POLITICS
01/05/2015 03:44 pm ET Updated Mar 07, 2015

New Arizona Governor Vows No New Taxes Amid Growing Deficit

ASSOCIATED PRESS

By Tim Reid

Jan 5 (Reuters) - Arizona's new Republican governor pledged to solve the state's growing budget deficit on Monday but insisted it will not be done through raising taxes.

Doug Ducey, the former CEO of the Cold Stone Creamery ice-cream chain and Arizona's former state Treasurer, said his administration can confront the state's deficit, but said raising taxes on people and businesses will only create more problems.

According to the state legislature's Finance Advisory Committee, Arizona is on course to end this fiscal year with a $520 million deficit, and be saddled with a $1 billion shortfall by the end of the 2016 fiscal year. The state budget is roughly $9.5 billion.

Significant factors in the growing deficit were sluggish growth and lower tax revenues, according to the committee's report.

Ducey, a relative political newcomer with just one term as state treasurer behind him, replaces outgoing Republican Governor Jan Brewer. During his gubernatorial campaign, Ducey vowed not to postpone a $226 million corporate tax cut due to be phased in over the next three years.

Arizona's constitution requires lawmakers to pass a balanced budget, and Ducey promised to produce four balanced budget plans during his next four years as governor. His first budget will be presented on Jan. 16.

With taxes off the table, spending cuts remain as the main way to try and narrow the budget gap.

"I give fair warning: the budget will not be met with general approval among special interests," Ducey said.

Ducey said his opponents will argue that the state has cut everything it is possible to cut, and now is the time to raise taxes. "I will reply not on our watch," he said. He repeated the maxim that "people are not taxed too little; it is their government that is spending unwisely."

Ducey added: "Raise taxes, and you haven't solved anything."

(Reporting by Tim Reid in Los Angeles; Editing by Lisa Shumaker)

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