DALLAS — For the fourth time this year, Arizona Gov. Jan Brewer is calling the Legislature back into special session to reduce the nearly $2 billion budget deficit.
The goal of this week’s session is to reduce education and social service funding by more than $300 million, cuts that Brewer had hoped to avoid through a temporary sales tax increase. The Legislature begins its regular session in January.
Even with the proposed cuts, Arizona still faces a downward spiral as estimates of the budget shortfall continue to grow. Projected revenue for the current fiscal year of $6.4 billion are down more than $3 billion from the peak of three years ago. With federal funds, the state’s budget comes to $10 billion, and the state has relied on federal stimulus funding to sustain operations.
The cuts proposed by Republican legislative leaders include funding for school equipment and social services. Lawmakers must tread carefully on education, because the stimulus program requires the state to maintain education spending at 2006 levels in order to receive stimulus funds.
An August special session designed to overcome an impasse between Brewer and her party’s legislative leaders failed to deliver a compromise that would have increased sales taxes for three years to cover some of the shortfall. The tax increase would have required voter approval but was not included in the budget package submitted to the governor.
Brewer’s line-item veto of the fiscal 2010 budget passed in the regular session that ended June 30 left the budget unbalanced. The governor vetoed cuts in spending for the Department of Economic Security and Department of Education. Her proposal would have raised taxes to maintain funding for those agencies. Since then, Brewer has made cuts to the Department of Economic Security.
Brewer last month asked all state agencies to report what a possible 15% cut in appropriations might mean for their operations. Among those that said they would be hardest hit was the Arizona Department of Transportation, which said it would have to lay off 60% of its workforce. ADOT, a beneficiary of federal stimulus funding designed to provide jobs, fears it would also lose some of that funding with deep state cuts.
Through September, revenue is 16.1% below last year and $233 million below the forecast. One of the measures the Legislature enacted to raise revenue is the sale and lease back of state buildings to raise $735 million. So far, the state has not arranged a deal on the buildings or on plans to lease prisons to private operators.