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First
budget step: Drop
the shovel
- Robert
Robb
- The
Arizona
Republic
- Jun.
13,
2003
State
Senate
President
Ken
Bennett
has
offered
a
telling
critique
of
Gov.
Napolitano's
budget
proposal,
suitably
commonsensical
for a
Prescott
boy:
If
the
problem
is
that
you're
in a
hole,
the
first
step
is to
stop
digging.
Bennett
has
been
referring
to
the
gap
between
what
the
state
raises
in
revenue
each
year
and
what
it
spends,
which
has
been
covered
up
with
accounting
gimmicks
and
borrowing.
Along
with
other
Republican
leaders,
Bennett
set a
commendable
goal
of
reducing
that
deficit
for
next
year's
budget.
And
he
demonstrated
persistent
leadership
in
accomplishing
that
result.
The
budget
passed
by
the
Legislature
reduces
the
same-year
deficit
from
nearly
$570
million
to
$380
million,
on an
expenditure
base
of
$6.4
billion.
Napolitano's
budget
would
have
grown
the
deficit
to
around
$730
million.
Unfortunately,
however,
Bennett
appears
to be
ignoring
his
own
advice
regarding
large
future
financial
commitments
to
university
research
labs
and
the
Civic
Plaza.
He
wants
to
commit
to
recommence
digging
before
it is
clear
that
the
state
has
gotten
out
of
its
fiscal
hole.
Another
country
boy
who
ought
to
know
better,
House
Speaker
Jake
Flake,
appears
equally
committed
to
grabbing
a
shovel
when
it
comes
to
the
university
labs.
While
the
legislative
budget
is a
plausible
step
toward
an
honestly
balanced
state
budget
without
a tax
increase,
it's
a
long
way
from
actually
getting
there.
The
true
same-year
deficit
is
actually
around
$630
million,
including
the
$250
million
the
state
is
borrowing
each
year
to
build
schools.
Schools
have
always
been
debt
financed,
so
the
borrowing
isn't
the
problem.
Not
having
a
plan
to
manage
the
debt
is.
The
Arizona
Tax
Research
Association
says
that
debt
service
on
what
has
already
been
issued
will
reach
over
$100
million
a
year.
If
the
state
achieves
the
average
historical
rate
of 7
percent
revenue
growth
for
the
fiscal
2005,
'06
and
'07
budgets,
annual
state
spending
increases
will
need
to be
held
to
3.5
percent
to
reach
an
honestly
balanced
budget.
That's
half
the
growth
rate
in
state
spending
during
the
supposedly
parsimonious
1990s.
It
will
be
impossible
to
maintain
the
current
services
budget
on
that
rate
of
growth
while
absorbing
the
debt
service
commitments
already
made
and
ongoing
school
construction
obligations.
The
state
still
faces
the
same
decisions
about
reducing
or
abolishing
programs
or
raising
taxes
that
the
gift
of
federal
funds
allowed
it to
avoid
for
next
year's
budget.
And
the
mechanisms
left
on
the
table,
mortgaging
state
assets
and
shifting
vehicle
license
taxes
to
the
general
fund,
won't
bridge
the
remaining
same-year
deficits,
properly
defined.
In
short,
the
state
does
not
currently
have
a
credible
fiscal
structure,
nor
is
there
one
reasonably
in
prospect.
Nevertheless,
the
university
research
lab
and
Civic
Plaza
proposals
commit
the
state
to
around
$1.7
billion
in
additional
spending
over
several
decades.
The
annual
tab
gets
as
high
as
$65
million.
Advocates
of
both
proposals
are
attempting
to
decrease
the
potential
cost
to
the
state.
The
state
university
presidents
have
agreed
to
dedicate
a
broader
stream
of
revenues
to
re-
imburse
the
state.
And
there
is a
proposal
to
pledge
Phoenix's
share
of
lottery
or
state-shared
revenues
to
backstop
the
increased
state
revenues
proponents
claim
will
flow
from
Civic
Plaza's
expansion.
But
if
the
universities
have
sufficient
funds
to
reimburse
the
state,
they
have
sufficient
funds
to go
directly
to
the
market
to
raise
the
capital
themselves.
And
Phoenix
has
the
bonding
capacity
to
fund
Civic
Plaza;
it
just
wants
to
spread
the
costs
and
the
risks.
There
are
meritorious
arguments
in
favor
of
both
projects.
They
are
reasonably
part
of
the
discussion
about
what
should
be
considered
in
creating
a
credible
fiscal
structure.
But
until
such
a
structure
is
actually
in
place,
the
state
has
no
business
assuming
large
future
obligations.
Instead,
the
Legislature
should
heed
a
corollary
to
the
Bennett
maxim:
Until
you
know
you're
really
out
of
the
hole,
don't
commit
to
start
digging
again
sometime
in
the
future.
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