Napolitano Girds for Budget Battle


Governor Janet Napolitano faces a new session of the Arizona legislature with a large budget surplus and a Rublican majority dominated by ‘small government’ poseurs determined to lay a major tax cut at the feet of their wealthiest constituents. She’s going to have to fight to keep every dollar of revenue flowing to badly underfunded and neglected public purposes, and probably throw a few tax breaks into the mix to sate the ravening dogs of the Right. Her proposed 2007 is a solid start.

I will probably comment further on the Governor’s budget later, but for now, I want to present the Governor’s own words on the budget, which I suspect far too few Democrats, let alone Republicans bother to read. After the jump I pass on her letter to the legislature laying out her budget proposal.

The Governor’s main thrust is to repay the fiscal juggling acts adopted in recent austere years and to enhance core state services: the three major areas of education, prisons and AHCCCS consume 80 percent of Napolitano’s proposed budget. There’s little or no wasteful spending in the Governor’s proposal (though her gesture to the Right of funding for border enforcement, which should be borne by the Feds, is arguably wasteful). It will be interesting to see if the Legislature comes up with a budget of which the same can be said.

January 2006
To the Honorable Members of the Forty-Seventh Arizona Legislature:

In the context of budget creation, governing is largely about making good choices. Three years ago, when depressed revenues presented us with a projected billion-dollar deficit, the Executive and Legislative branches had a choice between raising taxes or implementing temporary fiscal measures. Guided by the belief that good times would soon return, we chose the latter, and history has validated our decision.

As I write to you today, our vibrant, fully recovered economy and three years of fiscal sacrifice and discipline at the State level give us a precious opportunity to pay off some of the fiscal bridges, to invest in education, to care for Arizona’s children, and to make larger deposits to State government’s Budget Stabilization Fund.

The Executive Budget Recommendation for Fiscal Year 2007 reflects a balanced approach. It emphasizes strategic tax relief and economic incentives that offer enduring benefits to taxpayers and to the state at large. It also modernizes State assets and strengthens vital programs that, during the last three years, bore the brunt of our fiscal austerity. In short, we should make the coming fiscal year a time for continuing to keep our house in order as we pour the foundation for long-term excellence in our essential and critical service areas.

The most effective and beneficial forms of tax relief at this time must be targeted toward helping Arizona families meet the rising costs of daily life and reward businesses that contribute to their employees’ quality of life. To help ensure that working Arizonans have access to health care, I propose that the State offer an income tax credit to small businesses that have two to 24 employees and provide employee health insurance. To help parents send their students back to school in the fall, and to stimulate customer traffic for many Arizona retailers, I am proposing a three-day sales tax holiday during which State sales tax will not apply to the purchase of school supplies, clothing, and the first $1,000 of computer equipment. To give families relief from the cost of their cars and trucks, I propose that we cut Arizona’s vehicle license tax and, as an added incentive, we cut it in a way that rewards drivers who choose to conserve gasoline. And to encourage innovation by Arizona businesses, I am recommending that we expand the existing credit for research and development of new products, systems and technologies.

The spending priorities contained in the Executive Recommendation reflect, in large part, a strong focus on three critical areas that directly impact the present and future: public safety, education, and health care.

In addition, our objectives should include repaying fund transfers that were part of prior years’ temporary fiscal measures. Specific recommendations consist of $95.5 million to repay half of the K-12 rollover; $118 million to fully pay back the Vehicle License Tax Fund; and $40 million as a partial repayment to the Highway User Revenue Fund. We will also increase our savings by putting an additional $180 million in the State’s rainy day fund.

With respect to public safety, this budget provides a $100 million initiative aimed at securing our border with Mexico, suppressing the entry and trafficking of illegal aliens into our state, preventing the importing of hazardous waste, and upgrading our crime lab resources in southern Arizona. To make our adult prisons safer for correctional officers and the public, we will make substantial progress toward implementing the system-wide reforms recommended by the Blue Ribbon Panel that investigated the 2004 hostage situation at the Lewis Complex. We also work toward ensuring that not one abused woman is turned away from a shelter or denied a place of safety. And, as part of our anti-drug efforts, we will take decisive action to halt the manufacture and distribution of methamphetamines and to deal harshly with the perpetrators of the meth epidemic that threatens every Arizonan.

No use of State funds provides a greater return than investing in our public education system. At every level, education funding must focus on the classroom. The Executive Recommendation provides for a pay hike for every teacher and a statewide increase in the base salary, in fair exchange for our heightened expectations for student performance, and it lays the groundwork for a progressive program of professional development for teachers in order to keep our best teachers in the classroom. Two years ago we made a laudable start in implementing voluntary all-day kindergarten, and now we must make that popular and valuable program available to all parents who want it for their children. Arizona’s universities continue to achieve national and international prominence, and we must continue to focus on attracting and retaining top faculty in order to benefit from the economic and intellectual assets that accompany them. We can further help our universities achieve their mission by providing performance incentives on such criteria as graduation rates and degrees awarded. And as the academic climate on our campuses evolves, we must make it more accessible to Arizona students who require financial assistance.

One of State Government’s most essential functions is to care for our most disadvantaged citizens of all ages. For children, the first months of life are crucial in terms of their overall well-being and development, and the Executive Recommendation provides additional resources for the Newborn Screening Program.

As our economy grows, one of the consequences is the often fragile transition of parents from dependency to employment; during this time, childcare subsidies are crucial, and we must be prepared to meet that need. For children who are permanently separated from their parents, additional funding is required to meet adoption caseload growth and to assist the adoptive parents of more than 9,200 children each month. Finally, approximately 184,000 Arizona children live in households at or below 200% of the federal poverty level and are not covered by health insurance; additional funding for the KidsCare Children’s Health Care Program will provide coverage for those children.

To meet the care needs of adults, the Executive Recommendation advocates a health care premium subsidy for workers earning below 200% of the federal poverty level to help them afford their share of employer health care premiums. This budget also provides necessary funding for Breast and Cervical Cancer Treatment and for adult community services and independent living support programs. To help recruit and retain Arizona physicians, the Executive Recommendation strengthens medical student loan and scholarship programs that encourage physicians to set up their medical practices in underserved areas or to meet the needs of underserved populations.

These actions build on the commitment we made last year to begin funding a medical school in Phoenix. Finally, the risks and sacrifices that military veterans have made on behalf of our nation warrant our unfading appreciation and our commitment to accommodate their unique needs. In Fiscal Year 2007 we will fund the startup cost of building a State veterans home in southern Arizona, increase the Veteran Benefit Counselor staff, and restore money to the Veteran Cemetery Fund for a cemetery in northern Arizona.

Most of these programs and initiatives carry a significant investment. In many instances, the investment is greater today because State government was unable or unwilling to pay the bill when it first came due. But today, for the first time since most of us first took our oath of office, Arizona’s robust economy and the State’s favorable fiscal condition present us with an uncommon and enviable opportunity to catch up with our obligations and to bring our equipment, buildings, programs and services up to date.

The packages included in this budget reflect the Executive’s singular focus on making our state and our citizens safer, stronger and even more prosperous than ever before. Working together during this Legislative session, we can achieve this goal and continue to move Arizona forward. Let’s do it.

Very truly yours,
Janet Napolitano