Byron Schlomach

Budget Reduction Opportunities 2011

Posted on February 03, 2011 | Type: Policy Report | Author: Byron Schlomach
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When Arizona’s current budget problems began in the spring of 2007, we had just come off of two years of unprecedented revenue and expenditure growth of 17 and 12 percent respectively. Since then, lawmakers have used a variety of tactics to manage the budget as state revenues dropped to levels last seen in 2004. These tactics have so far allowed Arizona to continue spending at near-record levels. Of $12.5 billion in solutions to budget shortfalls, $2.2 billion are said to have been in spending reductions. Total state General Fund spending is budgeted at less than $1 billion below what it was in 2008, the year General Fund spending reached its peak. The rest of the gap has been closed with debt, federal funds, fund transfers within state government, and two record tax increases.

It is time for false promises to end and genuine reform to begin. Enhanced federal funding will soon come to an end. The Brewer Administration’s suggested Fiscal Year 2011 budget fixes demonstrate that gimmicks are still possible, but they are running out. The temporary sales tax increase is slated to end in Fiscal Year 2014. Now is the time to consider and implement government reforms that increase efficiency and reduce spending while maintaining state government’s core functions.

What follows is a series of suggestions for $2 billion in budget reductions based on Fiscal Year 2011 spending levels. The Governor’s office estimates the Fiscal Year 2012 budget is $1.1 billion in deficit. The suggestions that follow add up to well over that amount. The first two presume that all levels of government in Arizona will take responsibility for their spending by directly raising the revenues they desire. Even without the first two suggestions, the reductions here total over $1.2 billion, these reductions do not assume we will receive a waiver from the federal government. It may not be possible to immediately implement all of the suggestions and phase-in periods and/or elections might be necessary for some.

There is no question that these budget reductions will be challenging but significant changes must be made in our spending priorities in order to meet Arizona’s needs and put our fiscal house on solid footing.

The good news is that the majority of these suggestions have come from the agencies themselves. When asked for contingency plans on how they would reduce their budgets by various percentages last year, many agencies offered excellent suggestions for savings that have yet to be enacted.

Read the Budget Reduction Opportunities policy memo here

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