Political Notebook: Farley revenue bill meets untimely death

We could have had a new state law that forces the Legislature to review the transactions exempted from the state sales tax every 10 years.

You would think that reviewing $12 billion worth of exemptions and exclusions from taxation would make sense in a state constantly scraping for pennies.

Instead, you’re more likely to get more tax exemptions.

For example, thanks to a bill that is undoubtedly crucial to all Arizonans, shares of a co-owned airplane may soon be exempted from the state sales tax. You were worried about the unfairness of state sales tax being collected on the purchase of airplane shares, right?

Back in January, I reported that Republican legislative leaders are treating Democratic members more fairly than in recent years, entertaining bills such as Sen. Steve Farley’s latest effort to curtail exemptions from the state sales tax.

Farley has been banging this drum for years — especially the annoying exemption for charging sales tax on the purchase of 4-inch pipe. This was an exemption intended to benefit Southwest Gas, which uses a lot of 4-inch pipe.

His bill this year, to simply require a review of the exemptions and exclusions, was an easy step. It didn’t even require repealing any. That was reflected in the Senate’s 28-2 vote in favor of the bill, SB 1144.

But then it hit the state House. In the Ways and Means Committee, the Arizona Tax Research Association’s president, Kevin McCarthy, raised questions about the utility of the bill, which would require a lot of staff time spent reviewing individual exemptions and exclusions. It’s a strange position for a group that says its goal is “efficient statewide government and the effective use of tax dollars through sound fiscal policies.”

But McCarthy said the $12 billion that Farley often points to is an exaggerated figure. It includes uncollected tax on items like food for home consumption ($356 million worth of tax uncollected), prescription drugs and oxygen ($604 million) and wholesale trade ($4 billion). Most of that uncollected tax is easily justifiable as a matter of public policy.

Not all of it, though. Each exemption has an interest group with a lobbyist attached to it, and those interest groups and lobbyists make campaign donations or can cause trouble for candidates.

So, suddenly, in the House this week, a bill that was sailing smoothly ran aground. That’s too bad, because eliminating exemptions is perhaps the easiest way to raise state revenue.

“My basic idea is if we can find $2 billion out of $12 billion of loopholes and get rid of them, that would allow us to decrease the sales tax rate by one percentage point,” Farley told me Thursday. “We would still be able to increase our revenues by $1 billion.”

To her credit, the Republican chair of the House Ways and Means Committee, Rep. Michelle Ugenti-Rita, voted for the measure, which went down 5-4. And Farley told me she’s willing to bring it back up if he can convince one of the people who voted against it to change their vote.

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But our sacred sales-tax exemptions and exclusions seem safe for now. The only question is if we can siphon more money from the state treasury in order to facilitate important transactions like the purchase of shares of private aircraft.

State of the city

Last year I lambasted Mayor Jonathan Rothschild’s state of the city speech, which was long on listing minor achievements and short on dealing with the big issues of the moment.

This year, not so bad. Rather than going through the year’s minutiae in his speech Thursday at the JW Marriott Starr Pass, he gave a more direct defense of the city’s performance and argument for its approach to the local economy and community.

On the many incentives Tucson has been offering developers lately, for example, Rothschild said:

“By offering incentives, the city is being a good partner, a fair partner, to businesses and taxpayers alike. With all our incentives, businesses benefit, but taxpayers benefit more — through job creation, job training, public infrastructure improvements, and tax revenue from private investment.”

He even offered an emotional ending that reflected on the best sides of the city’s nature.

In Tucson, he said, “Wherever we come from, however long we’ve been here — we help each other. Whatever we look like, whoever we love — we help each other. It’s why this community invests in itself: because we see value in working together for the common good. It’s what people love about Tucson. It’s what I love about Tucson.”

No, he did not mention being carjacked.

New county staff

The newest Pima County supervisor, Republican Steve Christy of District 4, has completed his hiring and now has a staff of four running the office. They are:

• Beth Borozan, chief of staff and liaison to the Tanque Verde Valley;
• Lori Oien, office manager and liaison to Tucson’s east side;
• Sergio Arellano, liaison to the Green Valley area;
• Lucretia Free, liaison to the Vail area.