Legislators pass largest budget in state history

By Howard Fischer/Capitol Media Services
Published/Last Modified on Saturday, June 17, 2006 12:55 PM MDT


PHOENIX - A House-Senate conference committee gave approval late Friday to the largest budget in state history - and likely also the largest tax cut ever enacted at one time.


The move came after Republican legislative leaders said they had enough votes among their own members to enact the package negotiated with Gov. Janet Napolitano. That cleared the way for final approval of the just-shy-of-$10 billion spending plan for the new fiscal year that begins in less than two weeks.

But the deal worked out with the Democratic governor does not have unanimous approval. Several Republicans said the could not support a budget with such a large price tag.

"We've seen dang near 20 percent growth in the budget," said Sen. Ron Gould, R-Lake Havasu City, with the spending plan in excess of $10 billion. "I can't support that kind of thing."

That includes $100 million for teacher salaries. But lawmakers refused to tell schools how to divide the money or even to mandate a $30,000 starting salary sought by some.

It also adds $160 million in new education dollars over the next two years to expand state-funded full-day kindergarten to all schools.

Gould acknowledged that GOP leaders had to give on those issues to get a 10 percent cut in state income taxes over the next two years - cutting state revenues by an estimated $340 million - as well as a three-year suspension of a state property tax that puts more than $200 million a year into state aid to education. But he suggested the Republicans sold out for too little. "If we would have acted like Republicans I think we could have cut a better deal," he said.

That's not the assessment of Rep. Laura Knaperek, R-Tempe, who noted that lawmakers have been debating the issue since January. "The budget package that has been put together currently at this late date is obviously satisfying many of the needs of the caucuses and the governor," said Rep. Laura Knaperek, R-Tempe. "I believe it's the best package we're going to get for now," she continued. "We need to take it and run."

One of the sweeteners for some Republicans was Napolitano's agreement not to veto legislation to create the state's first-ever "parental choice voucher" program. This essentially amounts to parents a state check to pay to send their children to any school - including private or parochial schools. Napolitano has been critical of vouchers, saying they divert money from public schools. But she acceded to allowing this program - which she insisted is a "scholarship" - for foster and disabled children.

That is a victory for Sydney Hay, lobbyist for Arizonans for School Choice: It provides her entre to push lawmakers to widen the program and let all parents get state tax dollars to send their children to any school they want at state expense. The deal also includes doubling the amount of money - to $10 million - that corporations can divert of their state income tax obligations to organizations that give scholarships for students to attend these private and parochial schools. It also has $345 million to accelerate road improvement projects, with a large share of that aimed at freeways in Maricopa County.

And it provides $20 million for the state's three universities for their own pet projects.

There also is $35 million for what has been dubbed the 21st Century Fund to invest in medical, scientific and engineering programs in the state. Backers hope that is the first installment to a program that hopes to raise $150 million over five years. The largest single tax cuts in Arizona history were, until now, a $200 million cut in income taxes in 1995, followed by an identical decrease in property taxes the following year, both years when Republicans not only controlled the Legislature but also the governor's office.

The split is not entirely among Republicans. House Minority Leader Phil Lopes, D-Tucson, found himself on the polar extreme as Gould: He likes the spending plan but said he can't vote for the permanent income tax cut.

"A cut of $340 million for ever and ever ... is not a responsible thing to do," he said. "We don't know what the future holds."

But House Minority Whip Peter Rios, D-Dudleyville, suggested that some of his Democratic colleagues were ignoring the political reality of the situation: While the governor is a Democrat, both the House and Senate are firmly in Republican hands.

"A budget is a compromise," he said. "This is probably, at the end of the day, a fairly darn good deal."

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