by Byron Schlomach, Ph.D.
Goldwater Institute
Last year, the Arizona Legislature and Governor Jan Brewer passed a state budget they claimed was balanced, although three ballot measures had to pass to make it so. A sales tax increase was approved in a May special election. Two other measures, worth about $450 million, failed in November. As a consequence of “balancing” the budget on a gamble, Arizona now faces a budget deficit of $763.6 million with less than six months left in the fiscal year.
In her plan released Friday to balance this year’s budget Governor Brewer has asked for another $245 million “rollover” for public education funding. The state already rolls one payment due to schools into the next year, this would make it two, meaning instead of receiving 12 payments from the state like they are supposed to, schools will only receive 10 this year. And it would push the state’s debt to school districts to more than $1 billion. Another gimmick proposed by the governor would be to borrow $330 million on June 30 and pay it back the next day on July 1, the start of the next fiscal year. Sounds harmless, but we would have to repeat this gimmick every year for the foreseeable future, increasing the interest we pay on state debt year after year. As it stands, interest payments on current state debt already will be the fourth largest budget line item.
Governor Brewer’s proposal to close next year’s $1.1 billion gap includes a $481.2 million reduction in the state’s Medicaid program. That’s certainly justified as Arizona has one of the nation’s most generous programs for Medicaid benefits. But, these proposed Medicaid reductions require a special waiver from President Barack Obama’s administration because of the federal health care law passed in 2010. Crossing one’s fingers and wishing for the best works no better in budgeting than when rolling dice in Las Vegas. The governor wants to take another huge gamble that no one should bank on.
This budget plan depends too much on gimmicks and hopeful thinking and too little on fundamental reform. Instead of effective alternatives to prison for non-violent offenders, for example, there is more funding for prison guards. School buildings get more funding, even though school districts already have the power to authorize charter schools which receive no funds for buildings and make use of existing real estate space. The icing on the cake, though, has to be the creation of a brand new $40 million fund to hand out money to private corporations if they will locate in Arizona.
We cannot afford any more failed gambles that set the stage for a third tax increase. What we need is real, fundamental reform and a government we can afford.
Dr. Byron Schlomach is director of the Goldwater Institute’s Center for Economic Prosperity.
Learn More:
Goldwater Institute: Budget Reduction Opportunities
Office of the Governor: The Budget Presentation of Fiscal Year 2012
Arizona Republic: Arizona budget gimmicks and debt won’t help
But of course what the Obama administration decides is truly besides the point since voters set the state Medicaid eligibility at 100% of poverty level back in 1996. There is no gamble here but a clever attempt to make this about the state vs. the Obama administration and health care reform so as to blame these for the budget shortfalls. This certainly will get the rubes worked up. I assume we will see proposals from Nick Dranias about including this issue in his Constitutional convention.
We won’t see any solution to the budget problem as long as people are operating under the delusion, in no small part thanks to the Goldwater Institute, that the problem with the Arizona state budget is only a spending problem and that discussions of the revenue side of the problem are non-starters. Clearly, some of our elected leaders know that we have more than a spending problem but they are willing to pretend otherwise all the while kicking it down the road in hopes that state revenues go up with a economic recovery. It has come to the point that the state is no longer even attempting to meet its statutory and constitutional obligations.
Unfortunately, the budget deficit will continue to be balanced on the shoulders of university students, the working poor and our ever increasingly underserved K-12 student. Our state is in sad shape and is heading down fast.
I see that Goldwater has ignored the fakely named “jobs” bill (because Goldwater supports it,) a multi-billion dollar, ARizona taxpayer-underwritten corporate bailout and central economic planning (private corporation) Authority created by the bill and staffed with Brewer appointees.
100% debt financed. Did we learn nothing from the national economic mess we are in now?
Apparently not. Thanks Goldwater for (not) standing up for principle!
Brewers AZ Commerce Authority is headed by Don Cardon, the failed developer and guy with 0 experience in economic development. But he is Jerry Colangelos friend and Gov Coughlin, I mean Brewer, must do whatever Jerry says.
Cardon got his head handed to him when he tried to build low income housing in upscale Laveen, he got the City Councilman recalled and he begged for favors from the Mayor on a weekly basis.
Tea Party Alert! Watch Gov Brewer bring together CEOs and big business leaders to decide how to spend tax money without any public oversight. The report that the Gov used to justify ending the Dept of Commerce cited cronyism and political appointments and a revolving door for Directors as a huge problem. So what does she do? She abolishes the Dept saying that it is ineffective, expensive and poorly run, then she creates the “New” AZ Commerce Authority to clean things up and improve the states business recruitment efforts – THEN, get this – She names the old Commerce Director Cardon as the Director of the NEW Az Commerce Authority. Basically they changed the sign on the door, still using the same phone number though. How many of his development projects did Cardon file bankruptcy on, all of them?