June 7, 2009
Back to you after a week's hiatus. Last week was so hectic with last minute budget negotiations that I just didn't take the time to report. By now, most of you have read about the House/Senate budget that was passed out of both houses. It is being held pending further talks with the Governor, who has vowed not to sign a budget that does not include a tax increase. We have shown her that it is possible to achieve a balanced budget without one, and the results in California surely should have convinced her that the people will not agree to vote for one. But she remains adamant.
Not only is she advocating a sales tax increase that she hopes will raise $1 billion dollars in each of three years, she is also proposing that the State Equalization Tax (a tax on real property) be allowed to return after a three year moratorium. This amounts to about a $250 million hit to property owners, including businesses which pay a higher rate than the residential tax. And her budget increases permanent, on-going state spending by almost $900 million, with another $100 million increase for school construction debt service. She is also proposing that we "securitize" the lottery; that is, borrowing against future revenues
I cannot, and will not, support these provisions.
The legislative budget contains some issues that I don't like and fought against, such as a 5% cut to health care providers for the AHCCCS system (our medicaid program). This is especially troublesome for our rural hospitals, which have a higher proportion of AHCCCS patients than many metro care centers. We are also counting on privatizing one or more of our state prisons, with a concession payment of about $100 million, as well as "refinancing" (basically taking out a mortgage) on several prison complexes. This one doesn't give me as much heartburn, as I'm in favor of the privatization; but I don't like the borrowing aspect of the second part. These two items result in additional revenue of about $600 million.
I'm not happy with the plan to take funding from our cities and counties, but at least we in the House were able to reduce the amount by 1/2 of the original Senate proposal. For Mohave County that amounts to about $2 million, not the $4-5 million that the County Manager ranted about. I have consistently said that the local governments did a much better job of responding to the economic downturn that did the state; but in this time of true fiscal crisis, all belts have to be tightened even more.
And despite the County Manger's comments to the contrary, we have made significant cuts to all areas of state spending, to the tune of over $650 million. And no, we are not "decimating" education. We continue to fund $3.6 billion for K-12, $126.6 million for community colleges, and $860.9 million for universities out of the General Fund. Keep in mind that all of these entities receive additional funding from other sources, including property taxes for K-12 and community colleges.
The good news is that we were able to secure state funding for the new JTED. The pot of money was not increased, but what is available will be spread among all the districts, including the two that were approved by voters in November.
As you have probably noticed, I am somewhat upset by the article in the Kingman Daily Miner in which Ron Walker's comments were quoted at length. Ron and I have always had (I thought) a good relationship, but he did not choose to call me to discuss his concerns before venting them at the Board of Supervisors meeting last week. Had he called, I would have been able to tell him that the figures he was using were in the original Senate proposal, which no one in the House had agreed to and which were subsequently subject to many changes, all of which were in the County's favor.
Absolutely no one is minimizing the challenges we all face in this severe downturn. But we will get through this tough time as we have always done before, and I'm convinced that we can do so without crippling tax increases. The task now is to persuade the Governor to agree to the responsible budget passed by the legislature and get it signed.
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