Arizona State Overview
Arizona scores well on economic freedom but its personal freedom score is mediocre. Arizona was one of the most improved states between 2009 and 2011, after declining between 2007 and 2009. Fiscal policy was the major factor in this apparent reversal, perhaps because the state was hit hard by the housing bust.
The state scores particularly well on taxes, which are 8.5 percent of personal income, and on fiscal decentralization, which is nearly a standard deviation better (more decentralized) than average. But it scores poorly on government debt, which is 22.8 percent of income. Government spending and employment are slightly better (lower) than average.
In the regulatory policy dimension, Arizona scores well on property takings: a fairly strong statewide law requires compensation for regulatory takings, and eminent domain reform has gone reasonably far. It also scores well on labor laws—a right-to-work law is in place—but an E-Verify mandate and a minimum wage drag down the state’s score somewhat. It imposes very few price controls on health and other insurance, especially on nongroup health insurance, and uses a flexible use-and-file system for homeowners’ and personal auto insurance rates. It scores well on liability system, but poorly on zoning, which is nearly a standard deviation stricter than the national average, and on occupational freedom. Fee, education/experience, and examination requirements are far higher than average, but the state does do extremely well on health professions’ scope of practice.
In the personal freedom dimension, Arizona scores well on gun control laws (no permit is required for concealed carry, as in Alaska, Vermont, and Wyoming); alcohol regulations and taxes, apart from a “happy hour” ban; and educational freedom (a tax credit law is in place, and private and home schools are not very regulated). It scores poorly on tobacco policies due to high cigarette taxes and extremely strict smoking bans, and on incarceration rates, which are a standard deviation worse (higher) than average.
Note that, because its most controversial provisions were thrown out by the courts, Arizona’s first-in-the-nation stop-and-identify law targeting undocumented immigrants is not included in the index.
- Reduce total government debt from 22.8 percent of personal income closer to the nationwide norm of 19.6 percent.
- Reduce Arizona’s fee, education/experience, and examination requirements. While the percentage of the workforce covered by mandatory licensing is not much worse than the national average, these requirements extend far beyond national norms.
- Reform sentencing policies for nonviolent offenders, with an eye to bringing incarceration rates down to national norms for the state’s crime rate. Such a move would have raised Arizona three places in the overall freedom index, into the top 10.