Arizona business leaders want big tax increase for teacher salaries, education

Alia Beard Rau | The Republic | azcentral.com

Show Caption Hide Caption Proposition 301 sales tax benefits students The voter-approved Proposition 301 six-tenths of a cent sales tax benefits various education programs. It is set to expire in 2021.

Some of Arizona's most influential business leaders have a plan to significantly boost education funding, and they're not waiting for Gov. Doug Ducey and the Legislature to make it happen.

This week, they began a public campaign to convince fellow business leaders to raise the funds to put an expansion of Proposition 301 on the ballot — and sooner rather than later, although they haven't disclosed exactly when they'd like to see it on the ballot.

They're pushing to nearly triple the current 0.6 cent education sales tax to 1.5 cents, permanently. That's significantly higher than has been discussed by other groups so far, and would mean an additional $900 million a year for teachers and schools.

The additional revenue would go toward areas Ducey prioritized this year — teacher salaries, full-day kindergarten, school infrastructure, teacher training and workforce development.

"A wise man once told me that vision without execution is hallucination," said Phil Francis, retired PetSmart chairman and CEO, referring to a Thomas Edison quotation. "I think the vision he's (Ducey) laid out is good. Now we need execution."

Francis said the business community — which has benefited from Ducey's annual tax cuts and the workforce the state's education system produces — needs to lead the way.

"The business community can take some of the perceived heat that neither the governor nor the Legislature may be able to take" on a proposal to raise taxes, Francis said. "So we're saying, 'Business community, let's get it on the ballot and then let the people decide.' "

Joining Francis in the push are Reginald Ballantyne, a health-care consultant and past president of the state Board of Education; Mike Brewer, CEO of Brewer Companies and Benjamin Franklin Plumbing; and John Whiteman, founder of Empire Southwest Co. and president of the Whiteman Foundation, which focuses on children and education.

"If we don't take the lead in advancing this initiative, I"m not sure who else will," Ballantyne said.

Without action, Prop. 301 expires in 2021 and schools lose the $600 million a year they're getting now.

Taking the lead

The group plans to spend the summer developing a "broad-based coalition" to raise $2 million and lead the initiative effort.

"I've seen determination like I've never seen before to get something done," said Francis, who also serves on the Greater Phoenix Leadership board. "This is the best chance we’ve had in 20 years to execute a big vision."

He said he's confident the business community will step up and expects by this fall to have an organized coalition beginning to decide next steps.

"Arizona has demonstrated that it is committed to incentivizing business to come to Arizona, and there should be some effort by the business industry to reciprocate," he said. "I would hope they'd want to invest in Arizona and Arizona's kids."

Ballantyne, past chairman of the Arizona Chamber of Commerce and Industry and a current board member, said they will appeal to all segments of the business community in the state.

"We can't on the one hand outline our concern that the workforce is not robust and then decide we're not going to take any responsibility or action," he said. "Somebody has to start the process. Somebody has to lead. So we are starting it."

But while there has been broad support for increasing education funding and for Ducey's education vision, the businessmen face challenges.

Prop. 301 — including whether it should be increased, who gets the money and when it should go to voters — has become a political football.

Many state Republican leaders don't want it on the 2018 ballot, where Ducey and other statewide officials will face re-election. And everyone wants to make sure their favorite education issue gets money.

While the business leaders did not say exactly when they'd like it on the ballot, Ballantyne said it needed to be sooner rather than later

"ASAP," he said. "I don't know about the year, but the sooner we can get going the better."

The Governor's Office declined to comment on the proposal.

Arizona Chamber of Commerce President and CEO Glen Hamer, who is often in lock-step with Ducey on such issues, said the chamber supports extending Prop. 301 but would need a lot more information and discussion before deciding whether to back this plan.

"If we're going to the ballot, you want to make sure your plan has the support of the public," he said. "We need to understand who is supporting this, what the timeline is. You're going to have to have the broadest possible coalition."

Joe Thomas, president of the Arizona Education Association teachers' group, said educators need to be part of that coalition.

