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Arizona budget morass second worst in nation

From the Arizona Republic today (we’re all one big happy Gannett family):

Pew report: Ariz. ranks among worst facing budget woes

by Mary Jo Pitzl – Nov. 11, 2009 10:57 AM
The Arizona Republic
Arizona lags only California in the magnitude of its state budget woes, according to a new report released today.

The state’s high foreclosure rate, year-over-year drop in tax collections and yawning budget gap make it second-worst in the nation in term of budget problems, the Pew Center for the States concludes in a special report, “Beyond California, States in Fiscal Peril.”

Arizona tied with Rhode Island for second-from-the-bottom honors.

The report examines the factors that led California to its epic budget morass and finds common threads in other states.

“They share important characteristics with California, but they may not be destined to follow in the Golden State’s footsteps,” the report summarizes.

However, it paints a grim picture of Arizona’s status – both of the conditions that led to the current $2 billion budget deficit and of the prospects for what lies ahead, as lawmakers and Gov. Jan Brewer face a potential $3.3 billion hole in the coming year.

Arizona lawmakers are expected to meet next week in a special session to cut a portion; estimates range from one-quarter to one-third of the $2 billion total. Still unresolved is Brewer’s call for a temporary sales-tax increase to boost state revenues.

The Pew Center tracks state policy issues and advances solutions. It is supported by the Pew Charitable Trusts and has offices in Philadelphia and Washington, D.C.

The Pew report found some common elements in the woes that plague the nation’s 10 most budget-challenged states. They are familiar to anyone who has followed Arizona’s downward-spiraling fiscal condition:

  • An unbalanced economy. In Arizona, that means a heavy dependence on growth, which screeched to a crawl as the foreclosure rate skyrocketed, eclipsed only by foreclosures in Florida and Nevada, according to data the Pew researchers gathered.
  • Revenues and expenditures that are out of sync. Currently, Arizona’s budget calls for $10 billion in spending, but there is only $6.4 billion in projected revenue.
  • Limited ability for policy makers to act. In Arizona, voter-approved mandates to increase education and Medicaid spending make it impossible for lawmakers to rein in spending in these fast-growing areas. Likewise, a voter-approved requirement that two-thirds of lawmakers must approve any tax increase makes tax hikes virtually impossible.
  • Delaying tough decisions. Arizona lawmakers and Brewer struggled through the summer to find a mutually acceptable balanced budget, to no avail. Brewer vetoed key parts of the budget in September, putting it out of balance, and lawmakers balked at her request to send a temporary tax hike to the ballot.

After California, Arizona and Rhode Island, the other states ranked by Pew as in fiscal peril are Michigan, Oregon, Nevada, Florida, New Jersey, Illinois and Wisconsin.

Read the report (especially the part about Arizona).

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