Governor defends tax increase for transportation

Yuma County might get more money for roadwork than originally anticipated if voters approve a ballot measure to hike the state sales tax.

Yuma County Board of Supervisors Chairman Greg Ferguson said the latest word from state officials is that Yuma County could reap $769 million over 30 years from the hike, up from $144 million he was originally told the county might receive.

But Ferguson said county officials have yet to see any guarantees. He says the initiative language is vague on exactly how much or what percentage each area will receive.

"If you read the initiative, it's not broken out," Ferguson said "There's nothing in writing that guarantees anything."

Gov. Janet Napolitano this week found herself defending plans to hike the state sales tax to among the highest in the nation to fund transit improvements rather than put the burden on those who will most directly benefit.

Napolitano, who is backing the ballot measure to hike the state sales tax by a penny, said that levy is the only thing that generates enough money and is reliable enough to support a $42.6 billion plan to build new roads, widen existing ones and finance new and expanded mass transit programs.

But opposition to the plan has come from various quarters, among them rural officials who are concerned their areas could end up paying more than they get back.

Ferguson said he and other county representatives have been meeting with staff from the governor's office in Phoenix about their concerns.

Initially, he said, he was told the county might only get $144 million worth for projects over 30 years, out of an estimated $768 million county citizens would contribute to the fund.

Ferguson said the latest word is that Yuma County could reap up to $769 million in road funding, $1 million more than it would be estimated to kick in.

The last word from Phoenix, according to county officials, was that Yuma could get:
*$280 million for road improvements to Highway 95 out to the Yuma Proving Ground
*$170 million for a loop expressway around the city of Yuma
*$58 million for public transit improvements
*$266 million for needed transportation improvements, to be determined by the local officials

"It looks good but how solid is it?" he said.

The governor this week acknowledged that sales taxes are paid by everyone in proportion to the number and price of the taxable items they buy. And the additional levy, if approved by voters in November, would add 1 percent to the final price tag of these items.

But Napolitano said raising Arizona's tax to 6.6 percent for 30 years - which is what the initiative would do beginning in 2010 - does not worry her. She said the state's overall tax burden, including income and property taxes, would remain "relatively low compared to other states.''

Ferguson said he was personally unsure if this tax was the right way to raise money for transportation.

"In the past, it has always been gas taxes or vehicle fees. ... They're switching it to a sales tax. Everybody's paying for it, whether they have a car or not. It's a shift in funding of the highways."

But he added the state was in great need of a new funding source for transportation and, if the voters do approve it, Yuma County should get back what it pays for.

"My job right now is to make sure we get our fair share if it does pass," Ferguson said.

The taxes are being opposed for various reasons.

Byron Schlomach, economist for the Goldwater Institute, called sales taxes "a very poor substitute for user charges.''

The Federation of Tax Administrators already puts Arizona's current 5.6 percent sales tax rate in the middle of all states that levy a state sales tax. If voters approve the penny hike in November, only five other states will have higher sales taxes.

He said the best kind of levy - assuming more money for transit is really necessary - would involve user fees.

A prime example of that in this kind of case is the gasoline tax: The more people use the roads, the more they pay.

Marty Shultz, treasurer of the organization pushing the project, said his group did explore hiking the state's 18-cent-a-gallon gasoline tax which has not been raised since 1991. But he said the idea was quickly dismissed as impractical.

Some of the problem is just pure numbers: An additional penny on the tax raises just about $38 million a year, far short of what is raised by a penny on sales taxes. Potentially more significant, Shultz said, are the long-term trends.

"The gas tax is becoming less efficient all the time,'' he said, what with cars and trucks becoming more fuel efficient and more people leaving their vehicles at home and using mass transit.

Shultz also dismissed claims that sales taxes are "regressive,'' imposing a relatively higher burden on people near the bottom end of the income scale than those at the top, pointing out that food purchased at grocery stories for home consumption is exempt, as are prescription medications.

The governor also said she does not believe higher sales taxes might hurt business activity here.

"I think, on balance, our overall commercial activity will be hampered if we don't have a transportation infrastructure that allows people and goods and services to move easily around the state,'' Napolitano said.

Shultz said there is one other reason coalition members opted for higher sales taxes: The state constitution says gasoline taxes can be used only for roads - and not for things like mass transit.

Much of the debate over the levy is likely to surround earmarking $7.6 billion of the total raised for mass transit, notably financing intercity rail service between Phoenix and Tucson as well as expanded light rail in Maricopa County and setting up a similar system in Pima County.

The governor also said that $7.6 billion for mass transit also includes funds for smaller communities to get help for things like van pools for seniors.

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Sun Staff Writer Sarah Reynolds contributed to this report.

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CURRENT STATE SALES TAX RATES:
*7.25% - California
*7.0% - Mississippi, New Jersey, Rhode Island, Tennessee
*6.6% - proposed Arizona sales tax
*6.5% - Minnesota, Nevada, Washington
*6.25% - Illinois, Texas
*6.0% - Arkansas, Connecticut, Florida, Indiana, Idaho, Kentucky, Maryland, Michigan, Pennsylvania, South Carolina, Vermont, West Virginia
*5.6% - Current Arizona rate
*5.5% - Nebraska, Ohio
*5.3% - Kansas
*5.0% - Iowa, Maine, Massachusetts, New Mexico, North Dakota, Virginia, Wisconsin
*4.65% - Utah
*4.5% - Oklahoma
*4.25% - North Carolina
*4.225% - Missouri
*4.0% - Alabama, Georgia, Hawaii, Louisiana, New York, South Dakota, Wyoming
*2.9% - Colorado
*None - Alaska, Delaware, Montana, New Hampshire, Oregon
Source: Federation of Tax Administrators