Arizona is one of the
fastest-growing states in the nation. Projections demonstrate that, by 2030,
Arizona's student population will increase to 2.5 million. Arizona's
education infrastructure will need to increase by more than 150 percent in
just 20 years.
This reality must be met with long-term, comprehensive planning that ensures
dedicated annual revenue for school construction - revenue generated through
an adequate and equitable system of taxation.
Arizona must invest
and grow its way into the future. But Arizona's conservative legislative
leadership refuses to accept this reality and continues to cut taxes,
setting Arizona expenditures on a collision course with revenue, evidenced
by the current deficit and a $2 billion deficit projected for 2009.
In the meantime, most Arizona school districts are facing enrollment
increases that demand new schools, more teachers and staff.
What is the Legislature's answer to Arizona's certain growth? Freeze
new-school construction.
This appalling lack of vision will result in a peculiar message to thousands
of families moving into Arizona: "School is closed."
Planning for Arizona's future begins with education. Arizona must meet the
short-term needs of its students by bonding for new schools.
But long-range planning and investment are the pathway to a successful
future for Arizona and its children.
- John Wright, president,
Arizona Education Association
State has cheaper options to bonding
Bill Clinton famously defined "insanity" as doing the same thing repeatedly and expecting a different result every time. So one can only wonder about the wisdom of Gov. Janet Napolitano once again calling on the state to incur huge levels of debt in order to build school-district facilities.Arizona has better options.
Charter schools operate with fewer taxpayer dollars and with no state funding for facilities. Charter schools make up nine out of the top 10 schools in Greater Phoenix when ranked by reading scores, so bang for the buck is substantially higher.
The state should pass a moratorium on financing school-construction projects. During the moratorium, districts should authorize new charter schools.
Looking beyond charter schools, thousands of seats sit empty in Arizona private schools. School-choice programs could make them accessible.
Arizona's existing charter and choice programs educate one out of three new students entering the state's K-12 system. Debt and overcrowding would be far worse without these successful options. We should expand them.
Alternatively, we can start borrowing billions to build nothing but district schools. Call me crazy, but a mountain of debt doesn't make much of an education legacy for either legislators or the governor.
- Matthew Ladner, vice president
of research, Goldwater Institute
It's vital for K-12 school
construction
If Arizona is serious about addressing the current budget deficit and
averting a more acute fiscal scenario next year, action must be taken now to
approve bonding for K-12 school construction.
Bonding for capital construction would return $430 million to the state's
general fund in fiscal '08 and provide important and immediate budgetary
relief.
Bonding is a sound financing solution as evidenced by its use by most other
states and its successful previous use in Arizona to build K-12 schools.
Arizona is a low-debt state, and with current reductions in interest and
construction rates, the circumstances for bonding are ideal.
Choosing not to capitalize on these conditions and opting instead to rely
solely on a "pay as you go" approach from the general fund will ultimately
result in needlessly prolonged budget difficulties, the further reduction of
essential state services and a heightened economic downturn.
Arizona cannot afford to entertain any of these setbacks and risk
jeopardizing its significant progress to date or its future prospects.
Bonding for school construction this year and next will help balance the
budget and keep our education system on track for success.
In order to continue moving Arizona forward, lawmakers should approve the
bonding proposal as an effective and appropriate public-finance tool for
K-12 school construction.
- Michael Crow,
president,
Arizona State University
Debt-financing right path for schools
First, schools are a long-term asset. Business and homeowners finance their
long-term assets to take advantage of the time value of money or out of
necessity.
Second, the cost of money (borrowing) now is so low that, calculated over
the term financed, Arizona could actually pay less for school buildings than
if they were paid for with deflated cash dollars over the same time.
(Example: Does your $20 buy the same amount it used to buy 20 years ago?)
Third, Arizona pays for all other capital assets, i.e. transportation,
prisons, buildings, etc., with debt financing. Why not new schools?
Fourth, the current state budget crisis has finally brought this issue into
true perspective: With our state's rapid growth, we can't afford to continue
paying cash for schools out of the state general fund.
Funding of new-school construction should be returned to the local level. In
the meantime, Westmarc has endorsed using debt financing as a tool to
balance the fiscal '08 and '09 state budgets, and we are committed to
reforming school-construction financing in the future.
- Jack W. Lunsford, president and CEO,
Westmarc (Western Maricopa Coalition)
Legislative lethargy takes costly toll
With a $1.2 billion deficit in fiscal 2008 (with only three months
remaining) and a $1.9 billion deficit estimated for fiscal 2009, Arizona's
state budget crisis is severe. Yet state policy makers have watched for
months as the current budget deficit grows deeper, losing the opportunity to
make meaningful changes this year.
