IIt's been a busy week as our Appropriation Committees start the work of crafting the budget.  My sub-committee, along with its Senate counterpart in joint session, has started reviewing funding requests from various state agencies.  Everyone, of course, wants more money than they had last year, and some agencies even have very good reasons for wanting more. 

The budget process itself is very interesting.  The Joint Legislative Budget Committee (JLBC) prepares what's known as the "Baseline Budget."  They start with last year's budget, add what it required by formula (e.g., Prop 301 spending for education), then make estimates as to increases in caseloads and rates for the numerous social programs to come up with the bare bones budget.  They also come up with projected revenues, based on a series of calculations.  Structural revenues less structural expenses leaves a balance that can be appropriated for discretionary increases for some agencies or programs.

The Governor also weighs in with the Executive Budget, put together by her staff at the Office of Strategic Planning and Budget (OSPB).  They also estimate revenues, and their projections are usually higher than JLBC's -- which means there's more money to spend.  And her budget this year has plenty of spending (and borrowing) in it.

It's the job of Appropriations to sort through all of these numbers and come up with a sensible spending plan, one that keeps government functioning but does not over burden the taxpayers.  Some members are calling for additional income tax cuts.  I believe this is premature, as we provided for a two-part decrease last year and the second phase kicks in for 2007.

Revenues are not increasing at the extraordinary rate of the past two years.  If JLBC's revenue projections are accurate, there will actually be a deficit for fiscal year 2008.  We will have a cash balance at the end of 2007, which will be necessary to balance the budget and leave a relatively small amount for discretionary spending.  This is where it gets really interesting as agencies and legislators make pitches for their particular projects.

As a new chairman, I'm trying hard to keep up with all the requests and put forward some logical dollar amounts.  We'll continue to review agencies and approve their budgets for the next five or six weeks.  Then everything is put together and the negotiating starts -- first with members, then with the Governor.

Amidst all this, we still have the other business of the legislature.  I have one bill being heard in committee on Monday; a second one should be up later in the week.  I'm still working on the final draft of the Oatman bill, but that should be finalized in the next day or so.  And it appears that legislation will not be necessary to get the Arizona Veterans Memorial the help they need.  More on that next week.

Until then,

Nancy McLain