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September 19, 2007 - 2:10PM
Napolitano proposes plan to erase budget shortfall
Comments | RecommendThe Associated Press
PHOENIX - Gov. Janet Napolitano on Wednesday proposed a plan to erase a projected $600 million shortfall in the state's budget that has been increasingly battered by the slumping economy.
Tax collections in recent months have been below amounts projected in the $10.6 billion budget approved by the Legislature and Napolitano in mid-June, and Napolitano said the state needs to start acting now to erase the shortfall.
Key elements of her plan include reducing agency spending by approximately $100 million, borrowing $300 million to pay for constructing new schools, and spending $200 million from the state's $700 million rainy day reserve.
Napolitano said she chose that multipronged approach because the state can't simply cut enough spending to erase the shortfall and still protect education, health care and public safety.
"This is the best way to manage our way through the shortfall," she said.
Napolitano said she will immediately start reducing agency spending through such means as travel and hiring clampdowns on her own.
However, she acknowledged she needs legislative approval for the proposed lease-purchase borrowing for school construction and the use of money from the Budget Stabilization Fund.
The governor said a fall special session isn't needed because lawmakers can take up the matter when they begin their 2008 session in January.
George Cunningham, Napolitano's chief budget aide, attributed the state's fiscal problems to weakness in the national economy in general and the downturn in the lending and housing industries in particular.
Economists consulted by the governor's office expect conditions to improve during 2008, Cunningham said.
The current fiscal year began July 1.
The budget picture started to deteriorate in June just as lawmakers and Napolitano were finishing work on the budget but the severity of the problem wasn't immediately apparent, Cunningham said.
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