State has money in the bank, but lawmakers still face funding conflicts

2014-01-12T00:00:00Z State has money in the bank, but lawmakers still face funding conflictsBy Howard Fischer Arizona Daily Star Arizona Daily Star
January 12, 2014 12:00 am  • 

PHOENIX — State lawmakers return to the Capitol on Monday with more cash available than they need to cover the basic operation of state government.

But the budget — and which programs get more money — still will be the top issue this session. That’s because the state actually is spending more than it is collecting in taxes.

For now, the books remain in the black because some cash is left over from the now-expired one-cent sales tax. Rep. John Kavanagh, R-Fountain Hills, calls that a situation fraught with problems.

“The budget projections are quite clear: Even taking into account the $600 million to $800 million surplus we currently have, in 2017 we’ll be a half a billion dollars in the hole,” said Kavanagh, who chairs the House Appropriations Committee. And that’s assuming the only spending increases are those necessary to keep pace with population and inflation.

“Once you start adding discretionary increases, you’re pushing a billion-dollar shortfall,” he said.

Meanwhile, there is pressure on lawmakers to stop raiding the Highway User Revenue Fund. That fund, made up of gasoline taxes and vehicle registration fees, is supposed to be used for road construction and maintenance. Legislators have diverted more than $100 million annually for years to balance the budget.

But despite the potential shortfalls, the demands for state money are plentiful:

Child Protective Services

The state’s child-welfare agency wants an additional 444 new staffers, including 394 caseworkers, to help Child Protective Services deal with an increasing caseload.

Gov. Jan Brewer has not yet said how much of the $115 million request she will support. But public uproar over the revelation that CPS failed to investigate 6,500 reports of suspected child abuse and neglect virtually ensures lawmakers will come up with at least some additional dollars.

Public schools

Brewer already has some priorities that will require cash. One is a plan to reward schools that boost student achievement.

In essence, the state would use each student’s current standardized test scores as a baseline and then see how much each child improves in a year. A school that helps a low-performing student advance several grade levels in reading, for example, might get an extra $300 in state aid.

Some money also would be available to schools that manage to keep already high-performing students on academic track, with the average boost being somewhere between $10 and $60 on top of the approximately $4,110 per student each school gets.

A similar proposal by the governor last year faltered because it would have been funded in part by taking money from schools where students were lagging, an idea that proved politically unacceptable. This year’s plan is all new money.

Only thing is, that carries a $40 million price tag for the first year, climbing even higher in future years that already have red ink projections.

And there’s another shoe waiting to drop.

Last year, lawmakers were forced to add about $80 million in basic state aid to schools after the Arizona Supreme Court ruled the state had illegally ignored a voter-approved mandate to adjust school appropriations each year for inflation. A similar amount will have to be added for the coming year.

And that’s not all. The Arizona Education Association, which filed the suit, is asking a judge to reset the state-aid figure to reflect what it would have been had lawmakers complied with the inflation adjustment all along. Don Peters, an attorney for the education association, said that would give schools an immediate cash infusion of $320 million.

Peters also said he will try to get a judge to rule that the state should make good on all money schools should have gotten in the interim — about $1 billion.

Universities

The Board of Regents says Arizona’s three universities need an extra $100 million to help catch up with the cuts made in prior years.

Business interests

A controversial plan would have the Legislature create what amounts to a venture capital fund to invest in new firms. The $50 million request faces resistance from some lawmakers, who question whether such an investment is constitutional.

Fire safety

State Forester Scott Hunt is asking lawmakers to double his budget so he can hire 15 staffers, replace equipment and thin out trees and shrubs.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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