April 27 , 2009
As expected, there was a "small group" budget briefing today (Monday, 4/27). Leadership has come up with a balanced budget for 2010 that does not include any sort of tax increase. They do rely, however, on some questionable "revenue enhancements" that may or may not prove to be viable.
For example, this budget proposes that $210 million be swept from the cities' impact fee accounts, mostly from Maricopa County cities. This presumes that the money extracted from developers (ultimately from home purchasers) that has not been spent on infrastructure projects be used to cover the cities' operating costs in lieu of receiving a portion of their urban revenue sharing money. At first the League of Cities and Towns was OK with this, but now they're saying that the money just isn't there -- it's already been spent or is already committed. So the question becomes: is it really the case that this money isn't there, or has the Governor's office somehow persuaded them to change their position so that it become absolutely necessary to go for the tax increase suggested by Gov. Brewer?
The proposed budget also includes money taken from school districts from various "savings accounts" that have accumulated over a period of time -- to the tune of $300 million. Again, this would be an offset to money that would otherwise come from the state. And again, there is much discussion as to whether this money is actually available -- or whether at the end of the fiscal year much of this pool would already have been spent. A further consideration is that those districts which have been prudent in their spending (and thus have savings), would be penalized. But those which have been profligate (with no savings) would come out without any sweeps.
I think that both of these ideas have merit, but I could only support them if they were considered loans; i.e., when the state's fiscal condition improves, this money would be returned to the cities and to the school districts -- no further discussion needed.
But here's the problem: In effect, we would be issuing IOUs to these entities. Future legislatures could simply say, we didn't agree with the plan and don't intend to honor the implied agreement to repay. If we choose to bond for these amounts, there is no reneging on our promise to pay -- the bond holders would have to be paid. The usual advice is to not borrow to pay for operating expenses. But I'd rather borrow (with fixed costs known) than gamble on a tax increase that would most likely not produce the revenue that is being projected.
I am still hashing out these scenarios, and others, in my mind before making any decisions. We have an Appropriations Committee meeting tomorrow afternoon in which these plans will be vetted. It's a hearing only, so no vote will be taken. I was told that leadership doesn't expect any final action this week. They are still looking for member input, as well as reconciliation with Senate (which, as usual, is lagging behind) which will probably carry us into next week.
The problem is further complicated by the fact that we don't know what the Governor's plan is for use of the federal "stimulus" money that Arizona will be receiving. As I believe I previously mentioned, much of the $4 billion that will be coming to us is strictly up to the executive's perogative as to how it will be distributed. Our House leadership tells us that they have been asking for weeks to get some idea of how the Governor would like to see that money distributed, all to no avail. So a budget has been prepared that may be drastically altered according to the Governor's wishes. We may make decisions, unpopular with many citizens, that will ultimately be reversed by the Governor's use of the federal dollars. But with no direction from or cooperation with the executive, we have no choice but to make those difficult decisions.
As I've said to many of the freshman legislators, "You wanted to run for this office because????"
Until next week,
Nancy
Rep. Nancy McLain
602-926-5051
nmclain@azleg.gov
Nancy McLain, District 3, Arizona House of Representatives
nmclain@azleg.gov or
nmclainbhc@aol.com