PHOENIX — The cause of Arizona's anticipated $800 million budget deficit this year — and a new estimate of $1 billion or more of red ink the next — is precisely the reason the state can't make deep spending cuts, Gov. Janet Napolitano said Wednesday.
"Families are hurting in Arizona," she said. That has resulted in a "very steep upturn" in people who qualify for the Arizona Health Care Cost Containment System, the state's Medicaid program. "They need health care. We need to take care of that."
Figures show AHCCCS enrollment jumped more than 12,800 — more than a full percentage point — in just one month ending Oct. 1, to 1,082,566, though November figures were down by 1,000. By contrast, the state's population is growing by less than 4 percent a year.
That, Napolitano said, is why she prefers a plan to balance the budget largely with borrowing and taking money from the Budget Stabilization Fund.
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"Sometimes when people say, 'Governor, you just need to reduce spending and that's the only approach you have,' I have to remind them that when the economy takes a downturn, the demand for government help goes up," she said.
"We can talk up here academically about budget numbers but where it's really felt is by people on the street," she said. "We want to make sure that we're doing everything that we can to protect them as we go through this downturn."
All that, said Napolitano, limits what can be done to trim state spending.
Napolitano proposed $100 million in budget cuts two months ago, when the budget deficit for the balance of this year was estimated at $600 million. But even that figure is inflated: She said some of that will not be actual cuts in programs but instead simply deferring some expenses, like filling vacancies, into future years.
The balance was supposed to come from $200 million out of the Budget Stabilization Fund and borrowing $300 million for school construction.
With the new forecast of an $800 million deficit this year and $1 billion the next, Napolitano said Wednesday the state could borrow even more. And while not providing specifics, she suggested more could come from that savings account.
Napolitano said she isn't concerned about leaving Arizona without what has been called the state's "rainy day" fund.
"It's clearly raining," she said, saying the cash in the account will help Arizona "manage our way through" the downturn that is expected to last well into 2008 and possibly into 2009.
But the governor said she has no fears the savings account would be needed beyond that, saying a slowdown of longer than 18 months "would be a historic anomaly."
Republican legislative leaders have balked at Napolitano's plan to borrow for school construction. But House Majority Whip John McComish said that opposition is precisely why they actually agree with Napolitano on tapping the rainy day fund.
In fact, McComish said he sees no problem with taking $400 million from the fund this year — half of the anticipated deficit — and using anything that is left to balance next year's budget. He said it always is preferable to use savings than to borrow.
