1-cent-per-dollar sales tax expires, leaves mixed legacy

Arizona’s temporary 1-centper-dollar sales tax disappeared from state ledgers today, sailing into the sunset after helping the state navigate a sea of red ink during the recession.

The tax, sold to voters as a way to protect core state services, primarily education, from further budget cuts, was overwhelmingly approved in 2010.

But the sales tax, passed as Proposition 100, leaves a mixed legacy that will be debated as the state moves ahead without the $900 million a year the tax generated.

After bruising budget reductions in 2009 and early 2010, the temporary tax took effect and shielded education, health services and public safety from additional cuts. It pumped $2.7 billion into those programs over three years.

But it also allowed the state to accumulate a surplus of more than $700 million this budget year, as well as make a $450 million deposit to the “rainy-day fund” — money that could have been used to reverse the earlier education cuts. Instead, K-12 education spending dropped from 53.5 percent of the state general fund, in fiscal 2008, to 43.9 percent in fiscal 2013.

While the temporary tax money flowed in, lawmakers and Gov. Jan Brewer started to phase in a $538 million tax-cut package, with the biggest cuts

yet to take effect.

As a result, some voters and education advocates say the tax turned out to be a bait and switch, subsidizing fiscal maneuvers that voters didn’t sanction.

“The voters of this state were misled by the governor,” said Rep. Chad Campbell, D-Phoenix and the House minority leader. After pushing for the tax hike, Brewer and lawmakers “gutted education, and then they passed a tax-cut package,” he said.

Although some say the tax fell short of protecting education, no one disputes the promise that it would expire after three years.

On Friday, Brewer celebrated the repeal of the tax, saying that it had done its job and that the 1-cent-per-dollar sales-tax increase was, indeed, temporary.

Beginning today, the state sales-tax rate returns to 5.6 cents on the dollar, giving the state an average sales-tax rate, including local levies, of 8.16 cents on the dollar.

Where the money went