Time is running out on the Arizona Legislature to pass a budget

Posted by AzBlueMeanie:

Salvador DaliThe Arizona legislature is still in session as it engages in a protracted battle over Governor Jan Brewer's Medicaid (AHCCCS) restoration/expansion plan and the state budget, the one constitutionally prescribed duty of the legislature, which is due by July 1. Arizona Constitution, Article 9, Section 4.

Today marks the end of the temporary one-cent sales tax approved by voters, resulting in a substantial loss of sales tax revenue. State’s 3-year-old temporary sales tax ends today:

The tax has raised $2.7 billion during its three-year run, with
two-thirds of it going to the K-12 system. The remaining third was split
between health care and public safety.

With the expiration of the temporary one-cent sales tax, the corporate welfare tax-giveaway plan laughingly labeled a "jobs bill" that passed in a special session back in 2011 will now begin to phase in over time beginning with FY 2014 (July 1), further reducing state revenues:

Senate Bill 1001 (2011) is
filled with tax breaks and incentives for businesses large and small.
The legislative budget office estimated its cost at $538 million by 2018
, when all the tax cuts
are phased in.

Brewer's advisors acknowledged that there
is no guarantee the changes would yield enough new investment and jobs
to offset the anticipated revenue loss.

Several other business tax cut measures enacted since 2011 are also scheduled to be phased in over time beginning with FY 2014 (July 1).

The Arizona legislature is purposefully creating future budget deficits and worsening Arizona's structural revenue shortfalls with these corporate welfare tax give-aways. This is not a bug but a feature of anti-government Tea-Publicans who use crisis management — a revenue crisis they created with faith based supply-side "trickle down" economics — to argue for further cuts to government services to "drown government in the bath tub," as their lord and master Grover Norquist commands them.

The Joint Legislative Budget Committee issued an FY 2014 Baseline Budget Summary (1/18/13) (.pdf) earlier this year which contained several dire forecasts. Here is just a snapshot (emphasis added):

The 3-Year Baseline Budget Outlook

• In the FY 2014 Baseline, ongoing General Fund revenues are projected to be $8.32 billion. In contrast, projected FY 2014 Baseline formula spending is $8.67 billion – well above the ongoing revenue level.

• The FY 2014 Baseline, however, is balanced by using $651 million of one-time monies remaining from the end of FY 2013. After adjusting for these funds, FY 2014’s projected ending balance is $310 million.

• During FY 2015 and FY 2016, the structural shortfall between ongoing revenues and spending remains. The projected FY 2015 cash balance is $25 million, followed by a $(70) million shortfall in FY 2016.

• The large projected FY 2014 ending balance may create an incentive for new initiatives above the Baseline. Any such proposals would effectively result in turning the $25 million FY 2015 balance into a shortfall and increasing the FY 2016 shortfall.

The Baseline does not include the impact of the Court of Appeals’ K-12 inflation ruling. If upheld, the ruling would result in a FY 2015 shortfall of $(223) million and a FY 2016 shortfall of $(346) million.

General Fund Revenues

Total FY 2014 General Fund revenues are projected to be $8.98 billion, including both ongoing revenues and the beginning balance. This amount is $(385) million less than FY 2013.

• Based on the 4-sector consensus, FY 2014 base revenues are projected to grow by $416 million, or 4.9%. This gain, however, would be more than offset by the loss of the temporary 1 cent sales tax.

• Given that 3-year projections are uncertain, a forecast’s probability establishes the potential risk level. The likelihood of meeting or exceeding the Baseline forecast is 65%.

• Base revenue growth will be offset by transferring an additional $(46) million to cities as part of the urban revenue sharing formula and by $(47) million for previously authorized tax reductions.

For those of you who are into charts and graphs and digging into the weeds of the state budget, see the Joint Legislative Budget Committee – Site Map.

The only potential new source of revenue to offset these structural revenue shortfalls is Governor Jan Brewer's Medicaid (AHCCCS) restoration/expansion plan, which the governor's office estimates will inject nearly $8 billion into our economy over the first four years alone. The state portion of the plan is paid for by a new hospital assessment (bed tax).

If Arizona rejects Governor Brewer's Medicaid (AHCCCS) restoration/expansion plan, the federal Medicaid funds will no longer be available and Arizona will have to incur greater expenses for AHCCCS, which will provide substantially reduced services (50-60,000 childless adults will immediately lose coverage on January 1, 2014). This will substantially add to projected future budget deficits.

What our Tea-Publican controled legislature is doing is reckless and fiscally irresponsible. it is a scandal for which they should be held accountable.

0 responses to “Time is running out on the Arizona Legislature to pass a budget

  1. Don’t hold your breath waiting for Republican legislators to do the right thing, or for the brain-dead voters to realize that these guys aren’t doing them any favors.
    Lily Tomlin once said, “No matter how cynical you get, it’s impossible to keep up.”