"Instead of having every group concerned about education coming up with their own ideas, we need to sit down together and see where we have common ground," he said.

But he admitted someone needs to step up and lead the conversation.

"The natural leader in the state is the governor. But he has said he's not going to do anything to raise taxes. That's problematic," Thomas said. "You can't have great schools and cut taxes every year. Arizona has proven that."



Thomas said he supports the primary areas this plan proposes to fund, including teacher salaries, full-day kindergarten and school infrastructure.

But he did have reservations about extending the tax to a full 1.5 cents, saying that sales taxes are regressive and disproportionately impact lower-income residents.

He said the plan could include a more moderate sales-tax increase combined with rolling back some corporate-tax loopholes.

What the leaders say

Ducey hasn't taken a leadership role on Prop. 301, at least not at this point.

In March, he told The Arizona Republic he supported extending and overhauling the tax, but has never said publicly whether he'd support bipartisan efforts to increase it.

RELATED:

Gov. Doug Ducey will support extending education tax

Who is Gov. Ducey talking to about tax for education?

As state treasurer in 2012, he successfully fought a ballot measure that proposed a separate 1-cent-per-dollar sales tax in which 80 percent went to education and the remainder to transportation. At the time, Ducey called it "a bad idea and a bad tax."

Ducey ran for governor on a pledge not to increase taxes during his tenure, and has said his position on Prop. 301 doesn't change that.

“Things haven’t changed — there are not going to be any new taxes,” he said in March. “This is a funding program, and we’re going to continue a funding program.”

Superintendent of Public Instruction Diane Douglas is the only state leader to publicly release a specific proposal for Prop. 301.

RELATED: Schools Superintendent Diane Douglas calls for major raise for teachers

In April, she proposed raising the tax to a full cent and using the additional revenue for an immediate 11 percent teacher raise and an annual $100 million boost to the School Facilities Board.

But she gave no plan for making it happen, instead saying she hoped the Legislature would take it up when their next session begins in January.

A number of lawmakers this session — both Republicans and Democrats — said they supported raising the sales tax to at least a full cent. But Republican lawmakers did not introduce any legislation to that effect, and Republican leadership did not put Democratic proposals up for a vote.

Ducey also has been vague about a timeline for Prop. 301, saying they "have some time" to get the plan worked out.

Funding teachers, kids

The current sales tax provides funds for teacher salaries, reading intervention and other student programs, university research, school maintenance and community-college workforce-development programs.

The business leaders have laid out a plan for the additional revenue the tax hike would raise:

$340 million for teacher raises. The proposal would give annual raises of 2 to 4 percent per year for at least six years.

$240 million to make kindergarten an official grade and fund a voluntary full-day kindergarten program for all public district and charter schools.

$278 million to the School Facilities Board to fund building maintenance. Schools earlier this year sued the state, alleging underfunding for maintenance and school capital needs.

$25 million for Ducey's proposed teachers academy, which would coordinate with state universities to help teachers earn their degree debt free.

$25 million for the Arizona Commerce Authority to issue grants to companies that provide construction-trade and workforce-development training programs.

Funding for teachers is a priority for the business group.

"We have not come even close to providing teachers the value, the respect and the compensation they deserve given what they're doing," Ballentyne said.

Full-day kindergarten also is a passion.

"There are a surprising number of third-graders who have not been literate enough to advance to fourth grade," he said.

Madison Elementary School District Superintendent Quinn Kellis said the districts would prefer getting additional funding without such strings attached.

"But these are certainly priorities consistent with the Madison district, as well as priorities the governor has identified across the state," Kellis said.

Kellis said the proposed teacher raises would go a long way in boosting confidence not only for current teachers but also for college students considering the profession.

But he said he didn't know if $278 million would be enough to meet statewide school construction and maintenance needs.

The proposal doesn't address annual state cuts since the Great Recession to funds that went directly to schools for soft capital such as textbooks, technology and buses. Currently, school districts are getting about 15 percent of what they were initially told they would get each year; charter schools are receiving about 85 percent.

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