Governor Ducey’s budget is ‘based on unicorns and rainbows’ (alternative facts)

I am glad to see that Democrats in the Arizona legislature are using the terminology that I have used to describe Governor Ducey’s budget: ‘Unicorns and rainbows’ – Dems question governor’s budget plan:

[A]fter the Governor’s Office presented details of Ducey’s budget proposals in full before the Joint Appropriations Committee meeting on January 17, Democrats’ hopes were largely deflated.

“It was full of great ideas but there was no funding to back it up,” Rios said after the meeting. “I’m really surprised the governor would put that out there and not assume that people would continue to watch when he actually let us know what he was going to fund.”

* * *
Senate Assistant Democratic Leader Steve Farley was one of the most skeptical voices on the left following Ducey’s State of the State address – perhaps because he already announced he is seriously considering challenging Ducey during the governor’s expected 2018 re-election bid.

Now, like many Democrats, Farley is skeptical that Ducey can even deliver on his proposed budget.

Farley noted that although the governor’s budget team, the Office of Strategic Planning and Budgeting, has projected almost $17 million more in revenues than expenses, the Legislature’s budget crew, the Joint Legislative Budget Committee, has warned that’s probably a rosey estimate.

The revenue projections in the governor’s plan are based on unicorns and rainbows, not on reality,” Farley said.

In fact, Legislative budget analysts cautioned lawmakers that the governor’s projection of available revenues is far rosier than their own. JLBC chief cautions lawmakers on governor’s spending plans:

Richard Stavneak, director of JLBC, pulled no punches in a joint hearing of the House and Senate Appropriations committees, telling lawmakers that he’s concerned by the governor’s proposing of myriad new spending plans without accounting for many legislative priorities or the possibility of an economic downturn.

“We may not have as much money as the governor thinks we have to spend,” Sen. Debbie Lesko, Senate Appropriations Committee chairwoman, told lawmakers at the hearing on January 17.

Accounting for disparities in revenue and spending, JLBC analysts project a $159 million cash balance at the end of fiscal 2018, while Ducey’s proposal leaves just $17 million. Ducey accomplishes spending more by projecting higher revenues — 4.1 percent baseline growth, compared to 3.9 percent projected by JLBC — and assuming lower formula-based spending requirements in areas like Medicaid, K-12 education and corrections, to the tune of $67 million less than JLBC projects. The governor also eliminates $86.5 million in highway spending, resuming a longstanding sweep of funds from a dedicated funding source known as HURF.

This is a budget gimmick that can blow up the governor’s “unicorns and rainbows” budget. Governor’s grab of cash for roads risks fight in legislature: “The governor’s budget proposal for the year starting July 1 eliminates $86.5 million in highway spending in the current year, a decision likely to spur a fight with lawmakers from both parties who have been seeking a permanent stop to shifts of cash for road work to other uses. Legislation that would bar the practice and require gas tax money only be spent on roads has been introduced in the Senate with both Democratic and Republican sponsors.”

As for the state’s structural balance — the maintenance of which is a priority for both the governor and GOP Legislative leaders — Stavneak’s office estimates the state will be left with a $46 million balance, compared to just $10 million by Ducey’s projections.

* * *

However, lawmakers shouldn’t assume that they’ll have even that amount to spend. Proposition 206, the voter-approved bump in the minimum wage, looms large over budget talks, as many private companies that provide services the government is obligated to offer are asking for adjustments to their contracts to account for as much as a $1.95 hike in hourly wages. The governor’s budget accounts for some, but not nearly all, of those needs, Stavneak said.

The governor also eliminates several budget items from the current fiscal year spending plan. Technically designated as one-time spending, Stavneak lamented what’s essentially a gimmick — lawmakers often classify a budget item as “one-time” for several consecutive years.

“If it’s a commitment that shows up year after year, that to me is ongoing,” Stavneak said, adding that there are several so-called one-time spending measures he’s certain the Legislature will want to continue. Spending on measures such as school facility maintenance and new school construction, as well as higher funding for universities, could result in $105 million in spending reclassified as ongoing, according to JLBC budget documents.

Stavneak also warned of calamitous consequences of a repeal of the Affordable Care Act, which congressional Republicans have vowed to do under President Donald Trump. Federal changes to health care law could affect the state budget to the tune of $1.4 billion if the state wanted to retain everyone who’s now insured.

It may only cost the state as low as $100 million — still not a pretty picture, Stavneak warned — if the federal match obtained by expanding Medicaid in 2013 goes away. The law that a bipartisan coalition of lawmakers adopted that year included a failsafe, which eliminates the hospital assessment that draws down those matching funds.

Further, “there’s clearly an elimination of deficit reduction, especially congressional Republicans are going to want to incorporate into the ACA,” Stavneak said. Any spending reduction at the federal level would be felt by states like Arizona, he argued.

“In the back of our mind, we do need to keep into account that there well could be some additional cost,” Stavneak said.