One reason for the lack of action is that some leaders think it can be
solved in part by debt-financing a $400 million annual operating-budget
expense.
Other policy makers understand that bonding for an annual expenditure that
accounts for only 4 percent of the state budget is not only foolish, it
simply adds to our future budget problems.
Advocates of bonding believe the short-term benefits of freeing up $400
million in cash exceed the obvious long-term downside of debt payments that
ultimately exceed the annual cash payment. The problem is that the bonding
proposal is not unlike other budget gimmicks like delaying state-aid
payments to schools that punt our current problems into the future. However,
even under the most generous future revenue-growth projections, such
gimmickry will clearly set the stage for future deficits that can only be
closed by a huge tax increase.
- Kevin McCarthy,
Arizona Tax Research Association
Economy should be a major signpost
To bond, or not to bond? That is really not the question. Instead we should
ask what we can do to improve Arizona's economy now and for the future.
Strategic tools can close the deficit, which as a percentage of the general
fund is the country's largest. They include cutting unnecessary spending,
deferring non-critical capital expenses and using the "rainy-day fund"
throughout the entire downturn. The magnitude of the hole requires
debt-financing in a limited fashion for schools that must be built in fiscal
2008 and 2009. Restrictions must be in place to minimize interest payments
and trigger payback when the economy rebounds.
We must contain spending. Requiring public notice and a vote of the House,
Senate and executive when the Legislature increases expenditures by more
than a certain formula is one step. We should also modify the initiative
process to prevent out-of-state interests from pushing tax/spending
obligations on Arizonans.
Arizona must signal we are open for business by permanently repealing the
statewide property tax. If not, instead of "welcome to Arizona," our message
to new businesses after their ribbon-cutting would be "here's your bill."
At this crossroads, each decision affects our future. We must choose wisely.
- Glenn Hamer, president and CEO,
Arizona Chamber of Commerce
and Industry
Blend bonding with financial savvy
Nobody expected such a drastic downturn in state revenues this year.
Arizona's revenue structure is volatile and difficult to predict. Given that
fact, we as legislators and the governor need to approach the task of
balancing the state budget with open minds.
There are few options for reducing already-appropriated agency budgets when
we are in the ninth month of the fiscal year.
Financing capital construction is a sound business practice that needs to be
used, along with tightening expenditures and other mechanisms. Remember that
almost two-thirds of the state budget cannot be changed because it is
protected by formula or voter initiative. It is also important to remember
that the state assumed the responsibility of paying for new-school
construction in 1998. Prior to that, local property taxes paid for schools,
and bonding was used for financing.
Severe budget cuts affect our state's ability to move into the future (such
as biomedical and bioscience research). The economy is negatively affected
when projects that move the state forward are delayed. Corporate businesses
looking to relocate evaluate a state by the quality of the university system
and the K-12 education system. In my opinion, it is prudent and fiscally
responsible to use capital financing to balance the 2008 and 2009 budgets.
- State Sen. Marsha Arzberger,
D-Willcox, Senate minority leader
5 key steps toward state solvency
So how to fix the worst state budget deficit in
the country? We begin by bonding for school construction, taking from the
"rainy-day fund" and deferring expenditures where possible. These are
no-brainers and accepted practice elsewhere. When the economy is tanking,
the public sector needs to protect families and make investments that spur
economic recovery.Next, we suspend ideological battles and seek real solutions to real problems such as how to maintain commitments to education, workforce development and health care.
Third, we must learn from our mistakes and move beyond snake-oil economics. Recent tax cuts both failed to rally the economy and helped manufacture a deeper deficit. Starve-the-beast ideology has foundered on the rocks of the Arizona reality.
Fourth, we should avoid wasting time on the personal obsessions of a handful of powerful legislators who see an immigrant behind every problem and peddle false information to dominate public agendas.
Fifth, we must prepare now to invest in a future by looking that future square in the face. Arizona is already home to exploding numbers of old and very old residents, whose needs are changing our human landscape. Meanwhile, we rank at the bottom of key indicators for education spending, workforce training and health coverage. This adds up to an increasingly unskilled, increasingly Latino, working-age population.
Our hope is that this budget crisis will provoke a real public debate that weighs what Arizona families are going through now and will need in the future. We must resist the temptation to devour our seed corn and must invest in those things that create opportunity for children and families.
- Richard White, president,
Valley Interfaith Project