DALLAS - With one week left in the fiscal year, Arizona lawmakers are considering a plan announced yesterday to erase a $1.9 billion budget shortfall through $600 million of borrowing for public schools and cutting about $400 million in spending.
The state would also use reserves from the rainy-day fund and postpone a payment to public schools until the next fiscal year.
Although the plan comes late in the legislative session, a shutdown of state government is not under consideration, said Senate President Tim Bee, R-Tucson, who announced its details in a press conference yesterday.
The Senate proposal comes on the heels of a proposal from the House that Republican leaders say protects classroom funds and services to children.
The House budget reduces state spending by almost $1.4 billion, which includes agency reductions and fund shifts, and borrows $500 million for school construction.
Lawmakers in both houses of the Legislature have wrangled for weeks over how to balance the budget as economic data continued to worsen.
"We have crafted a common sense budget that continues to invest in education and children and we will not shy away from that," said House Speaker Jim Weiers, R-Phoenix.
The House budget calls for spending $4.6 billion on education, an increase of nearly $200 million from the current year. The proposal would not cut money to the classroom.
The House proposal would shift $106 million from roadside litter collection to the general fund for use on more urgently needed services, leaders said.
"If given the choice of cleaning the side of the road or protecting Child Protective Services from reductions, I will always choose the safety of children," Weiers said. "This is a reasonable budget that reduces the state government but does no harm to essential services."
With only a week left, lawmakers must reconcile the two versions of the budget and win the support of Democratic Gov. Janet Napolitano, who had not commented on the proposals at press time yesterday.
"Republicans and Democrats had input and now it's time to provide state employees, school districts, cities, and all state residents with the certainty of a sound, reasonable budget," said House Majority Whip John McComish, R-Ahwatukee.
With revenue down 18%, Arizona faces the nation's second worst budget gap behind California at 21%. Arizona is among 29 states reporting a combined $48 billion in overall shortfalls for fiscal year 2009, nearly a 10% drop from anticipated revenues, according to the Center on Budget and Policy Priorities in Washington.
The bad economic news continued for the state yesterday as Standard & Poor's reported that Miami and Phoenix were the worst performers in its Case-Shiller home prices indexes for April, with both cities experiencing 3% declines. The composite 10-city index hit a record low, down 16.3%, and the composite 20-city Case-Shiller index fell 15.3%.
State officials fear conditions could worsen. Even after conditions begin to improve, revenue upturns tend to lag behind a growing economy, according to the National Governors Association.
