Legislators back at work on Arizona budget fix


Published/Last Modified on Monday, February 2, 2009 8:39 PM MST


PHOENIX (AP) - Arizona legislators haggled over last-minute issues Friday as they prepared for debate and votes on a Republican plan to close a big budget shortfall - the largest by percentage among states for the current fiscal year - by cutting spending, sweeping dollars from special-purpose funds and using federal stimulus dollars.


The cuts and sweeps would force layoffs and short-term furloughs for state workers, close some state parks, eliminate a welfare program for disabled people waiting for Social Security benefits and require low-income people getting subsidized health care to pay new monthly premiums. Others would force universities to increase class sizes and shutter some academic units, and K-12 public schools also would have to tighten their belts.

The plan balanced “the needs of Arizona with the current fiscal crisis,” said House Appropriations Chairman, Jon Kavanagh, R-Fountain Hills. “There are painful cuts but none lethal, so it appears.”

As floor sessions neared, lawmakers scrambled to take into account Gov. Jan Brewer’s request for an $18 million list of last-minute changes to drop some proposed cuts of funding for social programs and health care. She suggested making up the foregone cuts by taking money from an environmental cleanup fund and other pots of money.

Lawmakers also were discussing a proposal to require or encourage school districts to focus funding cuts on administrative costs and how big of a cut to make in funding for the 21st Century Fund, a research grant program.

The state’s tax collections have been hammered by the recession and the housing industry’s collapse. The $9.9 billion budget for the fiscal year now more than half over faces a $1.6 billion shortfall, or nearly 17 percent.

The plan would close the gap through three main elements: roughly $580 million of spending cuts, approximately $585 million of sweeps - including the last $130 million in a rainy day reserve - and $500 million from federal economic stimulus legislation pending in Congress.

Legislative Democrats argued that the Republicans’ cuts were premature and unnecessary because Arizona will get more than $500 million in stimulus money. Republicans argued that the state can’t wait to staunch spending that it can’t afford.

Arizona’s 2008-2009 gap is the largest by percentage among those reported by states, with California in second at 14.1 percent, according to an updated survey by the National Council of State Legislatures released Friday.

The budget that Arizona legislators will write in the coming months for the fiscal year starting July 1 is expected to have a shortfall roughly twice as big as the current year’s gap.

Many of the spending cuts are in lump-sum amounts assigned to state agencies whose directors would decide how to implement them. Though a hiring freeze in place since last spring has left some 1,500 jobs open, furloughs and layoffs have started in some parts of state government.

Already, Arizona State University has ordered its 12,000 employees to take furloughs of 10-15 days before June 30 and has not renewed contracts for hundreds of part-time faculty members. Attorney General Terry Goddard has laid off 20 workers already, and he said Thursday that the legislation would force more.

The Parks Board could close five parks “fairly quickly” and more closures could occur by summer, said Parks Department Director Ken Travous. “I’m not talking about seasonal closures.”

Legislators previously planned to eliminate the KidsCare health care program serving more than 60,000 children from low-income families but said the expected stimulus money took that program off the chopping block.

Legislators planned a December special session to close part of the shortfall but since-departed Republican legislative leaders scrapped that idea, partly because of an unwillingness to work with then-Gov. Janet Napolitano, a Democrat who has since left office to take a Cabinet post in President Barack Obama’s administration.

Napolitano had proposed some temporary spending cuts as well as fund sweeps, but also suggested new borrowing and deferring some payments of agency expenses into the next fiscal year.

The economy was already slowing last spring when Napolitano and the Legislature used most of the state’s traditional pain-free budgeting balancing tools in writing the current budget and covered a shortfall in the previous one. Those include sweeps, payment deferrals and new borrowing.

There’s been no serious consideration of tax increases so far, but legislatives are preparing to debate whether to repeal a suspended state property tax that is now set to take effect again this year. It would net the state $250 million annually.

On the Net

- Arizona Legislature: http://www.azleg.state.az.us

- National Conference of State Legislatures: http://www.ncsl.org/

 

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