No, Prop 208 Will Not Destroy Arizona’s Economy

woman holding sign that says "strong schools equals strong state"

By Jessica Swarner

September 21, 2020

“Investing in your public education system is one of the smartest strategies states can do to boost their future economy.”

Proposition 208, also known as Invest in Ed, will be on Arizonans’ ballots this fall. 

The measure would raise taxes on the personal income of wealthy Arizonans and put the money into a fund for schools to use toward raising salaries for and hiring more teachers and support staff. 

Opponents, which include business interests like the Arizona Chamber of Commerce, claim the tax increase would harm the state’s economy. 

Supporters, including the Arizona Education Association and many teachers across the state, refute the report’s claims and argue the measure is necessary to make up for a long underfunded school system. 

The Goldwater Institute, a libertarian think tank, broke down the arguments against the initiative in a report released last week.

Job Loss or Creation? 

One of the claims is that increasing taxes on “job creators” would discourage businesses from investing in the state, resulting in harm to Arizona’s economy—especially concerning at a time when many jobs have been lost due to the COVID-19 pandemic. 

But David Lujan, director of the Arizona Center for Economic Progress, one of the five organizations part of the coalition behind Prop 208, told The Copper Courier the initiative would be a boon to the job market. 

“If you have one of the largest employers in small towns across Arizona, the public schools, receiving millions of new dollars every year to increase the pay of their workers and hire more staff … that’s putting more money and creating more jobs for people that live in rural communities all across Arizona,” Lujan said. “And so they have more money in their pockets to go out to the local small businesses, to eat out.” 

Arizona currently has the seventh-lowest average teacher salary in the US, well under the national average. 

Lujan also argued that one of things businesses look for in places to start and expand is a strong education system—something Arizona has lacked for decades. 

“Investing in your public education system is one of the smartest strategies states can do to boost their future economy,” he said. 

“How many businesses have already chosen not to come to Arizona over the past two decades because of our inadequately funded school system?” he added. 

How Do Other States Compare? 

Supporters and opponents disagree on how Prop 208 would affect Arizona’s tax rates in comparison to other states. 

The Goldwater Institute says the measure would make Arizona the 10th-highest taxing state in the US.

But organizers say people in the income brackets actually affected would still have to pay more in a greater number of states.  

“A married couple with $1 million in taxable income will pay LESS state income taxes in Arizona than 19 other states,” the Invest in Ed coalition tweeted. “A married couple with $650,000 in taxable income will pay LESS state income taxes in Arizona than 34 other states.”  

Lujan said it’s important for voters to remember the tax increase only affects the top 1% of Arizona earners—individuals making over $250,000 and married couples making more than $500,000. Those people will pay a 3.5% surcharge on their income past those thresholds.

“The sky-is-falling fear that our opposition is making, that this is somehow going to create one of the highest state income taxes in the country, is just plain false,” he said. 

Where Will the Money Go? 

The Goldwater Institute report also accuses Prop 208 of ignoring students and doing nothing “to ensure that the funds are spent in a way that actually improves education in our state.” 

According to Invest in Ed, the measure requires half of the money to be spent on bringing in new teachers and increasing their compensation. A quarter must be spent on hiring and increasing pay for support staff, like classroom aides and bus drivers. Then 12% goes to technical education programs, while 10% is for teacher mentoring and retention programs. The remaining 3% is for the Arizona Teachers Academy, which gives scholarships to students studying education and who commit to teaching in the state. 

Lujan said the language in the initiative makes sure the money will go toward supporting teachers, which has benefits for their students. 

He explained the money will go into a fund controlled by the state treasurer, who then distributes the money to districts. This keeps the money out of the state Legislature’s hands, Lujan said. 

“Prop 208 has strong accountability to ensure that the money gets used in the way it’s intended,” he said. 

Lujan explained that hiring and increasing staff pay has direct effects on improving students’ education. 

For example, he said, making education jobs in Arizona more attractive could mean a solution to the state’s dire lack of teachers

“[Increasing pay] is good not only for teachers to make their working conditions better, but it’s good for the students and the parents because one of the problems that has been created by the teacher shortage is class sizes have gotten larger and larger.” 

And more money into the system means the ability to hire more staff like nurses and counselors

“Many of those positions have been cut over the past decade because of the cuts to education,” he said. “And so particularly in a pandemic we’re seeing why it’s so important for schools to have health professionals but also counselors.”

“[Prop 208] is good for the quality of education of kids in schools,” he added. “But it’s also good for their mental health as well.” 

Who is Spearheading It? 

The Goldwater Institute report says Prop 208 is “backed by out-of-state special interests.” 

The initiative has received the vast majority of its financial support from a Portland, Oregon-based nonprofit called Stand for Children that has a chapter in Arizona. 

But the other four of the ballot measures’ top five monetary backers are Arizona-based. 

Lujan said it’s clear the proposition has strong support in the state. Organizers managed to file over 387,000 signatures—more than the 237,645 needed to qualify for the ballot—even during a pandemic that stopped many in-person efforts. 

“I don’t think there’s any stronger statement to tell people that this is an Arizona movement by parents and teachers who are tired of waiting to see funding get into our public schools,” he said.

Educators and other supporters of the Red for Ed movement—which brought thousands of people to Arizona streets in 2018 as part of a teacher walkout—tried to pass Invest in Ed in 2018 but it was tossed of the ballot when a court ruled its summary was misleading.

This time, with Prop 208 secured on the ballot, they’re feeling even more hopeful.

Rebecca Garelli, a science educator who helped push for the initiative the first time around, said she is looking forward to the election. 

“It’s exciting, because what we know is that we have community support on our side,” she told The Copper Courier. “And so finally, the voters have a chance to say that they support us. They will show it through the ballot, and that’s exciting, because we know they will.” 


  • Jessica Swarner

    Jessica Swarner is the community editor for The Copper Courier. She is an ASU alumna and previously worked at KTAR News 92.3 FM in Phoenix.

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