Republicans Are Picking Economic Winners and Losers

smokestacks
(Wikipedia)

On April 25, 2018, Arizona’s Republican Gov. Doug Ducey signed a bill passed by the state’s Republican controlled legislature to exempt coal purchases from the state sales tax. It would lower the price of coal produced at the state’s only active coal mine, Peabody Energy’s Kayenta Mine on Black Mesa. The objective of the bill is to help attract a buyer for the mine’s only customer, the coal-fired Navajo Generating Station power plant near Page. The bill was pushed by Peabody Energy’s lobbyist Tom Dorn.

All but one of the Navajo Generating Station’s owners have decided to shut it down in 2019 because they can buy cheaper and cleaner electricity on the open market. And its other owner, the U.S. Bureau of Reclamation, cannot afford to operate the plant by itself, so if it shuts down, so will the Peabody coal mine.

“This bill is essential to the economic success of the Navajo Nation, the Hopi Tribe, and surrounding communities,” Ducey said when he signed it. The two tribes would, indeed, be severely impacted by a shutdown because the power plant and mine are located on their reservations. Both tribes hold leases for the mine, and the Navajos hold one for the power plant. If the plant and mine close, it’s estimated the annual revenue of the Navajo Nation’s government would shrink by about $40 million, or about 23%, while the smaller Hopi Tribe’s revenue could decline by about $12 million, or about 67%. In addition, the power plant and mine employee about 750 workers, nearly all of them Native Americans. (Some people would still be needed to maintain and dismantle the plant and mine if they were closed.)

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Maricopa County’s Transportation Plan Is Outdated

phoenix arizona freeway
(Wikipedia)

Every workday hundreds of thousands of drivers endure horrible congestion on the freeways and streets of Phoenix while commuting to and from their jobs. A study released in 2015 by the Texas A&M Transportation Institute estimated, for example, that Phoenix commuters were stuck in traffic jams for about 51 hours in 2014, racking up a “congestion cost” of $1,201 per person. This amount was calculated by combining the costs of wasted gas and lost time. And there are obviously other costs associated with this rush hour mess, such as health-damaging stress and unhealthy levels of air pollution.

Considering the magnitude of the problem, you would presume that solving it is the number one priority of the area’s transportation planners. Unfortunately, that’s not the case. In fact, it’s somewhat the opposite.

Some of the blame for this awful traffic belongs to the Republican-controlled Arizona State Legislature. In 2004 they passed H.B. 2456, which placed Proposition 400 on the ballot in Maricopa County. It asked county voters if they wanted to extend a half-cent per dollar sales tax until 2025 to fund local transportation improvement projects. But it also dictated how the money had to be used if the measure was approved. It required that the revenues had to be spent as follows:

  • 56.2% on freeways (mostly new) and highways
  • 33.3% on public transit
  • 10.5% on improving existing arterial streets

Maricopa County voters had little choice but to pass Proposition 400 in the fall of 2004 because their only other option was to gut transportation funding. And new freeways needed to be built because rapid real estate development had created traffic that far exceeded the capacity of the existing roadways.

But today there are freeways serving all of Phoenix’s densely populated areas. The only new freeway that can be justified is the South Mountain Freeway, which will significantly reduce congestion and air pollution along Interstate 10 in Phoenix by allowing cross-country commercial truck traffic to bypass the city.

The Maricopa Association of Governments (MAG) is the regional planning authority for metro Phoenix, and its Transportation Policy Committee (TPC) is in charge of the Regional Transportation Plan (RTP) that’s funded by the Proposition 400 revenues. The committee solicits public comments on the RTP, but its hands are somewhat tied by the spending rules included in Proposition 400.

Still, the TPC could at least focus its freeway spending on improving the existing the ones, instead of building new ones. But the current plan still includes millions of dollars for the Estrella Freeway (303L), the I-10 Reliever (SR 30), and the Gateway Freeway (SR 24). All of these new roads are on the outskirts of Phoenix, and will create more traffic congestion by contributing to urban sprawl. In other words, they primarily benefit real estate development – not existing transportation problems. This can be partially explained by the fact that when the legislature created the TPC in 2003, it mandated that six of its 23 members must be local business representatives appointed by the legislature.

The rigid spending rules included in Proposition 400 are one of the reasons that the City of Phoenix submitted Proposition 104 to the voters in 2015. City leaders realized that they’d have to find another source of funding in order to improve mass transit and add alternative transportation options. The city’s voters subsequently approved the proposed 0.7% sales tax increase to help fund a 35 year modern urban transportation plan.

