Darcy Olsen

Budget Blues

Posted on January 21, 2008 | Author: Darcy Olsen
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After five straight years of being flush with cash, Arizona faces a staggering deficit of about $1 billion. What went wrong?

Some analysts point to declining revenue. Revenue growth dropped from 7 percent last year to 1.6 percent this year. But declining revenue is only a piece of the puzzle. Most state economies have been slowing, but Arizona is one of the only states in the red.

Extreme spending bears most of the guilt. In just five years, Arizona state government has grown 32 percent, even after adjusting for inflation and population. Arizona's per capita state spending is now on par with Massachusetts. If the state had simply funded what was needed to keep up with population growth and inflation since 2003, we would have a $1.6 billion surplus today.

Now that revenue is slowing, as it invariably does, policymakers are trying to figure out how to close the gap. A ten percent reduction in key agency spending is a great starting point. We should also avoid new debt.

Lawmakers also have a great opportunity for creativity. In education, we could reduce pressure on the budget for new school facilities by giving children a portion of their state allotment to attend neighboring private schools. In transportation, lawmakers could tap the private sector to finance the construction of some of the new roads we need.

As the New Year rushed in, millions of Americans resolved to get a handle on their finances. State government should do the same

Darcy Olsen is the president and CEO of the Goldwater Institute. A longer version of this article originally appeared in the Arizona Republic.

Learn More

Arizona Republic: Loose spending hurts state

Goldwater Institute: Dollars and Sense: How Arizona's Spending Choices Affect Our Future

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