Not to mention the possibility of another recession, which Stavneak said the state would be woefully unprepared for if it adopted Ducey’s budget.

Arizona gained only 6,300 net jobs in December, closing 2016 with half the growth seen in 2015 and falling below the nation’s overall pace. Arizona’s job growth falls below national rate:  “The slowdown in job creation that began in summer deepened as the year ended and added to the caution economists are feeling about the state’s finances as lawmakers prepare the fiscal 2018 budget. The relatively weak job growth left the economists urging lawmakers to avoid big changes to the state’s $9.6 billion budget.”

Stavneak said the JLBC isn’t forecasting a recession, but “the law of averages suggests there will be another recession.” He warned that the state’s $450 million rainy day fund “by itself would not be able to address a recession scenario,” which could result a $737 million shortfall.

Budgeting a mere $10 million in structural balance by the end of fiscal 2018 “is too close to the margin given the challenges we face ahead,” Stavneak said.

And then there are things that the Governor’s office did not account for in its budget. Lack of cash to run computers could cost state federal funding:

The state Department of Education is warning that schools may not get their $5 billion in federal and state aid next school year unless the governor and legislature come up with more cash to run the computers that figure out who gets what.

Stefan Swiat, press aide to Diane Douglas, said the agency got a one-time $7.3 million this fiscal year for information technology. He said this year’s request made to the governor through his Department of Administration was for $17.6 million.

And what did Gov. Doug Ducey put in his budget request to the Legislature?

“Nothing,’’ Swiat said. “Zero dollars. Big fat bagel.’’

He said this isn’t a question of asking for new equipment. Swiat said the IT budget includes not only routine maintenance costs but, potentially more significant, the salaries of the people who operate the computers that figure out how much each school is due.

“If we don’t have a system, schools don’t get paid,’’ he said.

Dawn Wallace, the governor’s chief education adviser, said this was not a purposeful slight.

She acknowledged that Ducey’s proposal zeroed out the IT line in the agency’s budget request. But Wallace said it’s not because the governor believes the Department of Education does not need at least some money.

“There’s just a lot in their request,’’ she said.

* * *

Wallace said she has been talking with Department of Education officials as recently as Friday and is sure that something will be worked out to ensure there will be no interruption of payments to schools.

Douglas, in a separate letter to school administrators around the state, said answers are needed — and soon.

“Our IT staff will not be reassured about their employment, so we may begin to lose them permanently to other employers, which will cause the performance of the applications they maintain to decline,’’ she wrote.

* * *

“Unfortunately, without any funding in next year’s budget proposal to support the data system that allow us to collect enrollment information from schools and calculate their allocations, we will soon be unable to process the payments that support Arizona schools, teachers and students,’’ the superintendent said.

* * *

Swiat said he is not saying the zeroed-out funding request was done on purpose.

“We’re not going to point the finger,’’ he said. If nothing else, he said, this was “a massive oversight.’’

Swiat acknowledged that the IT request was in some ways more complex than in the past.

He said it included not just $10.1 million “to keep everything running,’’ including the system of sending out state and federal aid to schools but also another $7.5 million to finish a new student data system. But Swiat said all of it is justified.

It sucks when fiscal reality intrudes on GOP budget fantasies.

Governor Ducey engages in the same “alternative facts” that our Dear Leader Donald Trump does, as Laurie Roberts points out. ‘Alternative facts’ nothing new in Arizona:

While the nation works to get its arms around the concept, we in Arizona know it well. We live with “alternative facts” all the time.

Gov. Doug Ducey has built much of his record on such things.

* * *

This year’s big “alternative fact”? That Ducey is a champion of public education in general and teachers in particular. Recognizing that Arizona’s teachers are bailing and that we are at the throes of a crisis, he’s proposed $14 million for teacher pay raises as part of an overall plan to boost education funding by $114 million..

“This is an investment by the state of Arizona in recognizing and rewarding the work of our teachers in a way that is fair, permanent and fiscally responsible,” he said earlier this month, in his State of the State address.

With a 4/10ths of a percent pay raise. That’s $182 for a teacher who makes the state average ($45,000). For Mallory Heath, a high school teacher in Chandler, it amounts to $2.07 a week.

And perhaps the most brazen alternative fact of all? That Arizona is too broke to properly fund our public schools.

“There’s no pot of gold, or cash hiding under a seat cushion,” he lamented in his State of the State address. “And unlike Washington, we don’t print money, and we won’t raise taxes.”

He could, however, stop giving away money.

No mention of the $74.3 million in corporate tax credits that this year can be diverted from the public til to private school tuition this year – a $12 million increase over last year, thanks to a 20 percent increase that’s automatically applied every year.

No mention of $97 million in previously approved tax cuts that are about to go into effect. Or the $182 million in tax cuts that’ll go into effect the following year.

“Alternative facts? Got to give the guv credit. They really do work.” Especially when the GOP-friendly media in Arizona lets him get away with it by simply parroting his “alternative facts” as truth. Have you watched your local TV newscast lately?

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