Gov. Janet Napolitano is proposing what she says is $214 million in savings to balance the state’s books this fiscal year.
Napolitano’s plan to plug what she predicts is an $870 million hole in the state’s $10.6 billion budget also includes taking $293 million out of the state’s “rainy day fund” and borrowing to build schools, a move that frees up the $393 million allocated for that.
But the plan was all but pronounced dead on arrival by two key Republican lawmakers.
“I see no cuts, no fixes,” said Rep. Russell Pearce, R-Mesa, after reviewing her plan.
Pearce, the House Appropriations Committee chairman, said it just defers the problems into next budget year, something he said makes no sense with projections already forecasting a $1.7 billion deficit.
Sen. Bob Burns, R-Peoria, his Senate counterpart, said Arizona has a “structural deficit,” with the amount of authorized spending exceeding the money coming in. He said that was true even before the economy took a nose dive and Arizonans began spending less, reducing tax collections.
Finding a solution is being complicated by the fact the Democratic governor and the GOP-controlled Legislature can’t even agree on the size of the problem: Burns said the real gap between revenue and expenses is $100 million more than Napolitano’s fix addresses.
The pair will release their own plan today, one that doesn’t borrow for school construction and makes what Pearce said are permanent cuts in state spending. Legislative hearings are set to begin Tuesday.
The basic difference between the approaches is Napolitano’s belief the state’s financial problems, while severe, are transitory.
“This is a temporary dip in our economy,” she said.
Napolitano said that is why she opposes permanent cuts, particularly in education and programs she believes are investments in the state’s future.
George Cunningham, the governor’s chief financial adviser, said there are some real spending cuts in Napolitano’s plan, like taking $5 million from a fund lawmakers set aside for scholarships for students to attend private in-state colleges. It also would reduce or eliminate tuition reimbursement programs for state employees and slash a proposed system to allow public school students to take classes without going to a classroom.
But Napolitano’s plan purposely leaves untouched some major options legislative budget staffers said could help balance the books, like taking back nearly $30 million given to the state’s three universities to help retain faculty and students. Gubernatorial press aide Jeanine L’Ecuyer said that fulfills the governor’s pledge not to hurt education funding.
Similarly, Napolitano wants no spending cuts that would reduce cash for health care.
The GOP leaders agreed with Napolitano that the state should tap its $700 million rainy day fund. But Pearce questioned taking too much from that account, pointing out the state is facing various lawsuits over things like funding English-learner programs, each of which could cost more than $100 million.
“The rainy day fund ... is not for bad budgeting,” he said. “It really is intended to fix those unintended liabilities, one-time expenditures, to keep us from getting into serious trouble.”