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GOP lawmakers would prefer borrowing over tax increase

Governor says ‘funny math’ won’t work on budget

TEMPE – Republican legislators struggling to balance the state budget said Thursday they would rather resort to borrowing, which they have long criticized, than go along with Gov. Jan Brewer’s call for a temporary tax increase.

A tax increase would damage the state’s economy, the top House and Senate Republican leaders said at a budget summit sponsored by the Greater Phoenix Economic Council.

With a tax increase, “we’ll put a tremendous damper on economic activity and it’s economic activity that we need to get out of this mess,” Senate President Bob Burns, R-Peoria, said later.

Brewer, a fellow Republican who also participated in the summit, later reacted to the lawmakers’ description of their planned approach by saying it didn’t face up to the state’s grim fiscal realities.

“Funny math just doesn’t work,” said Brewer, who has regularly decried past budget maneuvers used by lawmakers and her predecessor, Democratic Janet Napolitano. “It doesn’t work in your home budget. It doesn’t work in government budgets. It doesn’t work in business budgets. Let’s be realistic and see the problem.”

However, Brewer said it was somewhat encouraging that lawmakers realize they can’t close a projected $3 billion shortfall in the next state budget by spending cuts alone. “I want to work with them. I think that we can come together once we agree on some particular principles.”

House Speaker Kirk Adams, R-Mesa, said during the summit that the still-developing Republican legislative proposal could include sales of some state assets and “debt financing” along with spending cuts, transfers from special purpose funds and use of federal stimulus money.

The state faces a projected deficit of roughly $3 billion in the next state budget based on about $11 billion of spending.

Adams said borrowing has the advantage of spreading out the costs of pulling out of the state budget crisis over multiple years, not just the short term.

Ideas for borrowing include selling future payments of some lottery revenue or tobacco companies’ payments to the state. Delays in state payments of some expenditures also are regarded as a form of borrowing, though it usually only spans a few months.

GOP fiscal hawks such as Burns regularly panned former Democratic Gov. Janet Napolitano’s advocacy of state borrowing in recent years, saying it helped put the state on shaky financial ground.

“It’s not something we like,” Burns said Thursday. “It’s not taking something we like. We’re taking the lesser of evils in this borrowing situation.”

Said Adams: “There’s a lot of bad choices that we have to make. It’s our job to find the least bad.”

He said previous borrowing aimed to either increase state spending or avoid cuts. The difference now, he said, is that the Republican proposal includes significant spending reductions.

But, Adams said “cuts alone cannot solve this problem.”

While Brewer’s tax increase proposal is out of the picture for most Republican leaders, their other ideas significantly overlap with her approach. Common ground includes spending cuts and using federal stimulus cash, though the discussed amounts vary.

The problem is huge and requires decisive actions “or we will risk long-term collapse,” Brewer said. “We need to solve this problem by acting right now.”

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