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Blog

Study Examines Impact of Increased Reliance on User Fees

Press Releases
•
January 3, 2013
•
Glenn Hamer
•
Comments Off on Study Examines Impact of Increased Reliance on User Fees

 

Paper finds that increases in fees results in a back-door tax

PHOENIX – The Arizona Chamber Foundation today released a study that examines the economic and legal impact of fund sweeps and the resulting increase in reliance on user fees.

The report notes that the Arizona Legislature has enacted nearly $13.4 billion in cumulative budget measures from fiscal year 2008 to 2012 to address the state budget shortfall. Fourteen percent, or $1.9 billion, of these budget balancing measures have come from various “fund sweeps.”

As the report highlights, many of the impacted funds derive their revenue from fees paid by businesses or specific industries for a dedicated purpose. The balances of these funds, although not having contributed to the budget shortfall, have been disproportionately used as a means of balancing the budget.

Use of these funds for the purpose of balancing the budget goes against the statutory purpose for which they were collected and results in increased fees for Arizona businesses. The report finds that these increases have resulted in a back-door tax on the regulated community.

“The Arizona business community understands the necessity for user fees, but also acknowledges that excessive fees make Arizona a less competitive state for business,” Arizona Chamber Foundation Executive Director Suzanne Kinney said. “As policymakers continue their efforts to adjust the state’s fee structures, it’s important they work to ensure the regulated community is not charged twice for the same service.”

The report also notes the importance of establishing fee increases that accurately reflect the costs for permits and regulatory compliance and that are not inflated to fund general administrative functions of the agency.

 

# # #

 

The Arizona Chamber Foundation (501(c)3) is a non-partisan, objective educational and research foundation. The Foundation produces research studies on Arizona public policy in an effort to inform policy makers, business leaders, and the general public.

 

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