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Legislators back at work on Arizona budget fix

Democrats call hits on education, social services premature and damaging

PHOENIX – Arizona legislators reported back to the Capitol for a rare Friday workday and are again considering a Republican plan to close the projected $1.6 billion shortfall in the state’s $9.9 billion budget.

The latest development is that Gov. Jan Brewer has presented lawmakers with $18.3 million of changes that she wants, mostly restoration of cuts proposed by lawmakers for social programs and health care. Brewer also proposes cuts and sweeps from special-purpose funds to make up for the restored spending.

The Republicans’ plan includes spending cuts throughout the state government as well as taking dollars from special-purpose funds and using federal stimulus funds.

The spending cuts included in the plan endorsed earlier Thursday by House and Senate committees would span most state agencies and programs as well as universities, community colleges and K-12 public schools.

Expected results include layoffs of state employees, larger university class sizes, closures of state parks, new monthly premiums for low-income people enrolled in the state’s Medicaid program and elimination of a state welfare program that helps disabled people waiting for Social Security benefits.

With state tax collections hammered by the recession and the housing industry’s collapse, Arizona’s shortfall of nearly $1.6 billion is one of the nation’s largest at 16 percent of the $9.9 billion budget for the current fiscal year, which is now more than half over. The budget that legislators will write in the coming months for the fiscal year starting July 1 is expected to have a shortfall twice as big.

House Appropriations Chairman John Kavanagh, R-Fountain Hills, called the current year’s fix a “first, necessary, unfortunately painful step toward financial responsibility.”

Democrats opposed the plan, and Sen. Rebecca Rios, D-Apache Junction, said Republicans’ willingness to cut education funding made the majority’s priorities clear. “I know we had options,” she said.

Many of the spending cuts are in lump-sum amounts assigned to state agencies whose directors must decide how to implement them. Already, Arizona State University has ordered its 12,000 employees to take furloughs of 10 to 15 days before June 30, and Attorney General Terry Goddard has laid off 20 workers already.

Goddard, a Democrat, warned that the legislative plan would force him to lay off half of his office’s criminal division. “There is a dangerous lack of common sense and equity in this budget that must carry our state through a time of crisis,” he said.

Lawmakers said the expectation of $500 million in federal stimulus money, chiefly through increased Medicaid reimbursements to the state, allowed them to drop an earlier proposal to eliminate the KidsCare health care program serving more than 60,000 children.

But the lump-sum cuts for social-service agencies will affect services for seniors, domestic violence survivors and people with disabilities, advocates said.

Legislators had planned a December special session to close part of the shortfall but since-departed 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 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.

Republican lawmakers, who blame past spending increases and borrowing championed by Napolitano for much of the state’s current fiscal woes, balked at those suggestions.

Republican Gov. Jan Brewer, the secretary of state who became governor when Napolitano resigned Jan. 17, did not release any budget-balancing suggestions of her own. She called the Legislature into special session Wednesday night after Republican legislative leaders assured her they had worked out a plan and had enough votes to approve it.

Saying Arizona likely will net well over $500 million once Congress settles on a stimulus package, legislative Democrats argued that the Republican-led Legislature was moving prematurely to adopt painful budget cuts.

“Republicans have declared war on our education system for no reason,” said Rep. Kyrsten Sinema, a Phoenix Democrat who cited a U.S. House vote approving that chamber’s version of the stimulus package.

Republicans argued that the state can’t wait to staunch spending that it can’t afford.

“Every single day we go we lose more opportunities to save some dollars,” said House Speaker Kirk Adams, R-Mesa.


Republican budget proposal

Key points of a proposal under consideration by Arizona lawmakers to eliminate a shortfall in Arizona’s current budget:

- Lump-sum cuts and salary reductions for state programs and agencies. To find the personnel savings, agencies have discretion to decide whether to use layoffs, furloughs or vacancy savings. Biggest lump-sum cuts for agencies: Department of Economic Security, $89.4 million, and Department of Health Services, $36.5 million.

— University funding. Cut by $130 million (by the House) or $145 million (by the Senate). Cut is smaller than an early $243 million set of options that included sweeps from special-purpose funds and larger than $100 million offered by Board of Regents and university presidents.

— Stimulus money. The package anticipates the state receiving $500 million in federal economic stimulus money, chiefly in increased federal Medicaid reimbursements to the Arizona Health Care Cost Containment System, known as AHCCCS, for health care for the poor.

— Health care. Make AHCCCS enrollees pay new monthly premiums. No change to existing KidsCare program for health care for children or a smaller program for parents, both of which had been proposed for elimination.

— K-12 public schools. Funding to districts and charter schools would be cut by approximately $130 million. Major elements include a $21 million cut of annual funding to districts for computers and other equipment and a $98 million reduction accomplished by not overriding a constitutional spending limit for districts. Neither reductions apply to small-enrollment districts. Districts get new discretion to spend their remaining equipment dollars either for that purpose or regular operations.

— Transfers. Sweep money from special-purpose funds into the General Fund, including $130 million from the budget stabilization fund, which is a rainy day reserve. Other examples: $17.5 million from the housing trust fund, $10.1 million from the state lake improvement fund, $20.8 million from the job training fund and $5 million from the arts endowment fund.

— Building projects. Delay and cancel some projects. Examples: Postpone a $10 million expenditure for a southern Arizona veterans home by one year. Withdraw $1.2 million which had been appropriated to renovate the old state health lab. Withdraw $3.2 million which had been appropriated for replacing prison cell doors and locks.

— Miscellaneous. Eliminate the General Assistance welfare program. Authorize the Department of Revenue to establish a tax amnesty program for May 1 to June 1. Increase monthly offender probation fees to $65 from $50. Increase monthly juvenile probation fees for parents to $100 from $50.


SOURCE: Briefing by Arizona House leaders, bill summaries by legislative staff.

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