Cutting state’s budget a tough course for Arizona leaders facing big shortfall

Cutting budget a tough course for Arizona leaders

PHOENIX — Arizona has a projected midyear budget shortfall of up to $2 billion, but the to-do list for a special Legislative session planned for this week would close about a quarter of that.

Arizona Senate President Bob Burns said legislative leaders agreed on Monday to ask Gov. Jan Brewer to call lawmakers into session Tuesday afternoon, and spokesman Paul Senseman said Brewer likely would do that Tuesday morning.

Lawmakers hope to cut education and social service funding by about $300 million during the three-day special session and also provide money to keep several state agencies going.

But any realistic hope of enacting budget fixes that come closer to filling the deficit have quickly run up against political, legal and fiscal constraints.

That’s because past budget cuts have some state agencies and programs just scraping by, voter-approved laws mandate big chunks of state spending and federal stimulus program requirements leave little room for maneuvering.

And despite comments from leaders like House Appropriations Chairman John Kavanagh that lawmakers should tackle more of the problem, there’s little chance that will happen soon.

The backdrop, of course, is the huge recession-caused drop in state tax revenue.

The latest estimate for the current fiscal year’s ongoing revenue is $6.4 billion, down more than $3 billion from the high set three years ago.

Meanwhile, the budget’s spending still hovers around $10 billion and is propped up with stimulus dollars, borrowing and various budget maneuvers.

The cuts now under consideration are split between school equipment funding and social services. The amount targeted in school cuts is based on what the state can trim without running afoul of the stimulus program’s requirement to maintain education spending at 2006 levels. Brewer had the Department of Economic Security cuts in her June budget proposal and implemented them already.

While opposition to the new cuts has been relatively muted so far, advocacy groups say deeper cuts would be too damaging.

“If you want to destroy the future of the state, I guess you could cut your way out of it,” said George Cunningham, a former top budget aide to ex-Gov. Janet Napolitano, who is now a consultant to a coalition of advocacy groups. “I think we have hit rock bottom.”

Trying to balance the budget through cuts would raise university tuition, raise student-teacher ratios in public school classrooms to 40-1, eliminate child-care subsidies to single working parents and clog emergency rooms with people taken off the state’s Medicaid program’s rolls, Cunningham said.

The Arizona Health Care Cost Containment Program accounts for 13 percent of the general fund’s spending, and its spending is largely locked in by voter mandate.

Unlocking that mandate and others like it would require voter approval.

Without that authority and without revenue from Brewer’s proposed temporary sales tax increase, an additional $2.5 billion of cuts would be needed to balance next year’s budget, Kavanagh said.

“And I’m not sure if that final scenario is even doable, cut-wise, because there’s not enough state money to cut unless you want to significant cuts to corrections,” Kavanagh said, referring to the prison system.

Meanwhile, the Legislature is torn by ideological schisms between Democrats against spending cuts and Republicans opposed to tax increases, he said.

Brewer on Monday assured Republican senators of her willingness to make additional cuts, said Burns.

“She realizes there’s a lot more to do yet,” he said.

The 2010 regular session starting in January will start with even more belt tightening. “The choices become very, very difficult in terms of targeting cuts when you take the next step,” Brewer Chief of Staff Eileen Klein said.