Proposition 204

Ann-Eve Pedersen, organizer of Proposition 204, explains why the measure earmarks 10 percent of what the tax hike will raise for road construction. (Capitol Media Services photo by Howard Fischer)

Howard Fischer/Capitol Media Ser

Proponents of a permanent one-cent hike in state sales taxes for education are defending setting aside 10 percent of the $1 billion that would be raised to start for road construction.

At a press conference Tuesday, organizer Ann-Eve Pedersen detailed how her group believes the Legislature has short-changed education for the last several years. And she said that has occurred even in the face of new mandates.

For example, she said the state will soon require students read at a third-grade level before being promoted to fourth grade. But Pedersen complained that the Republican-controlled Legislature short-changed the $50 million request to fund that by $10 million, and refused to promise ongoing finances.

Proposition 204, however, guarantees $100 million in the first year for roads, assuming projections hold.

Pedersen said the funding is justified. She said economists like Dennis Hoffman of Arizona State University say the “two main things’’ the state needs to be competitive are investments in education and transportation infrastructure.

“If you want the economy to really rebound and be healthy, that’s where you make your two primary investments,’’ she said.

Hoffman, however, told Capitol Media Services that Pedersen’s analysis of his views is overly simplified.

He said that while both education and transportation are important, there are other crucial factors, including energy, water supply and an advanced telecommunications network. And Hoffman, who said he is taking no position on Proposition 204, said he would never specifically list education and infrastructure as the top two.

Pedersen denied that the dedicated tax funding for roads is payback for the construction companies being the largest single source of cash to collect the signatures and now convince voters to support the initiative.

A review of contributions so far by Capitol Media Services finds that more than a third of the cash has come from We Build Arizona. That group, made up of major contractor organizations, has so far kicked in $357,000 out of the approximately $945,000 raised to date.

That does not include $50,000 given early on by John Whiteman whose family owns Empire Southwest, a major seller and renter of construction equipment, plus another $25,000 directly from the Arizona chapter of Associated General Contractors.

Pedersen said, though, the business backing of the initiative is deeper, citing $50,000 from Greater Phoenix Leadership and an identical amount from the Southern Arizona Leadership Council.

And Pedersen said there is one other connection.

“The Legislature has been raiding both,’’ she said of both education and road construction. “They’re not funding either.’’

To back that argument, at least for education, Phil Oliff, a policy analyst for the Center on Budget and Policy Priorities said his own study shows that, when inflation is taken into account Arizona has cut more state funding for education between the 2007-08 school year and now than anywhere else. Oliff put the inflation-adjusted loss at 21.8 percent; he said the median decline for all states is closer to 9.4 percent.

Oliff acknowledged that a slightly different picture emerges just looking at current funding versus last year that. He said that, after inflation, there was no loss.

The initiative, if approved, would create a permanent one-cent surcharge on the state’s current 5.6 percent sales tax rate. It is designed to take effect June 1, the day after a temporary one-cent levy approved by voters in 2010 expires.

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