Nick Dranias

Court decisions share blame for Arizona's budget deficit

Posted on September 22, 2009 | Author: Nick Dranias
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During the Great Depression, Chief Justice Alfred C. Lockwood dissented against a string of Arizona Supreme Court decisions that allowed the state to deviate from the Arizona Constitution's pay-as-you-go budget rules. In one case, Lockwood warned, "Facilis descensus Averno. Sed retro!" Translation: "The road to hell is easy. Reconsider!"

Seventy years later, Arizona faces one of the nation's largest budget deficits. The JLBC reports that the state finished fiscal year 2009 $500 million short. And there is already nearly a $500 million deficit for fiscal year 2010. But even that could be understated as revenues continue to decline.

A major hole in the 2010 budget was plugged by "sale/lease-back" schemes that, in substance, authorize mortgaging state assets for $750 million, which the state will be obligated to pay off in 20 years or less. But these deals are not required to generate more than $250 million before December 31, 2009, and the $500 million balance is not required to materialize before June 30, 2010. Given the shaky economy, it is fantasy to bank on these revenues. If no one buys the assets, the state government could easily be short this $750 million for fiscal year 2010, on top of the existing deficit that hasn't been addressed.

In short, we have reached the dead end of the road taken in the 1930s. While it is easy to blame the Governor and the Legislature, much institutional responsibility lies with the Arizona Supreme Court for pragmatically breaking the Constitution's strict budgetary rules seven decades ago, despite Chief Justice Lockwood's warnings.  Even the state's sale/lease-back schemes follow the Arizona Supreme Court's own guidance on how to evade the Constitution's limit on long term debt financing.

Allowing the state to run a billion-dollar deficit over two fiscal years is openly contemptuous of Article 9, Sections 3 through 5, of the Arizona Constitution. At the first opportunity, the Arizona Supreme Court must vindicate Chief Justice Lockwood and purge such contempt from its own precedent.
 
Nick Dranias holds the Goldwater Institute Clarence J. and Katherine P. Duncan chair for constitutional government and is the director of the Institute's Dorothy D. and Joseph A. Moller Center for Constitutional Government.
 
Learn More:
 
: Current FY 2010 Budget Status after Governor September 4th Vetoes

HB2010: Sale lease back
 
Arizona Constitution: Article 9, Section 3 
 
Arizona Constitution: Article 9, Section 4
 
Arizona Constitution: Article 9, Section 5

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