DALLAS — Arizona Gov. Jan Brewer is considering an $8.3 billion budget that she negotiated with the Republican-controlled Legislature despite misgivings about some of the $1.1 billion in spending cuts.
The budget, approved last week, is a package of appropriations bills that Brewer can veto in part or in its entirety. Last year, she vetoed some of the spending cuts to education, leaving the budget unbalanced for the remainder of the year. Special sessions designed to close the shortfall proved futile.
Under the new budget scheduled to take effect July 1, the state will issue no new debt and will shift much of its spending to local governments. The five largest counties will be required to fund part of the Motor Vehicle Division, and county jails will be required to hold inmates sentenced to two years or less.
Last year, Arizona raised $700 million in operating funds by mortgaging its buildings, including the legislative offices. It also issued bonds backed by state lottery revenue to provide a one-time funding solution.
This year, the government could not count on federal stimulus money to ease cash flows.
“The Senate budget used no gimmicks, no new rollovers, and no borrowing,” said Senate President Russell Pearce, R-Mesa.. “For years, the Legislature has played games with the Arizona budget. Those games ended today, and our state has a brighter future because of the votes of our Republican caucus.”
The minority Democrats in the House called the budget “irresponsible” and a “sucker punch.”
“Republicans approved massive education cuts, increased class sizes, pay cuts for thousands of teachers, and elimination of critical programs that help students get ahead in the worldwide economy,” said House Democratic Whip Anna Tovar. “Now Arizona spends less on our students than any other state in the country.”
The Republican Brewer had called for $72 million in cuts to K-12 education, which the Senate GOP raised to $242 million.
“While I am willing to consider additional budget cuts in partnership with our stakeholders and legislators, these cuts cannot be imposed according to some arbitrary standard that is counterproductive in the long term,” Brewer wrote in an op-ed piece for the Arizona Republic last week.
Analysts at Moody’s Investors Service and Standard & Poor’s, which have the state on negative outlook, have not yet issued any comment on the new budget. Arizona has issuer credit ratings of Aa3 from Moody’s and AA-minus from Standard & Poor’s.
The spending plan cuts funding for universities by $200 million and community colleges by $73 million. Public schools will lose $180 million, forcing increases in class size.
The budget’s cost to the state’s five largest counties is estimated at $40 million. Housing state prisoners in county jails is expected to cost $55 million, and the local Motor Vehicle outlays are expected to cost counties $39 million.
Arizona has been hard hit by the collapse of the housing market, leaving more than 100,000 homes in the Phoenix area vacant. Local governments are coping with that crisis while also adjusting to the loss of state revenue.
“Arizona’s counties continue to experience drastic reductions in property and sales tax revenues, and continual cost-shifts from the state have exacerbated an already desperate financial situation for every county government,” according to a statement from the Arizona Sheriffs’ Association.
“In the last three years alone, Arizona’s county governments have been forced to subsidize $193 million of the state’s operational deficit through direct state cost shifts and county revenue diversions,” the association said. “The [budget] will place an unconscionable burden of more than $150 million more in state spending onto county governments in FY12 alone.”
