NEW REPORT: Prop 208 Would Cause Massive Job Loss and Cuts to Critical Services

September 15, 2020

A new report reveals the devastating consequences that the Proposition 208 “Invest in Ed” initiative would wreak on Arizona, including staggering job losses and inevitable cuts to child protective services, public safety, and higher education.

In their report Good for Special Interests and Unions, Bad for Arizona: The Economic Impacts of Proposition 208, Goldwater Institute Director of Education Policy Matt Beienburg and Senior Fellow Jim Rounds lay out the costly impact the initiative would have on Arizona, if voters approve it in the November 2020 election.

Should Proposition 208 become law, the report finds:

• Under the most conservative scenario, job losses will reach a minimum of 124,000 over the course of 10 years. That’s four times greater than the losses experienced during the economic downturn of 2001. Proposition 208 won’t affect high-income earners alone—it will jeopardize the employment of thousands of plumbers, dry cleaners, nurses, retail store employees, mechanics, janitors, and others throughout the state.
  

• A minimum of $2.4 billion in state and local tax revenues will be lost over the same time period. These economic losses will be the result of a reduction in business recruitment, job growth, and wages.
  

• Cuts to social services, public safety, and higher education will become inevitable because State General Fund revenues will fall by a minimum of $120 million per year. Proposition 208 requires any decrease in state revenue to be made up for entirely from other sources, putting critical services on the chopping block.
  

• More than half of the Arizonans affected by the Proposition 208 tax increase will be small business owners. These individuals represent thousands of job creators—and they will bear a disproportionate load of the Invest in Ed price tag.

Jim Rounds, co-author and economist, notes: “Proposition 208 will impact the state’s ability to be a national leader in economic growth over the next decade. Arguments for additional education funding need to come from diligent research on individual budget items, not from broader generalizations about overall funding. Changes to public policy of this nature also need to be based on reliable return on investment calculations.

“Furthermore, the initiative, on average, will produce $250 million less than projected by advocates. Thus, the promised increases in teacher pay and reductions in classroom size will be negligible. However, the economic harm from the measure will be significant. A better plan can be designed to help both the economy and K-12 education. I still remain optimistic that we can coordinate our efforts and do better.”

“Small businesses across the country have closed their doors because of the COVID-19 pandemic, and now small business owners in the Arizona may be dealt a further blow under Proposition 208,” said Goldwater Institute President and CEO Victor Riches. “As this report shows, the backers of Proposition 208 want to turn Arizona into California or New York—where crushing tax burdens are driving job creators from the state and bankrupting their own futures. Arizona should be focusing its efforts on creating a friendly climate for economic rebuilding and growth—not taking steps to hurt our state’s job creators and entrepreneurs.”

Read the new report here. For more information on why Proposition 208 would hurt Arizonans, visit goldwaterinstitute.org/no-on-208/.