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Budget cuts prevent collection of millions in unpaid taxes

Reported by: Josh Bernstein
Email: jbernstein@abc15.com
Last Update: 4/01/2009 4:52 pm

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State lawmakers ready to push $600 million in budget cuts

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The Arizona Department of Revenue was recently forced to lay off 300 employees, preventing the collection of more than $400 million in unpaid taxes.

"It's a lot of money when you're facing the largest budget shortfall in the history of the state," said State Representative David Lujan, D-District 15.

Arizona's budget deficit is now in the billions.

Teachers are losing their jobs, and state employees are being forced to take mandatory unpaid leave.

"We laid off 114 auditors and 94 collectors," said Anthony Forschino with the Arizona Department of Revenue.

Forschino said his department had no choice.

While his agency is the state's largest revenue stream, the legislature cut its budget by almost $10 million dollars, resulting in one third of the department's staff being laid off.

To put it in perspective, Lujan said the $400 million in uncollected taxes "would have (not only) prevented the cuts to K-12 education but also to the universities, and we would have had a few million left over beyond that to save some other programs."

Lujan said the cuts to the Department of Revenue have "decimated" the department's ability to collect all that cash.

"They can't do their job, and that's how we pay for things in this state is through taxes. And if we're not giving the tax collector the tools to go after them, then we're really harming our future as a state," he said.

On average, the Department of Revenue estimates "an auditor can bring in maybe $400,000 a year, a collector $800,000 a year."

If you do the math, the state is losing more than $120 million dollars a year by laying off these 114 auditors and 94 collectors.

"I wouldn’t say it’s a good idea," one angry taxpayer told ABC15. "How are they going to get the money if they don't have anyone to go after it? No one is going to volunteer to pay those taxes."

While the Republicans are talking about raising taxes, Democrat Lujan said, "We don't have to raise taxes to get that 400 million. We just have to go out and collect it."

And taxpayers we spoke with certainly agree.

"I think they should be going after the taxes that have not been collected, just because the money’s already out there, so why not go after it," another person told ABC15.

Both House and Senate Republican denied our repeated requests for comment.

Democrat Lujan said it's a "no brainer."

Lujan, the Minority Leader of the House, said, "Our alternative would be to restore the funding to the Department of Revenue. It would be a few million dollars and the return would be over $400 million."

Monday, the Democrats made that suggestion official by submitting a proposed budget plan that includes all funds be restored to the Department of Revenue along with an additional $9 million to aid in the collection of unpaid taxes to the state.