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Lump-sum cuts under discussion for Arizona budget

PHOENIX – Arizona legislators are discussing lump-sum spending cuts for agencies and unpaid days off for most state workers as options to help eliminate big shortfalls in the current and next state budgets.

The Legislature’s budget director said the options were cited in a recent briefing for incoming new legislators. They didn’t represent proposals now under development, but a key lawmaker said Tuesday that they are among the budget-balancing steps that his colleagues should consider.

“We have to make massive cuts,” said Rep. John Kavanagh, a Fountain Hills Republican who in January will become the House Appropriations Committee chairman.

Resorting to broad lump-sum cuts would return to an approach last used in a big way in 2002 when lawmakers and then-Gov. Jane Hull imposed 7 percent cuts on most agencies to help eliminate a shortfall. Since then, Gov. Janet Napolitano has emphasized other budget-balancing approaches, including borrowing, accounting maneuvers and selective cuts in agency budgets and special-purpose funds.

The state now faces a projected $1.2 billion shortfall in the current $9.9 billion budget, according to a joint estimate by Napolitano and legislative leaders. Some lawmakers expect the shortfall to grow because of the national recession’s continued slam on tax collections.

The legislative budget staff says the shortfall in the next budget could total $2.2 billion to $3 billion, depending on what carry-over changes are made to keep the current budget in the black. The state by law cannot run a deficit.

The budget staff last week presented incoming freshmen legislators with a briefing on the state’s fiscal condition, including options to balance the budget.

The listed options include 10 percent lump-sum cuts that could save a total of $641 million. Also, most state workers could be furloughed without pay for one day every two weeks to save a projected $126 million.

Other options included in the briefing material included raiding half the money in special-purpose funds, borrowing against future lottery revenue, delaying some spending into the next fiscal year and, if it happens, any federal bailout.

Legislative budget director Richard Stavneak said the listed options were meant to give the incoming lawmakers an idea on the money involved, not to brief them on plans under development.

“It’s not like anyone has directed us to put together a specific proposal at this moment,” Stavneak said.

However, Kavanagh said the state may need to do both lump-sum cuts for agencies as well as targeted cuts of specific programs.

Agencies could see varying percentages of lump-cuts or even be exempt from that approach, Kavanagh said. “I don’t think anybody is going to say cut 10 percent out of Corrections because we don’t want to be releasing criminals. But other agencies like Commerce might take a 20 percent hit.”

In addition to lump-sum cuts, “there are some programs we might target because of their size, like all-day kindergarten and school construction,” Kavanagh said.

Lump-sum cuts have the benefit of allowing agency heads who know their programs to decide where to find savings, Kavanagh said. “That’s my preference, and other legislators might not want to do that.”

Kavanagh said unpaid days off for state workers would be a last resort. “But it’s certainly better than layoffs,” he said.

Kavanagh said he and his Senate counterpart are meeting to develop a “framework” that Appropriations committee members can consider for closing the budget gaps.

“And if they add (spending), they’ll hopefully subtract. But it’s the Appropriations Committee and ultimately the (full) Legislature that ultimately decides.”

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