May 11 , 2009

We're taking a break from deliberations on the 2010 budget for the next few days -- to go back and work on revisions to the 2009!  As expected, revenue continues to decline; and as of April 30th we're now facing an additional shortfall of $650 million.

When we did the '09 budget "fix" earlier this year, we relied on using approximately $570 in stimulus money to close the gap.  The Governor has indicated that she is willing to only use $250 million for that purpose, leaving a deficit of about $400 million.  (As I mentioned before, for most of the stimulus money expected for Arizona, the executive has total control of where it is applied.) 

Her original suggestion was to "roll over" payments due to schools, universities, AHCCCS and a total of seven programs until July, thus pushing off until 2010 these obligations and eliminating the $400M shortfall.  Our Republican leadership negotiated with her to reach the following agreement: we will rollover $100M for the university payment and use a convoluted procedure to come up with the other $300M.  That involves using the excess balance funds accumulated by school districts as an offset to payments that would otherwise be made on May 15th (another rollover).

All of this in on a fast track because of the May deadline.  There is an Appropriations Committee meeting scheduled for Wednesday morning, which should be rapidly  followed by the other steps necessary to pass a bill.  We've had to suspend the House rules in order to even contemplate this action.

There are some Republicans who are holdouts in supporting this plan.  They are angry that the Governor will not use more of the stimulus money for '09, and they also resent the fact that she has been less than forthcoming in letting us know of her plans for using what is coming to Arizona.  I agree, in principal, with those feelings, but right now we are between a rock and a hard place.  To do nothing will just compound the problem for 2010 and will give the impression that we are fiddling while Rome burns. 

My feeling is that if we now take a hard stand against the agreement between leadership and the executive, we will not only not solve the problem but set ourselves up for political problems down the road.  The budget should not be a political issue, but of course it is.  So I'm hoping that the Speaker and others in the leadership team can persuade our Republican caucus to stand together on this issue.  After speaking with Sen. Ron Gould this afternoon, my understanding is that the Senate Republicans are in agreement and will be supporting this effort.

You'll read the results in the paper before I write again next week, but I wanted to give you a bit of inside info as to what's going on.

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