DALLAS — Two years after Arizona mortgaged state buildings to cover operating costs, the Legislature opened Monday with hopes of paying down that debt.
Gov. Jan Brewer, who addressed the opening session Monday in her annual state of the state speech, noted that lawmakers are working with a surplus estimated at $1.3 billion to $1.5 billion. The 2012 session is the first since 2008 in which the state has not faced a deficit.
Brewer said that she wants to buy back some of the buildings the state sold and leased back through $1 billion of certificates of participation, according to the Arizona Republic.
The buildings sold in January 2010 included the Executive Tower, legislative buildings, the Department of Public Safety headquarters, various state prison facilities, and other assets.
That summer, the state sold the Arizona State Hospital and the Department of Public Safety building in Tucson, along with additional state prisons and state fairground buildings.
Though some of the certificates will be paid off in the current fiscal year, others have lease terms as long as 20 years. Brewer did not specify a new schedule for paying off the debt but is expected to have more details when she submits her proposed budget on Friday.
To replace some of the vanishing revenues, Arizona also borrowed $450 million through a revenue bond issue backed by the state lottery.
At the Republican governor’s urging, voters also approved a one-cent sales tax increase for three years to soften the impact of spending cuts on schools and services.
Brewer said she does not expect to seek an extension of the tax now that revenues are back in the black. The tax, approved in 2010, will expire at the end of the next fiscal year.
Brewer, who watched the state’s ratings fall in tandem with revenues over the past three years, noted that Standard & Poor’s last month raised the outlook on its AA-minus issuer credit rating to stable from negative. Moody’s Investors Service rates Arizona Aa3. The Moody’s outlook shifted to negative on Feb. 9.
When the current budget was enacted last year, the state forecast fiscal 2011 would end with a $332 million general fund deficit, or 3.5% of the budget. Instead, it now estimates fiscal 2011 ended with a positive $3.2 million fund balance.
One legislator Brewer will not be dealing with this year is former Senate President Russell Pearce, who lost a recall election last year.
Pearce, who was a lightning rod for conservative issues, angered constituents with his role in pushing SB 1072, which made local law officers responsible for enforcing federal immigration law.
Brewer, who promoted the measure in her election campaign, has accused the federal government of failing to secure the border with Mexico, even though border crossings are down sharply along with the economy.
Brewer has toned down some of her rhetoric about crime caused by undocumented workers after an international boycott of the state while a decision on the constitutionality of the Arizona law is pending in federal court.
In a speech to the Arizona Chamber of Commerce last week, Brewer did not mention the divisive issue that prompted objections from tourism-oriented businesses and claims of racism from Hispanic civil rights organizations.
Brewer said she will promote efforts to create jobs in the state, which is one of the hardest hit by the collapse of the housing market.
“We will not race to return to Arizona’s pre-boom spending levels,” she told the Chamber of Commerce. “Instead, we’ll build from this new baseline — spending strategically, cautiously and with the knowledge that the best state government is one that focuses on core services and does them well.”