By New Times
By Connor Radnovich
By Robrt L. Pela and Amy Silverman
By Ray Stern
By Keegan Hamilton
By Matthew Hendley
By Monica Alonzo
By Monica Alonzo
Projecting revenue collections is a tricky business, however.
A huge surge in personal and corporate tax collections beginning last April caught budget analysts by surprise. After several months of sorting the data, economists generally agree that the bulk of the tax collections came from stock market profits.
"Some portion of that is clearly attributable to the stock market boom," says Hull's deputy chief of staff Ted Ferris. "We got a lot of money related to the surging equity markets."
Relying on the stock market to continue to fuel unexpected state budget surpluses is a risky policy, Ferris says.
A market decline could occur at any time, and the Joint Legislative Budget Committee points to such an occurrence as a possible trigger of the next recession. A decline in the stock market could sharply reduce state revenue collections, Ferris says.
"The additional money you get from capital gains would then evaporate," Ferris says.
The state's wealthiest taxpayers benefited most from Symington's tax cuts.
Tax cuts have reduced the state personal income tax burdens for married taxpayers across the board by about 26 percent since 1990.
In dollar terms, the savings are much higher for the wealthiest taxpayers. For example, a married couple filing jointly and reporting $300,000 in taxable income in 1990 paid $19,500 in state income tax. The amount in 1997 fell to $14,400, or a $5,100 savings--or 2.6 percent of income.
A married couple making $50,000 in 1990 paid $3,250 in state income taxes. By 1997, lower tax rates reduced the payment to $1,950, a $1,300 savings--or 1.7 percent of income.
Symington's tax-cutting crusade also further enhanced the perception that Arizona is a business-friendly state.
That perception, economists say, is one of many factors companies consider when deciding to expand in or relocate operations to Arizona.
But determining how important state tax-cutting policies are in business relocation and expansion decisions is difficult.
"It's like in the business world where it's hard to measure the impact of advertising," says APS economist Pete Ewen. "Everybody is doing it and it's hard to quit."
While Symington's faithful continue to claim his tax-cutting policies should enshrine the former governor in the state's political hall of fame, perhaps a better measure of his economic clout is what effect his sudden removal has had on the state's economy.
"Zero impact," says Pollack.
Symington's conviction is just another in a long string of political and financial scandals that has rocked Arizona in the past decade.
Pollack cites ugly episodes that preceded Symington's criminal conviction: the impeachment of former governor Evan Mecham; the Keating Five scandal, featuring Arizona Senator John McCain and former senator Dennis DeConcini; the AzScam sting in which state legislators took bribes; the collapse of the state's savings and loan industry; and voters' rejection of the Martin Luther King holiday.
"We had all these disasters," he says. "Did it affect us one iota? No. The reason is they were all transitory events."
Arizona will continue to grow, Pollack says, until the quality of life declines relative to other areas.
"If you are coming here from Chicago, you still think this is heaven," he says.
But what about the political turmoil and the departure of Symington, the tax-cutter?
"Symington had to leave office in disgrace," Pollack says. "But the economy boomed when he was here, so nobody cares. If he was here when the economy was bad, it would have been different."
Symington's ouster, Pollack says, simply makes no difference.
"It's been a non-event for the average person.