The residents of Tucson also seem to understand that more freeways aren’t necessarily the answer. In 2006 Pima County voters approved a half-cent sales tax through 2026 to fund a regional transportation plan. The plan is administered by the Regional Transportation Authority (RTA) of the Pima Association of Governments (PAG). Their plan also spends most of the revenues on freeways (57%), but the money’s intended to improve existing ones, not build new ones.

Phoenix’s serious traffic congestion and air pollution problems cannot be solved by just building more freeways. A ballot initiative to implement a new transportation plan that prioritizes modern mass transit solutions in the urban core should be submitted to the county’s voters. The economic benefits from this strategy would undoubtedly be greater than the existing plan, and it would ensure that existing residents are the primary beneficiaries of local transportation spending. The problem can’t wait until Proposition 400 expires in 2025.

The Arizona Ministries of Truth

George Orwell
George Orwell Wikipedia

Arizona’s Republican Governor Doug Ducey, in cooperation with the state’s Republican-controlled legislature, allocated $5 million in the state’s FY 2017 budget for three “freedom schools” at Arizona State University and the University of Arizona. The money will go to the U of A’s Center for the Philosophy of Freedom, ASU’s Center for Political Thought and Leadership, and ASU’s Center for the Study of Economic Liberty. These three schools were established with seed money from the Charles Koch Foundation, an organization that promotes a radical libertarian ideology. The billionaire Koch brothers provided millions in “dark money” support for Ducey’s 2014 election campaign.

According to the Center for Budget and Policy Priorities, no other state has cut university funding more than Arizona since the Great Recession. Last year, for example, Ducey and the Legislature reduced state university funding by $99 million. This year’s budget restores just $32 million, but $5 million of it is earmarked for the so-called freedom schools – or about 15% of the increased funding.

Ducey’s spokesperson Daniel Scarpinato defended the earmark by saying the governor “believes it’s important that students in our university system are exposed to a broad range of viewpoints and academic views on a number of issues, including economics.”

Several Republican legislators also voiced their support. Representative Jay Lawrence, R-Scottsdale, a former conservative radio talk show host, said the money represents “a wonderful opportunity” to fund conservative viewpoints, which he claims are lacking at the state’s universities.

But Arizona Republicans weren’t concerned about encouraging different viewpoints when the they passed HB 2281 in 2010. That law was used to stop Mexican-American studies classes from being taught in Tucson’s public schools. John Huppenthal, Arizona’s school superintendent at the time, helped get it passed because he claimed the classes taught Mexican-American students to resent Anglos.

If Republicans are so concerned about the quality of the information that’s being given to the state’s students, then why aren’t they concerned about what’s being taught at the freedom schools? Dr. William Boyes, for instance, the founding director of ASU’s Center for the Study of Economic Liberty, is advocating for the elimination of public schools. He gave a speech last fall in support of the School Sucks Project in which he rejected the belief held by most Americans that public schools are a foundation of our democracy. He called for the end of public schools, saying they are our biggest obstacle to greater personal and political liberty.

Furthermore, Dr. Boyes in an advocate of the Austrian School of economic thought, which is promoted by the Mises Institute.  Austrian School economic theory advocates the concept of methodological individualism – that social phenomena result from the motivations and actions of individuals. It rejects the use of econometrics and macroeconomic analysis. Instead, it calls for the government to be dismembered so the free market can magically solve all problems.

If this doesn’t seem to make sense, that’s because it doesn’t. There aren’t any reputable economists that believe in it. But, not coincidentally, Austrian School economic theory can be used to justify a radical libertarian political ideology.

Updates

The FY 2018 state budget passed by Arizona Republicans gave another  $2 million to the state’s “freedom schools” at the U of A and ASU. This was in addition to their ongoing $5 million annual appropriation. Republican Rep. Anthony Kern, who pushed for the funding, claimed the schools are needed to counteract the widespread “liberal indoctrination” that’s going on at the state’s universities.

The FY 2019 state budget passed by Arizona Republicans included another  $2.5 million for the state’s “freedom schools.” This was in addition to the ongoing $5 million annual appropriation. Republican Sen. John Kavanagh said the money was needed to help balance “left-wing bias” at the state’s universities. The U of A and ASU will each receive $1 million more, and Northern Arizona University will get $500,000 to establish a new school there.

Total Appropriations to AZ Freedom Schools: $19.5 million

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