Gov. Janet Napolitano wants to use photo radar, jail inmates and borrowing to help balance the state budget for the coming year, which is projected to be even more out of whack than the current one.
The governor’s $11.4 billion spending plan for the 2008-09 fiscal year, released Friday, anticipates a nearly $1.3 billion shortfall, due in large part to growth in education, health care and the prison system.
“We don’t lose people just because the budget is in a downturn,” Napolitano said during a visit to the Tribune this week. “This is basically a stay-even budget, but we are doing things in this budget that allow us to continue to grow.”
But growth isn’t in the spending proposal that Republican legislative leaders released Friday, which estimates a budget deficit nearly $500 million more than the Democratic governor’s more optimistic projection for the fiscal year that begins July 1.
The legislative budget anticipates a $1.7 billion shortfall and recommends $1.4 billion in spending cuts, including 10 percent across-the-board agency reductions.
Both the governor and lawmakers would use an accounting trick to find about $300 million, pushing June payments for kindergarten through 12th-grade schools into the new fiscal year.
The GOP leaders also would sweep about $231 million from various funds and then reallocate that money. And they want to skip inflation funding for public schools, which voters approved in 2000, to save $101 million.
The rest would come from spending cuts.
“We have spending far exceeding our revenues,” said Senate Appropriations Committee Chairman Bob Burns, R-Peoria, who crafted the plan with his counterpart in the House, Rep. Russell Pearce, R-Mesa.
As with the current-year budget deficit, Napolitano proposes financing school construction and tapping the state’s reserve rainy day fund to help balance the 2008-09 budget.
She also wants to find nearly $61 million in savings by keeping low-level, nonviolent offenders in county jails, rather than transferring them to state prisons.
That just shifts the costs to the counties, said Maricopa County Supervisor Don Stapley.
“The cost doesn’t go away. We’re going to have to pay for it,” Stapley said.
The GOP budget would reduce the amount of tax dollars the state shares with cities by more than $120 million.
Napolitano also proposes raising $125 million by taking photo radar statewide. She said the system would cost roughly $35 million to set up, netting the state $90 million.
And she would gather $55 million by collecting July 2009 sales taxes a month early, so they would count as 2008 revenue.
Republican leaders say the borrowing and revenue shifting are risky maneuvers in uncertain times. Economists who advise the Joint Legislative Budget Committee don’t expect the economy to turn around until late in fiscal 2009, and maybe not until 2009-10.
“I supported using her budget numbers last time, but I can’t support it this time,” said Sen. John Huppenthal, R-Chandler, a member of the Senate Appropriations Committee. “I think what we’re going to see is even our estimate might not be conservative enough.”
Napolitano’s economic advisers are projecting a quicker recovery and smaller deficits both this year and next.
The current-year budget deficit is pegged at $970 million by the JLBC, the Legislature’s budget-writing arm. Napolitano’s budget writers estimate the shortfall at $870 million.
GOP leaders say the two budgets should be handled simultaneously, advocating deep cuts this year that would carry over into 2008-09.
But with the fiscal year more than half over, it’s becoming more difficult to make significant agency cuts, so they may be forced to rely more on accounting maneuvers. Financing school construction is a key sticking point between the governor and legislative leaders, affecting negotiations for both fiscal years. The lawmakers want to suspend school construction altogether next year and most Republicans have said they oppose borrowing.
Napolitano would save $393 million this year and $471 million next year by spreading the construction payments over time.
Among the biggest losers in the Republican budget would be the state’s three universities.
Capitol Media Services writer Howard Fischer contributed to this report.
Key elements of each plan:
• Bond for school new school construction ($471 million)
• Delay state aid payment to schools ($297 million)
• Withdrawal from rainy day fund ($197 million)
• Fund Highway Patrol with road funds ($53 million)
• Anticipated revenue from photo radar tickets ($90 million)
• House some prisoners in county jails ($61 million)
• Require earlier payment of sales taxes ($55 million)
• Spending cuts ($1.38 billion)
• Moratorium on new school construction ($328 million)
• Delay state aid payment to schools ($300 million)
• Withhold inflation funding for schools ($101 million)
• Reduce share of state taxes to cities ($122 million)