The Arizona Chamber of Commerce and Industry doesn’t want lawmakers to enact higher taxes when they convene on Jan. 10 to balance the budget. In fact, they want tax cuts.
But members are loath to support any reduction in funding for the state’s three universities. And they definitely don’t want legislators slashing funds for the state’s Medicaid program.
So how do members of the organization propose to bring expenses into line with revenues?
They don’t know yet. That will come later.
“We do want to see what our friends in the Legislature put out, as well as what the governor puts out,” said Glenn Hamer, the chamber’s president. Gov. Jan Brewer is set to release her plan this coming Friday.
“Obviously, in this state, you only have a few big pots of money,” Hamer said.
With tax hikes off the table and the chamber mounting a defense of universities and the Arizona Health Care Cost Containment System, Hamer conceded that really leaves only one big element in the budget to trim: education. Hamer said that could take the form of increasing “efficiency” in schools.
“This chamber has long pushed for consolidation of school districts,” he said, pointing out there are more than 200 in the state. “We still submit that the state wastes tens of millions, if not more, of dollars in unnecessary administrative expenses.”
Chamber lobbyist Suzanne Taylor said it’s not a question of wanting to cut K-12 funding. She said it’s a recognition of the fiscal reality: An estimated $825 million deficit for the balance of this budget year and a $1.4 billion shortfall for the coming year.
“It’s pretty much inevitable some of the money is going to have to come out of education,” Taylor said.
To soften the blow, she said the chamber would support giving school officials more flexibility in how to spend what’s left, allowing them, for example, to transfer money between accounts for capital expenditures and day-to-day operations.
Universities, however, are a different story.
“Investing in a state university system is almost a prerequisite for a successful high tech and manufacturing economy,” Hamer said. He said while higher education is a major segment of the budget — close to $1 billion a year — legislators should think carefully about the implications on the economy before slicing the cash.
“There has been more than one manufacturing company that has advised us we could have the best tax structure in the nation. But if the university system crumbles, they will be sending us postcards from somewhere else.”
That, then, leaves only one other large pot of money to slash: AHCCCS.
The Legislature, with the blessing of Gov. Jan Brewer, actually approved a major cut in the program last year, agreeing to drop more than 300,000 people from the program out of the estimated 1.1 million enrolled.
The only thing that kept that from happening was that the president signed the new health care law, forbidding states from trimming eligibility below where it was or face loss of all Medicaid funds. In the case of Arizona, that is $7 billion a year.
Legislators responded by restoring the funds.
Brewer wants Congress to remove the mandate. And she is seeking a waiver.
But several GOP legislative leaders say they may trim the program anyway, arguing the $7 billion doesn’t do Arizona any good if the state can’t afford its match.
Taylor said that move will get a fight from the business community. She said it is “more cost effective” to keep the AHCCCS program as is, providing free care to everyone below the federal poverty level, currently $18,310 a year for a family of three.
She acknowledged that by “more cost effective” she doesn’t necessarily mean state government.
“The costs are passed on,” Taylor said. “People are still going to need to have health care. They’re not going to magically go away because we roll back eligibility levels.”
And Hamer said federal law prohibits hospitals from turning away patients who show up in need of emergency care, regardless of their ability to pay.
Most immediately, those costs of unreimbursed care will be borne by the hospitals who are members of the chamber. The hospitals, in turn, will try to recoup the lost revenues through higher charges for everyone else.
Brewer argues — and Taylor conceded — that most other states do not and never have provided Medicaid benefits as generous as Arizona. That enables the working poor to get their care at state expense rather than putting the burden on employers.
Taylor argued, however, that doesn’t mean Arizona should be able to reduce its public benefits.
“We’re different than other states,” Taylor said.