Arizona is in its 12th straight year of drought, but at the state Capitol, it's raining - at least when it come to money for roads.
A proposal to drain the state's $650 million "rainy day fund" to pay for highway construction is gaining ground even as opponents argue this is not how the fund was meant to be used.
A bill that would take $450 million from the fund to accelerate road building is advancing easily in the state Senate. It's not such easy sailing for another proposal that would take $199 million from the fund for school construction. That bill was held last week in the face of anticipated defeat.
Together, the two proposals would all but wipe out the fund, which currently has about $655 million and is "full" for the eighth time since it received its first deposit in 1994.
Lawmakers are split over the wisdom of dipping into the fund, which was created to tide the state over in tough economic times. The fund is considered essential to providing basic state services during a recession.
Gov. Janet Napolitano has offered another approach to raising money for highways. She would extend state bonding to generate $500 million to speed road projects. So the most notable solutions have come down to raiding the rainy day fund now or borrowing more in the future.
Sen. Bob Burns, R-Peoria, contends that the state's transportation needs are an emergency. He argues that it makes more sense to spend the cash on hand to speed up road construction than Napolitano's proposal to borrow the money.
Many of his fellow Republicans agree, even as the fiscal watchdog groups that champion conservative causes are both amused and appalled at this new definition of "emergency."
Both the Goldwater Institute and the Arizona Tax Research Association oppose the idea of breaking into the fund, a common savings device in many states.
"They're for the Great Depressions, the Hurricane Katrinas, the North Dakota flooding of a couple years ago," said Darcy Olsen, president of the Goldwater Institute. "These are true emergencies that are unexpected."
Rainy day funds exist to allow the state to operate in those kinds of dire economic times, she argues.
Kevin McCarthy, executive director of the Arizona Tax Research Association, said road construction wasn't part of lawmakers' intent when they created the fund in 1990.
"The point of it was to be there for economic downturns," he said. And with state revenues still coming in above the previous year's collections - 4 percent ahead, according to the most recent report from the Joint Legislative Budget Committee - the state has yet to hit the economic skids.
"Having money in the rainy day fund avoids taxes when you're in a recession," McCarthy said.
Napolitano opposes using the fund, whether it be for roads or for Sen. Jack Harper's proposal to use it to speed up school construction. During her re-election campaign last fall, she touted the fact that it was "full."
Rarely tapped
State law caps the fund at 7 percent of state revenues.
The fund has been tapped only four times since its creation, state fiscal reports show. Most of it, $280 million, was used to prevent state budget deficits earlier this decade. It also was used to bail the state out from its financial obligations after the botched alternative-fuels program ($100 million) and to help build a new state hospital ($37.5 million).
Many Republican lawmakers point to the state's transportation woes as a worthy purpose.
"We can lay pavement for the (Loop) 303 now," said Sen. Robert Blendu, R-Litchfield Park. He was referring to a partially built loop road on the northwestern side of the Valley.
And getting a road sooner rather than later will pay off for the state in terms of enhancing the value of state trust land that is near the freeway path, he said. Trust-land proceeds feed the state's education fund.
Blendu voted in favor of the proposed $450 million transfer, but with some regrets. If he had his way, he told fellow members of the Senate Transportation Committee, he would redirect the entire $650 million in the rainy day fund to roads.
Blendu also is sponsoring a bill that would allow the state to bond for highway construction money over 30 years, instead of the current 20-year maximum. The sooner the state builds roads, he said, the quicker the return.
Better than borrowing
Sen. Ron Gould, R-Lake Havasu City, is one of the Senate's staunchest fiscal conservatives. And while he acknowledges that road construction probably doesn't equate to an emergency, he says using the rainy day fund for roads is better than borrowing through bonding.
"It sounds weird because who spends their budget down to zero?" he said, referring to using up the state's savings account. "But government is different (from a home budget)."
Sen. Barbara Leff, R-Paradise Valley, said her colleagues should keep their hands off the rainy day fund.
"Roads are forever, they're for generations," she said. "One generation shouldn't have to pay for them."
The Goldwater Institute's Olsen is flabbergasted that lawmakers aren't even talking about alternatives.
Privatization, such as giving a company the right to build or expand roads; toll roads; and toll lanes are all approaches being used in other states, she said.
Other ideas
There are other ideas floating around the Capitol, although their fate is uncertain.
Rep. Tom Prezelski, D-Tucson, has a bill that would tie increases in the state's 18-cent gas tax to inflation. The state gas tax has not changed in 16 years.
Business groups are in the midst of plans that could result in a call for a hike in the state sales tax to pay for roads, although they aren't expected to make any specific proposals this year.
But the rainy day fund is a tempting pot of money that allows lawmakers to avoid tax hikes and the interest costs that would come from increased bonding.
To Russell Pearce, head of the influential House Appropriations Committee, to ignore the rainy day fund while rushing to borrow for projects is like leaving your savings account intact while maxing out the credit cards.
But the Mesa Republican is torn about tapping into the fund, as well as the wisdom of even having a fund. Ideally, the state should pay as it goes, he said, spending money out of its General Fund.
The debate will continue to seesaw as the legislative session continues.
If a bill to take money from the rainy day fund does pass, most lawmakers expect Napolitano would veto it.
And that means the issue will likely get caught up in the horse trading of budget negotiations later this year.
