Byron Schlomach

Balanced Ledger or Legerdemain?

Posted on July 02, 2008 | Author: Byron Schlomach
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Like a suspenseful action movie that resolves all plot conflicts in the last fifteen minutes, the Legislature passed a budget just in the nick of time. Unlike after a good film, though, I'm left wondering what I waited for. The budget fails Arizonans on a number of fronts.

For one, the budget still isn't balanced. The assumption that only a $1.9 billion shortfall exists for 2009 is based on a rosy scenario of four percent revenue growth next year. According to the Joint Legislative Budget Committee (JLBC), a $2.2 billion spending gap is much more likely.

The budget reduced General Fund spending by only 3 percent, or $343 million. These paltry reductions sacrifice little, considering the 30-percent real growth in per-capita spending since 2005.

To find another $1.6 billion, the state resorted to a combination of fund sweeps (moving funds from a designated category to another agency), borrowing, and postponing state commitments.

The state is borrowing $527 million in the name of school facilities. But much of this is to pay itself back for general funds already spent this year on school construction.

And then theres borrowing on top of borrowing. By an accounting gimmick, the state has deferred $300 million owed to school districts again. The $600 million of unfunded obligations for 2008 and 2009 will require the school districts to borrow, and school district taxpayers will pay the interest on borrowing to make up for the losses.

The legislature has used just about every gimmick, drained every fund, and borrowed every dollar it can. With normal budget growth and the modest growth rate predicted by the JLBC, the 2010 budget is likely to be in the red. Deep program cuts or tax increases will likely be on the table in the future, because this budget, quite literally, passed the buck.

Learn more:

Goldwater Institute: Compromise on Arizona State Budget Makes 2009 a Year of Reckoning

Goldwater Institute: Blaming Feds for Budget Deficit Passes the Buck

Goldwater Institute: Budget Shortfall not Inevitable

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