State continues to spend money faster than it is coming in

By Howard Fischer
Capitol Media Services
Published/Last Modified on Wednesday, November 4, 2009 11:02 AM MST


PHOENIX — Arizona state government is spending money far faster than it is coming in.


New figures Friday show total tax collections for the first three months of the fiscal year were $1.8 billion. But more than $2.8 billion went out the door during the same period.

Lawmakers anticipated the gap, putting various accounting maneuvers and other fixes in the budget plan, including selling off $735 million worth of state property for cash and then leasing it back. And the state managed to save $269 million by using federal stimulus dollars to make a scheduled aid payment to schools rather than using state revenues.

But even with that, the drop-off in revenues is far sharper than anticipated.

In fact, the report from the staff of the Joint Legislative Budget Committee shows that tax collections are more than $233 million below what legislators forecast when they adopted the budget.

The new report also shows that the highly touted “Cash for Clunkers’’ program didn’t make much of a dent in the state’s deficit.

Even with the generous rebates of up to $4,500, tax collections in September for motor vehicle sales were still 12.4 percent below the same time a year earlier. Those September collections represent sales made in August while the federal program was in full swing.

That drop-off is significant, as vehicle purchases represent one fifth of what the state collects in sales taxes.

Still, it appears the program did have some impact: That 12.4 percent drop-off between August 2009 and the same month a year earlier is better than the 28.1 percent slide in vehicle sales between August 2008 and the same time in 2007.

A report by the U.S. Department of Transportation which administered the “clunkers’’ program, said Arizonans got a total of more than $38.6 million in vouchers for trading in their less fuel-efficient vehicles.

Car and truck sales aside, Friday’s JLBC report showed no bright spots in the economy.

Taxes from the sale of furniture and other home items were down 27.5 percent from a year earlier, a direct fallout from the lack of new home construction and sales. Along the same lines, taxes from contracting were 40.5 percent below the same time last year.

Sales of building materials were down 11 percent, with an 11.4 percent drop in clothing and accessories sales. And bar and restaurant spending is down by 6.6 percent.

Arizona’s unemployment picture also is taking a toll on the budget picture.

Withholding tax collections in September, money taken out of worker paychecks for state income taxes, were 10.9 percent below the same time a year earlier. According to the report, this is the 12th consecutive month of year-over-year declines, something that hasn’t happened since 1960.

So far there is no deal between Gov. Jan Brewer and Republican legislative leaders on plans for a special session this coming month to try to bring revenues and expenditures closer into line.

Senate President Bob Burns, R-Peoria, said the primary discussion involves making “fixes’’ to the budgets of some agencies that will free up tax dollars. Burns said he understands just making those changes, which he said are not controversial, should save about $160 million.

Burns said, though, there is no consensus on whether the special session should also include an effort to make major mid-year cuts in state spending.

 

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