Governor touts exports as fix for economic woe

Arizona's financial crunch is putting a drag on the state's efforts to boost its exports even as Gov. Janet Napolitano is touting that as a way to save the state's economy.

The governor, in a speech Monday billed as her "international state of the state" address, said Arizona needs "a new kind of economy." More to the point, she told the Phoenix Committee on Foreign Relations, it has to be one that is less dependent on housing.

And she said one key is exports.

"There are lots of markets out there for all the wonderful things that we think of and produce right here in our state," the governor said. She believes her office can help further those relationships.

But the governor, in response to an audience question, said the international trade missions she has headed since taking office in 2003 have been halted.

Napolitano said she had intended to go this year to both India and China, nations with two of the most rapidly growing economies in the world. That was before the state's tax collections took a dive and the governor said she instituted "belt-tightening" measures.

"This does not seem to be a good time to do those sorts of trips," she said.

The Department of Commerce reports that the last trade trip Napolitano headed was with a group that met with Mercosur, a free-trade organization from South America. But that trip was only to Los Angeles.

Napolitano has not gone on a foreign trade mission for at least a year.

Even as the governor was talking about the deficit, she began staking out her arguments for protecting funding for K-12 and university education.

Sen. Bob Burns, R-Peoria, who chairs the Senate Appropriations Committee, said last week that tax collections for the first two months of the fiscal year that began July 1 already are $180 million below estimates. He said if the situation does not improve the state could easily find itself with a $1 billion gap between actual revenue and its $9.9 billion spending plan.

Napolitano was unwilling to go that high, calling an $850 million deficit the worst-case scenario.

Whatever the number, that will lead to pressure to make further spending cuts.

Basic state aid to K-12 education, which makes up about 40 percent of the budget, is constitutionally untouchable, though funding for full-day kindergarten is not. Also off-limits is most of the state's $1.4 billion health care program for the needy. And cutting funding to prisons or public safety has been a political nonstarter.