Donna Gratehouse introduced you to Dicey Doug Ducey’s Budget Study Committee. To no one’s surprise, Gov-elect Ducey’s Budget Study Committee is a bunch of rich white people (What? No Tom Jenney from Americans for Prosperity?)
Howard Fischer reports today that they are essentially getting the band back together for the GOP’s Gimmicks-R-Us Shoppe. You see, when you start from the premise that taxes are always off the table, you are not to be taken seriously on matters of tax policy — Arizona has a structural revenue deficit precisely because of years of ideologically driven GOP tax cuts that have failed to produce the promised miraculous results. Ducey won’t rescind tax cuts to balance budget:
The successful gubernatorial candidate who promised to balance the budget without tax hikes or borrowing won’t be presenting a truly balanced spending plan to lawmakers in January.
Doug Ducey acknowledged in an interview that projected revenues for the next fiscal year will be less than $8.79 billion, while current spending is at $9.3 billion.
But the budget is considered “balanced,” with the difference financed through accounting maneuvers, borrowing, raiding some special state funds, and tapping the last of the cash left over from the now-expired temporary 1-cent-per-dollar sales tax increase.
In budget parlance, this is known as “gimmicks.” To cities, counties and school districts, it is better known as “theft.”
[L]egislative budget analysts anticipate new expenses next year that cannot be avoided, which will take spending next year to more than $9.4 billion — not including the additional $336 million the state may have to start paying each year to public schools to comply with a voter-approved requirement to adjust aid to match inflation.
Ducey said there are places to cut expenses, but he conceded he cannot get spending down to that $8.8 billion revenue figure — at least not this coming year.
* * *
Ducey does not yet have a plan. “This is going to take some time,” he said. In the interim, Ducey said, his job is to figure out how to use the money now available “to manage through the situation that we have.”
Remember, Dicey Doug Ducey has been our state Treasurer for the past four years, and he has been running for governor for the past year, and he still does not have a plan. What has he been doing with his time?
Ducey took the first step Monday, forming a seven-member committee of financial experts in the public and private sectors to study the budget and make recommendations. But he made it clear upfront that some things remain off the table.
Key among those is the possibility of a tax increase.
Ducey is so opposed to the idea that he even nixed the kind of temporary tax hike pushed by incumbent Jan Brewer in 2010 after the recession sent state revenues into free fall. Brewer got voter approval by saying the alternative was much larger cuts in spending for vital state programs.
There is a way for Ducey to raise revenues without imposing new taxes.
He could simply cancel or delay a series of tax cuts lawmakers approved in prior years that have not yet taken effect. That includes $100 million worth of revenue reductions this coming fiscal year alone, mostly in tax breaks for corporations.
The new governor, however, said he won’t do that, insisting it would be counterproductive.
This is the problem when a disproved and discredited economic theory attains the status of quasi-religious dogma — it becomes a matter of faith, and the faithful will not question their faith regardless of the weight of all objective evidence to the contrary. “I believe!” Arizona is headed down the yellow brick road that Kansas took.
There are limits, though, to what can be cut.
Funding for K-12 education, projected at $3.8 billion this coming year, is set by a statutory formula. And even if the state escapes another $336 million to schools to fund a voter-mandated inflation formula — to say nothing about the $1 billion in missed payments — legislative budget staffers say school aid has to increase by $175 million next year.
Then there’s another $57 million for the state’s $1.3 billion Medicaid program, also set by law.
Those two alone take up more than half the budget.
Ducey is instead looking at more than 80 smaller agencies for places to save. But their combined budgets total only around $1 billion — the amount legislative budget staffers say could be the deficit by the 2017 fiscal year.
What that leaves is Ducey’s belief that the state can grow its way out of the recession. [“Click your heels three times!”]
“A 1 percent change, in terms of a growing economy, represents $500 million over the course of the next three years,” he said.
“If we can get the economy growing even at traditional levels, which is not where it is today, it changes our budget situation dramatically,” Ducey said. In the meantime, he said, the state needs to figure out how to use the money Arizona does have “to manage through the situation that we have.”
Ducey rejected any suggestion that a series of tax cuts previously adopted by the Legislature, with more than $650 million implemented in the last decade alone, has left the state worse off.
But of course he does — he has blind faith in supply-side “trickle down” GOP economics, and it is a question of faith to him. “I believe!” All objective evidence to the contrary be damned. Ducey and his Tea-Publican allies will damn Arizona to a fiscal train wreck for at least the next two years.