Lawmakers restore $500 million to Education

HOENIX — State lawmakers voted unanimously Monday to restore $500 million in state aid to education they had cut just a week ago, ensuring schools will have the money they need later this month to pay their bills.

The deal restores $220 million in cuts the Republicans in the Legislature had made to K-12 funding in the budget that Gov. Jan Brewer vetoed last week. It also increases basic state aid by 2 percent and will make additional cash available for things like books and computers after Oct. 1.

Overall, the total education spending will be about $100 million more than last school year.

Monday’s votes are an immediate victory for Brewer who used her power of line-item veto to eliminate all state funding for education. The Republican governor gambled — successfully — that lawmakers would have little choice but to return to the Capitol and adopt a funding formula with more money, one more to her liking.

It also is a victory for the Democrats who, like Brewer, want more education dollars.

Monday’s action in special session, however, technically leaves the state budget out of balance to the tune of $2 billion.

Aside from restoring those cuts to K-12 funding, lawmakers have yet to address the balance of Brewer’s vetoes.

Rep. John Kavanagh, R-Fountain Hills, conceded Monday’s action is a setback for GOP lawmakers who wanted less state spending to reflect the sharp decline in tax revenues. But Kavanagh said there was little choice given the need of schools for money.

He said, though, that doesn’t mean Brewer and the Democrats have won.

“It depends on the final outcome,’’ Kavanagh said. “If, in the end, we get what we want, then we haven’t been rolled.’’

He said that means getting Brewer to restore some of the spending cuts she vetoed.

Brewer, however, has some different ideas on what Monday’s action means — and how this all eventually will get resolved.

The governor said she’s willing to accept some new spending cuts.

“We’re going to have to go in and tweak things,’’ she said. But Brewer said she’s also counting on lawmakers to accede to her demand for more revenues.

Ideally, she said, lawmakers would actually vote increase taxes themselves, at least temporarily. The governor acknowledged, though, that would require the approval of two thirds of both the House and Senate.

That leaves the alternative: Ask voters for a temporary sales tax increase to generate $1 billion a year.

Even Sen. Russell Pearce, R-Mesa, a foe of increased spending, said Monday he would consider referring the matter to the ballot. But his motives are far different than Brewer: He believes the election will show that voters don’t want higher taxes.

“And if that message needs to be gotten to these spenders and the governor, (we will have to) reduce the budget,’’ he said. “We ought to be protecting the taxpayer from too much government, not protecting the government by plundering the taxpayer.’’

Senate President Bob Burns, R-Peoria, shares that view.

“It’s time for us to get a read from the voters,’’ he said.

“If they pass it, there’s some additional money to spend,’’ Burns continued. “If the voters turn it down, then I think that sends a clear message that it’s time to get our budget into balance without counting on revenues.’’

Some GOP lawmakers said, though, their vote for putting the question on the ballot is conditional on getting something in return.

“If we are going to incur the economic damage of a sales tax increase, what major significant reform do we do to offset that?’’ asked Sen. John Huppenthal, R-Chandler.

One option, he said, would be to replace the graduated individual income tax system with a single flat-rate tax, a Republican favorite. But he said that isn’t the only choice.

“There’s got to be some offsetting thing that moves the ball down the field,’’ Huppenthal said.

Time is running out for the proposed Nov. 3 special election.

Jim Drake, the deputy secretary of state, said his office needs at least 93 days to comply with all legal requirements for an election. That puts the deadline for referring the issue to voters in early August at the latest.

But Maricopa County Elections Director Karen Osborne said her office cannot conduct an election on Nov. 3 unless lawmakers approve the plan by July 16.

Burns brushed aside deadline concerns. He said if there is no deal soon, the special election could be moved back several months.

Negotiations on the fixing the rest of the budget resume Wednesday.

Monday’s move does more than free up the cash for schools to pay their bills.

More immediately, it ensures Arizona is in compliance with the American Recovery and Reinvestment Act, more commonly known as the federal stimulus bill. That requires states to spend at least as much on state aid to schools this new fiscal year as they did last year.

Brewer’s veto took the funding down to zero, endangering $1 billion in anticipated stimulus dollars.

Lawmakers also agreed to a separate measure to reduce the amount of money counties have to contribute to running the Arizona Health Care Cost Containment System, the state’s Medicaid program.

The federal stimulus law bars states from increasing what local government pay into the system. Failing to make that change could have cost the state another $1.3 billion.