Battling over the budget

East Valley Tribune
February 7, 2003
Kevin McCarthy

Arizona faces a huge budget deficit and the Tribune appropriately editorialized on both the Governor and Legislature’s initial response to the crisis. In the case of the Governor, the Tribune characterized a budget that increases spending over $600 million and finances that increased spending primarily through debt financing as "fairly conservative." The Legislative budget that attempts to keep spending at this year’s level with much less debt financing was hammered as "putrid." To cap off the inconsistency, the Tribune’s push for higher spending was followed by a call for the passage of a "Taxpayer’s Bill of Rights" to limit future state spending.

Make no mistake, the state’s budget crisis is severe and will not be resolved without real leadership from state policymakers. Deluding Arizonans into believing that the problem can be solved without making tough choices will only exacerbate our problems.

It has become standard practice for politicians on the campaign trail to support higher government spending and oppose raising taxes. More often than not, that campaign rhetoric collides with the realities of the economic cycle and that is not necessarily a bad thing.

Growing government is considerably easier than cutting it. Downturns in the economy, followed by declines in the growth rates of tax revenue, are the only times government programs are scrutinized and spending re-prioritized.

Seventy-eight percent of Arizona’s state general fund budget is directed to education, low-income health programs, and prisons. While the Tribune rips the Legislature for including all the budgets in the overall resolution to the crisis, the simple truth is the huge deficit cannot be balanced responsibly by focusing all the reductions on twenty-eight percent of the budget.

The math is simple. After taking education, health care and prison spending "off the table", there is $1.3 billion left in the current Fiscal Year (FY) 2003 budget. The FY 2004 deficit is estimated as high as $1.5 billion.

Excluding education, health and welfare, and prisons simply because they are high priorities ignores the fact that each of these areas could be made more efficient and effective.

For example, Arizona, despite having one of the fastest growing student populations in the United States, double and sometimes triple counts the same student in the system. The Legislature has been aware of the problem for years but opposition from the education lobby has stopped any fix.

The sad truth is that it takes a budget crisis to fix glaring flaws in government funding programs. To her credit, Governor Napolitano called for the end of one such funding redundancy in her budget.

Arizona’s attempt to address the budget deficit is complicated by the fact that some of the spending is "voter protected." The Prop 301 sales tax revenue earmarked for K-12 schools, as well as the tobacco tax and tobacco settlement monies earmarked for health care clearly have to be maintained.

However, in an effort to protect budgets, as well as shift responsibility for the problem to the voters, some state policymakers have adopted an expanded interpretation of programs that are voter protected. Resolving this budget crisis will be difficult enough without creating artificial barriers to the flexibility that is needed to resolve the problem.

The top responsibility of lawmakers is to adopt a balanced state budget. As tough as that job is this year, they should embrace it and not shift the problem to the future. There are no other responsible options. Funding increased state spending with a credit card may make for good politics now but it is recipe for fiscal disaster later.