Arizona Chamber of Commerce and Industry

Group Wants Public Funds for Elections Used Elsewhere

The Arizona Chamber of Commerce and Industry is focusing its agenda for the upcoming legislative session on balancing the state budget and eventually cutting taxes.

And its executives are using the deficit as a new reason to go after one of their favorite targets: the state's system of public financing of elections. That system makes it possible for candidates to run without seeking private contributions, including from the business community.

"The state has a multibillion-dollar deficit," said Glenn Hamer, the group's president. "Every penny that comes from taxpayers" should be used for vital services, he said.

"Those funds that are being raised for Clean Elections could very easily get diverted into any other purpose," he said, specifically mentioning K-12 education, university funding and the Arizona Health Care Cost Containment System, which is the state's Medicaid program.

Hamer acknowledged, though, that if it weren't for the fact that voters approved the Citizens Clean Elections Act in 1998, the money would not be there in the first place.

The program allows candidates for statewide and legislative offices who gather the requisite number of $5 donations to get public funds for their campaigns if they agree not to raise money from private sources. That 1998 voter- approved initiative makes the program self-funded.

More than half the operating cash—close to $10 million so far in 2009—comes from a new 10 percent surcharge on civil, criminal and traffic fines.

On top of that, the agency has so far received nearly $8 million in contributions through a dollar-for-dollar tax credit available to Arizonans on their tax forms. In essence, these donations cost the donor nothing: They agree to give $5 to the Clean Elections Commission, and then get an identical credit against the taxes they owe the state.

In effect, what the chamber is proposing is that the money being raised now for one specific purpose, namely public financing of elections, be diverted to another.

Suzanne Taylor, the organization's senior vice president, pointed out that what the chamber wants would require voter approval: The Arizona Constitution forbids lawmakers to alter any program enacted by voters without taking the question back to the ballot.

"I believe that most Arizonans, if given the choice of funding candidates running for election or funding vital public services, would choose to fund other activities," Hamer said.

The chamber was among business groups that helped finance the campaign against the public financing system when it was proposed in 1998.

When voters decided otherwise, the organization filed several lawsuits contending the law violates various state and federal constitutional requirements. But with one exception—a fee on lobbyist registration—courts have repeatedly upheld the legality of the program.

The chamber has other priorities for the upcoming session.

One involves the goal of resolving the state's immediate budget crisis and then lowering taxes to stimulate the economy.

Hamer said one goal is lowering the state's corporate income tax rate, which is now just slightly less than 7 percent. He wants the figure to be no higher than the maximum rate of the state's graduated individual income tax, or about 4.5 percent.

The move, he said, would move Arizona's corporate tax rate from the midpoint of all states to the seventh-lowest.

Taylor said the need for the reduction is underscored by the state's current finances, which she said are due in part to the lack of economic diversification. She said lowering the rate would bring in more corporate headquarters and more manufacturers, especially those that produce products for export.

The chamber also seeks to reduce property taxes by lowering the assessment ratio—the figure used to compute the value of the land, buildings and equipment against which the state, local governments, schools and improvement districts levy their tax rates.

Residential property is valued for tax purposes at 10 percent of its "full cash value," generally considered the market price.

Businesses had been assessed at 25 percent. Prior lobbying efforts have reduced that each year to the point where for 2010 the figure is 21 percent. But it is not set to go lower than 20 percent.

Hamer said businesses would like parity with residential. But recognizing the political difficulty of that—especially as such a move would effectively increase taxes on homeowners—the chamber is willing to settle for 16 percent