The primary cause of this year's fiscal deficit is excessive government spending. State spending has grown far more than needed to keep pace with Arizona's growing population. Whereas population has grown by only 36 percent, government spending has grown by 63 percent.1 Contrary to some reports in the media and the legislature, the mild recession has not left the state withering on the vine. The current state budget is the largest in Arizona's history.
The cure for the deficit is not to raise taxes, shift earmarked revenue from other accounts, issue bonds, or use budget gimmicks. Those are temporary solutions at best. The long-term, sustainable, and responsible solution to a bloated budget is to rein in spending.
If government spending had increased at a rate consistent with population growth since 1990, there would not be a deficit today. Instead, legislators would be debating what to do with a $217 million surplus.
This study identifies more than $233 million of spending cuts in the general fund that the legislature should consider. Some of the programs are identified for elimination because they exceed the bounds of a properly defined role for government, such as the Arizona Commission on the Arts. Some programs are redundant, and others could be reduced, privatized, or devolved to the local level. These spending cuts can be achieved without challenging federally mandated spending or substantially altering the way education and health care are currently provided in Arizona.
The future savings from this belt-tightening should be returned to taxpayers. Money left in state coffers will inevitably be spent. Finally, strict budget rules should be enacted to ensure that future budgets do not increase faster than the rate of population growth. A spending cap would force legislators to reassess the state's priorities on a more frequent basis, keeping the budget and the state tax burden at manageable levels.