An improved national reputation could improve Arizona's economic forecast - Ahwatukee Foothills News: Valley And State

An improved national reputation could improve Arizona's economic forecast

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Posted: Thursday, May 8, 2014 3:20 pm | Updated: 7:56 am, Fri May 23, 2014.

What's the best way to boost the Arizona economy?

Stop getting mentioned on The Daily Show.

At least that's the consensus of three economists from Arizona State University who were looking into their crystal balls Thursday about what they see on the horizon — and what could be.

It's actually a bit more complex than avoiding Jon Stewart's jokes. Mike Orr, who runs the Center for Real Estate Theory and Practice at the W.P. Carey School of Business, said the real problem is Arizona's image.

“I think things could improve if we actually sat and thought about what do we look like to the average Californian,” he said.

“That is the biggest marketplace of people who could move here and drive our economy,” Orr explained. “How can we look more like a real state that they could identify and be proud of moving to.”

Lee McPheters, a professor at the school, said that shows up most visible on basic cable, saying Arizona is getting “too much time on the Jon Stewart show.”

Arizona is a regular subject of Stewart's barbs, whether it's legislative action on who can carry guns and where, what rights gays should have and the ends Arizona has gone to make it among the least hospitable states for those not here legally.

“We have become a laughingstock to some parts of the nation in ways that are not really fair,” Orr said. “But we need to think about ways our image looks when we take some of these actions.”

Staying off Comedy Central is only part of the way that happens.

ASU economist Dennis Hoffman said the state also needs to have points it can make on the positive end. He said a good place to start would be better funding of public education.

But that becomes part of a really interesting vicious circle.

In essence, all three economists concluded the state's economy won't improve until people move here. But people won't come until there are more available and high-paying jobs. Those jobs won't come, Hoffman said, until they are convinced there are plenty of well-trained and qualified workers.

Yet Hoffman said companies won't find those workers until it spends more on public education, but the governor and lawmakers have cut education funding levels because the economy is in the tank.

Which bring the problem full circle.

Arizona has gone on a spree of cutting taxes. That includes not just things like a 30 percent cut in corporate income taxes and more generous credits since Gov. Jan Brewer took office, but even a 10 percent cut in personal income taxes approved by Janet Napolitano, her predecessor, in a political trade for funding for full-day kindergarten.

That funding, though, has since been repealed, but the tax cut remains.

Orr said Arizona's reputation as having low per-pupil spending hurts.

“I think it's the No. 1 reason Californians have reservations about relocating,” he said.

“It's not taxes, because they would save enormous amounts of taxes by moving to Arizona now,” Orr explained. “They're very concerned about low spending on education — and low results compared with the schools they have.”

Hoffman said the way out of this vicious cycle probably involves something that runs contrary to the cut-taxes-even-further preachings of most of the Republican gubernatorial candidates: Higher taxes — earmarked for education.

He was under no illusion that the Legislature itself would approve such a measure — that would require a nearly-impossible-to-get two-thirds vote.

But he said voters showed in 2010 that they are willing to tax themselves when they are told the funds are for public schools, with that temporary one-cent hike in state sales taxes being approved by a 2-1 margin. Hoffman said he believes voters would do that again — and raise a needed nearly $1 billion a year — if they are convinced the dollars will be used specifically to improve public schools.

He said a 2012 initiative ballot extend that levy failed because it was poorly crafted.

McPheters said population growth this year should be no better than 1.5 percent.

He said there are other signs that Arizona's allure is fading.

Just two years ago it was the third most popular destination for people moving from other states. By last year, McPheters said, it had slipped to sixth, with South Carolina, North Carolina and Colorado all showing faster growth.

These numbers of people willing to move here is not the only indication of problems for a state that has relied on population growth to fuel its economy. There's the flip side of out-migration.

In a December survey, the Gallup organization asked people across the country how likely it was they were going to move to another state in the next 12 months. On a proportional basis, Nevada was first with 20 percent saying it was at least somewhat likely — if not more so — they would pack up. Arizona and Illinois followed at 19 percent.

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