From The Arizona Republic:
Arizona State University economist Tom Rex said Thursday that raising taxes and fees would have a less negative impact on the state’s economy than the spending cuts Gov. Jan Brewer’s budget plan proposes.
The governor relies heavily on spending reductions, including eliminating health-care coverage for more than 280,000 Medicaid recipients, to close a budget deficit her office estimates at $1.15 billion for fiscal 2012.
Brewer has said she has no choice but to recommend cuts to the Arizona Health Care Cost Containment System given the magnitude of the state’s fiscal crisis.
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[...] Rex, associate director of the Center for Competitiveness and Prosperity Research at the W.P. Carey School of Business, said Brewer’s plan would result in the loss of more than $1 billion in matching federal dollars, which would lead to the loss of about 46,700 jobs. Sixty percent of those jobs would be in the private sector.
Instead, Rex says the state should focus on increasing revenues. He said his analysis shows doing so would only cost 13,800 jobs. Higher taxes and fees would likely lead to residents spending less on private-sector goods and services. But because Arizona companies don’t manufacture many products, the impact would be less than if the government reduced spending.
Brewer won voter approval for a temporary 1-cent-per-dollar increase in the state sales-tax rate. But she has said the Arizona economy cannot weather another such hike.