Byron Schlomach

Governor's budget places bad bet

Posted on January 18, 2011 | Author: Byron Schlomach
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Last year, the Arizona Legislature and Governor Jan Brewer passed a state budget they claimed was balanced, although three ballot measures had to pass to make it so. A sales tax increase was approved in a May special election. Two other measures, worth about $450 million, failed in November. As a consequence of “balancing” the budget on a gamble, Arizona now faces a budget deficit of $763.6 million with less than six months left in the fiscal year.

In her plan released Friday to balance this year’s budget Governor Brewer has asked for another $245 million “rollover” for public education funding. The state already rolls one payment due to schools into the next year, this would make it two, meaning instead of receiving 12 payments from the state like they are supposed to, schools will only receive 10 this year. And it would push the state’s debt to school districts to more than $1 billion. Another gimmick proposed by the governor would be to borrow $330 million on June 30 and pay it back the next day on July 1, the start of the next fiscal year. Sounds harmless, but we would have to repeat this gimmick every year for the foreseeable future, increasing the interest we pay on state debt year after year. As it stands, interest payments on current state debt already will be the fourth largest budget line item. 

Governor Brewer’s proposal to close next year’s $1.1 billion gap includes a $481.2 million reduction in the state’s Medicaid program. That’s certainly justified as Arizona has one of the nation’s most generous programs for Medicaid benefits. But, these proposed Medicaid reductions require a special waiver from President Barack Obama’s administration because of the federal health care law passed in 2010. Crossing one’s fingers and wishing for the best works no better in budgeting than when rolling dice in Las Vegas. The governor wants to take another huge gamble that no one should bank on.

This budget plan depends too much on gimmicks and hopeful thinking and too little on fundamental reform. Instead of effective alternatives to prison for non-violent offenders, for example, there is more funding for prison guards. School buildings get more funding, even though school districts already have the power to authorize charter schools which receive no funds for buildings and make use of existing real estate space. The icing on the cake, though, has to be the creation of a brand new $40 million fund to hand out money to private corporations if they will locate in Arizona.

We cannot afford any more failed gambles that set the stage for a third tax increase. What we need is real, fundamental reform and a government we can afford.

Dr. Byron Schlomach is director of the Goldwater Institute’s Center for Economic Prosperity.

Learn More:

Goldwater Institute: Budget Reduction Opportunities

Office of the Governor: The Budget Presentation of Fiscal Year 2012

Arizona Republic: Arizona budget gimmicks and debt won’t help

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