DALLAS - Arizona Gov. Janet Napolitano has revised last month's fiscal 2008 budget-deficit action plan following indications the state's revenue shortfall is almost $300 million worse than expected.
The governor proposed a budget plan in early January to deal with a revenue shortfall in fiscal 2008 of some $870 million in the state's $10.6 billion budget. However, the latest state revenue reports show a shortfall for fiscal 2008 of $1.15 billion and a shortfall of up to $1.73 billion for fiscal 2009, which begins July 1.
The latest figures adopted by the governor are in line with earlier estimates by the Legislative Joint Budget Committee.
The newest proposal for fiscal 2008 retains $393 million in debt financing for new school construction, but increases the draw on the state's budget stabilization fund from the original $263 million to $298 million and cuts state agency budgets by $151 million, double the $75.5 million in budget cuts outlined in Napolitano's January plan. The governor retained the proposal to draw on agencies' fund balances for another $128 million in spending.
Napolitano's plans for reducing the budget shortfall in fiscal 2009 continues the school debt program, cuts state agency budgets by $125 million rather than the $25 million already proposed, draws down the budget stabilization fund by another $100 million, and delays the state's payment of some $600 million to local school districts by four weeks to push it into fiscal 2010.
Arizona's general fund revenue collections for the first six months of fiscal 2008 are down 1.1% from the same period in fiscal 2007, and $392 million less than expected. The state collected a total of $4.43 billion in the first half of fiscal 2008, $118 million less than in fiscal 2007.
Sen. Bob Burns, R-Peoria, chairman of the Senate Appropriations Committee, said he has "lost patience with the governor's lack of leadership" as the budget problem grew from what was seen as a balanced budget when adopted to a $600 million shortfall in fall 2007 and then to $870 million in early 2008.
Burns said the governor should have called a special legislative session in fall 2007 as the full extent of the budget shortfall became apparent.
"Gov. Napolitano's failure to take action early in the identification of the budget shortfall and continued failure to propose viable solutions has made this a crisis, and if history is any indication, we can expect to soon hear that it is all someone else's fault," Burns said.
Burns criticized Napolitano's use of long-term debt for school construction, saying that only higher taxes or spending cuts could solve the problem.
"The bonding being proposed by the governor would provide a short-term cover-up of her failure to use the tools available to her office to bring this storm under control," he said.
Napolitano is a Democrat and the Legislature is controlled by Republicans, who hold 33 of the 60 House seats and 17 of the 30 Senate seats.
In her budget message delivered at the opening of the legislative session last month, Napolitano said the state could provide $2.6 billion for school construction through 2013 with bonds that would require only $341 million in debt service over the next five years.
In addition, she is seeking legislative authority to issue $470 million of bonds to build two medical research buildings in downtown Phoenix, with debt service payments to begin in fiscal 2010, and $966.5 million of bonds to finance maintenance and major renovations at state colleges and universities, with debt service beginning in fiscal 2011.