Report says Prop 100 sales tax increase falling short of projections

PHOENIX - A new report shows the one percent sales tax increase from Proposition 100 isn't bringing in the revenue dollars that was predicted.

The proposition was approved earlier this year and went into effect on June 1st.

How short will the budget be?

"That's more than 10% off of what they had expected to bring in," said State Treasurer Dean Martin.

The statistics from the first month of the 1% increase brings to light a problem for State Treasurer Martin.

"That's 100 million dollars plus, that the budget will be short this year," said Martin.

A joint legislative budget committee said the extra revenue expected from Prop 100 fell 7.5 million dollars short in June.

Some of that gap could be blamed on slower big ticket items like car sales.

In May, before the sales tax increase, car sales were up 31%, but in June sales were down 12%.

But Don Luke at the Bill Luke dealership said that trend changed in July and August.

Their sales have matched last years numbers.

"Well, it looks like this years just going to go along level at the rate we are right now," said Luke.

That's good news for the dealership and the state budget.
"They should do better in revenue because we are running level," said Luke.

But the budget battle isn't over. Martin said the upcoming vote on Propositions 301 and 302 weigh heavily on the states budget woes.
"They need those propositions to pass in order to close this year's budget. If they don't that's almost a half a billion dollars hole that's created instantly that they'll have to fix," said Martin.