ARIZONA’S ECONOMY: DON’T ASKby Tucson Citizen on Oct. 04, 2008, under Citizen Voices
Citizen Staff Writer
Arizona’s impending budget deficit may be as “small” as $320 million. Or it may be $800 million. Or $1 billion. Or possibly even more.
And while there may be room to argue about the shade of the red ink – whether it is ruby or downright scarlet – there is no doubt Arizona is facing a serious deficit that most agree will grow by at least $1 million per day through the rest of this fiscal year.
With about a month to go before the election, there is insufficient time to craft a solution and call legislators to Phoenix for a special session. But it is incumbent upon legislative leaders to start talking about this problem and work to forge consensus on the outline of a solution.
That would allow a lame-duck special session to be held between the Nov. 4 election and the opening of the legislative session in January. Making a dent in the projected deficit sooner rather than later would offer more flexibility in considering possible solutions.
Gov. Janet Napolitano and Republican leaders in the Legislature this week held dueling events to stress the severity of the budget problem.
It was barely three months ago – in late June – that lawmakers reached agreement on a budget for fiscal 2009. But already, that spending plan is out of whack as revenues continue falling far short of projections.
Because of different ways of projecting future revenues, the governor’s budget experts and the Joint Legislative Budget Committee differ on the size of the problem. Napolitano says fiscal 2009 will end up between $320 million and $800 million in the red. The JLBC says it could be $1 billion, with some lawmakers predicting a $1.5 billion deficit.
To her credit, Napolitano has taken some steps designed to stanch the red ink. She has instituted a partial hiring freeze that has saved $31 million so far. She also has ordered agencies to restrict travel, defer equipment purchases and eliminate any expenses that are not “mission critical and absolutely critical.”
That’s a start, but not much more. Looking at gloomy economic forecasts for the state, there will have to be substantial spending cuts imposed – possibly up to $3.5 billion – through fiscal 2010.
Construction – especially housing – is responsible for much of the problem. It was housing that drove Arizona’s boom and, when that collapsed, it drove the state’s budget straight into the ground.
That has caused employment growth to tank, as shown in the graph to the left. For 13 of the past 15 years, Arizona’s annual job growth has been among the top five states. In the past two years, it has plunged to 22nd and now 46th.
Virtually every other economic indicator is down as well, providing a grim budget forecast.
Napolitano has started the repair process and outlined her priorities. Legislative leaders must start meeting among themselves and with other members to come up with their own plan.
That should lay the groundwork for a special session soon after the general election. Further dithering will only worsen the problem and narrow the range of possible solutions.
• For links to economic forecasts given to the Legislature and budget reports from the governor, see this story at www.tucsoncitizen.com/opinion.