July 6, 2009
It's Monday evening (July 6th) and I'm back in Phoenix for the special session called by the Governor after she vetoed many provisions of the budget passed last week, including a line item elimination of the entire $3.2 billion spending for K-12.
We received a recap of the effects of those vetoes from our Joint Legislative Budget Committee (JLBC) staff, and many were quite severe -- potentially putting some of the federal stimulus money in jeopardy, an amount of $2.3 billion for education and another $1.3 billion for Medicaid matching funds.
It's hard to summarize in just a few paragraphs all the implications of the vetoes; but the most salient point is that without further action, the 2010 budget is now $2.1 billion out of balance. In addition to vetoing specific appropriations, the Governor vetoed all the budget reconciliation bills (knows as "burbs"), which contained cost savings measures, ways to enhance revenues, and some debt financing to get us over this hump. With her actions, she basically reversed many of the cuts that the legislature previously made in adjustments to the 2009 budget, resulting in the Depts. of Economic Security and Health Services and the universities receiving either the same, or more, than in the original 2009 plan.
Another important point to be made is that her veto also reinstated the County Equalization Tax, a state property tax benefiting school districts, which increases residential and business property taxes by $250 million (a permanent repeal was included in the burbs). For those legislators who were against referring a sales tax increase to the voters as part of the budget agreement, they in effect caused taxes on real property to increase. I don't see how we can now correct this in future legislation that we would expect her to veto again, with the rationale that the state can't afford it. The moratorium on this tax relieved property owners, but K-12 funding did not suffer because it was "backfilled" from the general fund. As it stands now, both funding sources will be made available to schools.
So what did we accomplish in today's special session meeting? Here's a summary of the bills:
*Appropriated $3.677 billion from the State General Fund and $46.5 million from the Permanent State School Fund for basic state support of K-12 education
*Increases the amounts for charter school additional assistance
*States that school districts cannot include for budgeting purposes certain specific funding until October 1, 2009. This gives us the opportunity to revisit these issues in another special session, which is certain to happen later this summer.
*Makes changes in health and welfare programs that will allow us to continue to draw down stimulus money.
*Provides that legislators will not receive their special session per diem on days that the legislature does not actually convene.
These provisions were agreed upon by both Republicans and Democrats, and the votes on all four bills were 47-0, with 13 not voting. Everyone recognized that we simply could not afford to jeopardize the federal funds.
Our leadership is not sure whether or not the Governor will accept these bills, so we adjourned today with a date to reconvene of July 13th. If she vetoes again, we hope to maintain the bi-partisan vote and override those vetoes, which takes 45 in special session. If she signs them, we're off the hook for the moment. But there is hard work ahead as we try to fill the holes that the Governor has created for us.
As I indicated last week, this could have been resolved with a referral to the ballot of the sales tax measure, which most believed was sure to fail. Leadership told the Governor that they could not guarantee the votes necessary and it would be up to her to round up the rest. She could not do it, but decided that she would not honor the negotiated agreement anyway. Now we wait to see what she does with this temporary fix.
Next week I plan on doing a recap of the bills that I sponsored this year and their successes and failures.
Until then,
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