Arizona Budget

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State lawmakers and the Governor have agreed on a new budget and lawmakers are expected to pass it today. Bob Robb of the Arizona Republic will talk about the budget.

Ted Simons: Good evening and welcome to "Arizona Horizon," I'm Ted Simons. Lawmakers are close to passing a state budget. This after on again, off again talks between the Governor and legislative leaders resulted in an agreement. Here to talk about the budget is columnist Bob Robb. Thanks for joining us.

Bob Robb: Good to be with you.

Ted Simons: As we're taping right now, they are so close in the late afternoon, early evening. It's pretty much a done deal.

Bob Robb: It's passed the Senate and it's awaiting action in the House. But they wouldn't have brought it to the floor if they didn't know they had the votes.

Ted Simons: Give us an overview of the budget.

Bob Robb: It's primarily designed to get the state past the expiration of the temporary sales tax at the end of the next budget year, with a minimum of stress on the ability to sustain state programs. So over this year and next year revenues are expected to exceed what would be necessary to maintain existing spending by about a billion dollars. And the legislature and the governor have agreed to spend about $200 million of that in restoring various cuts that have been made, and not spend $800 million of that. It creates a reserve that can be used in 2014, the budget year after next, and 2015, to try to make up for the expiration of the temporary sales tax.

Ted Simons: Indeed. And to make up for the expiration also to look at perhaps what could be a result of the Affordable Health Care Act. These kinds of things led -- seemed like there were two different revenue projections. The governor's office saw things a little rosier than the legislature did. The legislature won out on the projections. Were you surprised by that?

Bob Robb: I was not, particular after what the state has come through. Being prudent about revenue projections is the sensible course of action if you're not going to do anything to replace the 1% temporary sales tax. And the difference between the revenue projections, what tax increases would be between the governor and the legislature, wasn't that great. The largest difference was in the extent to which the governor was proposing to continue sweeping funds from other accounts and using them to support general fund programs, which the legislature wanted to end. So that was actually the biggest confrontation over revenues. The legislature largely won that. There's some sweeps here but not nearly to the extent that the governor was proposing.

Ted Simons: There's one sweep that seems to be getting a lot of attention. It's not the most money in the world $50 some odd million dollars, but still, the idea of taking money from this mortgage settlement fund that states and mortgage lenders kind of agreed to with the state's attorneys generals because of more foreclosure fraud and these sorts of things. The money, say critics, is supposed to be used to help folks hurt by the foreclosure crisis. The legislature says, "Well, we were hurt by the foreclosure crisis because we lost public revenue, public funds, we'll take $50 million." Quite a brouhaha over that.

Bob Robb: I think this was a pocket money that the governor and the legislature could seize in order to compromise the differences between them, between what you put aside for the future and what you spend today. It undoubtedly would be subject to legal challenge. That's not nearly as consequential as it was a few years ago when there was no reserve. Given that you have $800 million in what is not being spent, $450 million of it going into a rainy day fund, the rest just being carry-forwards, if they were to lose that lawsuit it wouldn't be that consequential.

Ted Simons: But just the idea of doing it has some folks up in arms.

Robb Bob: Oh, yeah, sure.

Ted Simons: All right. This $450 some odd million rainy day fund, I've asked it to a lot of folks and I want to ask it to you. When voters approved the one cent sales tax, did they have it in mind for the legislature to sit on it?

Robb Bob: They did not. But the recovery in state revenues wasn't nearly as quick as anticipated at the time that it was submitted to voters. And so if you were to plow that money into spending today, you would in just the budget that the next legislature is going to deal with not have to look at cutting it again. And one of the things that the Republican legislative members have been most insistent upon in the last couple years is to get out of this process. Let's develop sustainable programs and move forward. And that's what this budget is intended to do.

Ted Simons: Are these sustainable programs, though? Because again, Democrats and critics will say you're gutting the system that -- there has been some reimbursement here, the governor did get quite a few spending items in there as far as education and prisons and public safety and these sorts of things. But there are other programs that are still not where they used to be. Is that responsible? Is that a concern?

Robb Bob: Well, it's a huge concern. Whether it's responsible depends upon your point of view. These programs, what the Republican legislature and the governor have done is to put current state programs on a sustainable basis, where you can even look at the expiration of the temporary sales tax a year or two later and to say, "There's a good chance we will have the revenue to support what the state is currently doing." The question is whether the state is doing enough. There's lots of things that continue to be left unfunded, likely to remain unfunded for the foreseeable future. Any kind of new construction for education. Any kind of books or textbook money from the state for education. All-day kindergarten, a popular program, remains unfunded. And until and unless the federal government provides a mandate, continuing to fund health care fund indigent health care at 35% of the federal poverty rather than 100%. But if you're going to do those things you need additional revenue to do it. They are not sustainable with the existing revenue source. So I would say until we're going to deal with the issue of revenues, cutting state spending down to the point that it's sustainable by existing revenues is the responsible thing to do. And over the last two years remarkable strides have been made to try to put the state on that kind of a sustainable fiscal basis.

Ted Simons: All right. And last question here. So when critics and Democrats say this is short-sighted, not looking for the long-term, you would say just the opposite?

Rob Bobb: I would say the opposite. If you think otherwise, put your proposed revenue increases on the table. They haven't done that.

Ted Simons: All right. Did they not have a budget proposal? Didn't the House Democrats come through with something?

Rob BObb: They did, and this is very comparable to where the Democrats were. The main difference is that it doesn't fund a full restoration of Kids Care. The Democrats have a good point, that's not a big ticket item with all this money sloshing around. It is something you would have anticipated being restored.

Ted Simons: It's nice to hear there is even some money sloshing around. Thanks for joining us, good to have you here.

Rob Bobb: Good to be with you.

Bob Robb:Reporter, The Arizona Republic;

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