State spending continues to outpace revenues, paving the way for a deeper deficit even after lawmakers enacted more than $420 million in savings, a new report says.
The figures Monday from the staff of the Joint Legislative Budget Committee show the state took in about $455 million from all sources in October. But the state also spent nearly $1.1 billion in the same period.
That puts the gap for the first four months of the fiscal year at more than $1.6 billion, well on its way to what was billed as a $2 billion gap for the entire year.
The report says the savings approved in November put a dent in that.
But it cautions that does not mean the state is headed out of the financial woods yet. Tax collections continue to fall below even the relatively pessimistic estimates lawmakers used in crafting the budget earlier this year.
The report came the same day that Gov. Jan Brewer reaffirmed her call for lawmakers to let voters decide if they are willing to hike sales taxes, at least temporarily, to minimize how much more lawmakers will need to cut in spending to bring the books into balance.
"It's probably very apparent now to the Legislature, and probably very apparent to the public, that we are in desperate need of revenue," she said of the deficit.
"If we leave it as it is today, I could go in, the Legislature could go in and cut every government service in the state of Arizona except that which is mandated by the federal government, and we still wouldn't balance our budget," Brewer said. The only option, she said, is additional cash coming in.
"And even with that revenue, we're going to have to do more major cuts," the governor said. She said a 1-cent temporary sales tax hike on top of the current 5.6 percent levy is the simplest way to deal with the problem.
The new report shows that, at the current rate, those current sales tax collections which finance about half of the state spending are not keeping pace with the needs.
Total sales tax collections for October hit just $277.9 million. That is not only $59 million below the same time a year earlier but is $42 million less than lawmakers projected for the month.
Much of that is due to lower-than-anticipated retail sales. But the taxes collected on contracting in October were just 65 percent of the prior year as building activity in the state remains weak.
At the same time, the rising unemployment rate is having an effect, too, as the amount withheld from worker paychecks in income taxes is down by more than 10 percent from a year earlier.