GRAND CANYON - Gov. Janet Napolitano proposed to link new programs with specific sources of money, to revive the "rainy day" savings fund and to create a single tax revenue forecast office during a speech Monday at the biannual Arizona Town Hall.
Napolitano’s remarks highlighted the first day’s discussions on how to create a state budget process that promotes stable government and minimizes fiscal crises.
The governor told a luncheon crowd at the El Tovar Hotel at the Grand Canyon that the state’s ongoing fiscal woes result from poor budget planning that failed to anticipate economic downturns.
She offered seven reforms to prevent repeating the billion-dollar revenue shortfalls of the past two years, including:
• Establishing requirements for the governor and the Legislature to spell out funding sources when proposing new government programs. Napolitano said she also supports a proposed amendment to the state constitution that would require the same of voter initiatives. That issue goes to the ballot in November 2004.
• When revenue exceeds expenses, requiring up to 15 percent of tax collections to be directed to the "rainy day" fund, with strict limits on when the money could be used. The state tapped the fund in 2001 for more than $100 million to pay for the alternative-fuels tax credit fiasco. The remaining $450 million was wiped out as budget shortfalls escalated.
• Creating a single tax projection office used jointly by the governor and Legislature.
"Some of these are straightforward, and some of them are difficult," Napolitano said.
"But our commitment to addressing them . . . is really our commitment to Arizona and the kind of state we want to have. It’s a statement of our priorities. It’s a statement of who we are," she said.
Napolitano said her office is working on a proposed 2004-05 budget that again won’t include any general tax increases.
But she left that door open by saying she first wants to see the final proposals of her tax reform commission, which is scheduled to report in mid-November.
Some of Napolitano’s comments coincided with several early conclusions reached Monday by five separate panels at the Arizona Town Hall.
Moderators said there was consensus that the state must plan budgets for multiple years, set goals for state agencies and create some penalty when those goals aren’t achieved.
Scottsdale resident Heidi Schaefer said government officials shouldn’t use political barriers as an excuse for avoiding such planning.
"I would challenge government to follow a financial plan as a business does," said Schaefer, manager of strategic economic services for Salt River Project.
"Right now, we have a whipsaw where revenues go up and down and services can’t be sustained," she said.
The panels will continue today by examining the best ways to measure success or failure of government spending.
A final report by all participants is expected to be approved Wednesday.