Arizona Governor Jan Brewer Proposes
Decisive And Balanced State Budget Plan
Preserves Core Government Functions of Education, Public
Safety.
Governor Jan Brewer today presented the Arizona Legislature her
specific and detailed recommendations to balance the State’s General
Fund budgets for Fiscal Years 2010 and 2011.
The Governor’s budget proposes to make substantial and long-term
changes to the way State government fulfills its mission to the citizens
of Arizona.
The Governor’s budget proposes to mitigate massive cuts to education
and public safety with significant spending reductions and service
eliminations across state government, a temporary revenue increase to
bridge the fiscal crisis, and remaining stimulus spending targeted to
job creation and public safety.
In her State of the State Address on Monday, the Governor challenged
all state officials to set aside partisanship and replace it with the
higher calling of statesmanship when contemplating the necessary
decisions to restore and revitalize the Arizona that our citizens
expect.
The Governor’s complete and detailed budget proposal can be
fully reviewed at her website:
www.azgovernor.gov
The following is Governor Brewer’s state budget message to
the Members of the 49th Legislature:
“Today marks the most significant day of state budget reform and
restructuring in Arizona’s ninety-eight year history. The Executive
Recommendation for balancing the General Fund budgets for Fiscal Years
2010 and 2011 is built on a decisive, well-conceived plan that begins to
correct our structural deficit, weans State government from one-time
fixes and other fiscal gimmicks, rejects arbitrary or acrossthe- board
funding cuts, and paves the way for future economic growth.
For Arizona, the middle of the last decade was a period of
unprecedented growth and prosperity. With increased revenue streams, our
State wisely and correctly lowered taxes, and today Arizona’s tax
burden, per $1,000 of personal income, is at its lowest level in over 30
years. Arizona also increased services in every area of State
government: Medicaid expansion provided health coverage for hundreds of
thousands; expansions in our K-12 system provided a State-funded
full-day kindergarten benefit; and our higher education system enjoyed
unprecedented levels of support and expansion.
Those days of expanded government services are over. Since the start
of the recession in December 2007, Arizona’s unemployment rate has more
than doubled, from 4.3% to 8.9%. More than 270,000 Arizonans have lost
their jobs, and our job growth rate is next-to-last among the 50 states.
We anticipate that we are four years away from returning to our 2007
peak in employment.
Compared to December 2007 – just over two years ago – Arizona’s
retail sales activity is down by nearly 20%, home prices have fallen by
42%, and construction is off by more than half.
The recession and State government’s structural deficit – an
institutionalized misalignment of revenues and expenditures – have
combined to devastate the State’s finances. Revenues have declined for
three consecutive years, and, for Fiscal Year 2010, they are projected
to be 34% less than in FY 2007. While revenues have decreased sharply,
we have had to accommodate enrollment growth in our K-12, community
college and university systems; extraordinary mandated growth in our
Medicaid population; and continued obligations for public safety and
general governmental services.
We have taken difficult action in the last 12 months – action that
has impacted our citizens. We imposed the largest spending reductions –
$1.09 billion – in Arizona’s history, eliminated State services and
programs, and reduced the State workforce by almost 10%. Yet despite our
efforts to date, our job has just started. State government still must
resolve a $1.4 billion shortfall for our current fiscal year, and for FY
2011 we face a projected shortfall of $3.2 billion.
In addressing these shortfalls, the Executive Budget Recommendation
reflects my core principles:
First, public safety cannot be compromised, and my
Recommendation honors that principle. I have tried to limit the impact
of cuts to the Department of Public Safety and Department of
Corrections. While they have not gone unscathed, they must remain
positioned strongly against crimes and threats to our safety.
Recognizing that budgets are strained at all levels of government, I
will use $20 million in discretionary federal stimulus dollars to fund
grants for local public safety to
help cities and towns struggling to provide these critical functions in
these difficult economic times.
Further, education is fundamental to Arizona’s
societal and economic future, and we must protect it to the maximum
practicable degree. While the Executive Recommendation reflects the
reality that we cannot continue education spending at the rate of the
last few years, we will protect total education funding at the State’s
FY 2006 funding levels. Reducing education expenditures to that standard
will be difficult and require significant change, but the change is
necessary. At the same
time, dropping below the FY 2006 levels is not an option; I will not
accept any budget that reduces education funding below that line, and –
in light of the reductions in General Fund support – during this fiscal
crisis I will oppose encroachment on locally raised education funding
streams.
Third, taking on significant debt is not to be done
casually, and it is appropriate only in extraordinary circumstances such
as those that we face today. Unwise budget decisions in recent years
have virtually made debt the fourth leg of State revenues. Relying on
long-term debt obligations for current operations binds the State and
will suffocate our long-term recovery. While debt is needed to help us
through this current crisis, we must use it in a careful and limited
fashion.
Finally, we must recognize State government’s
appropriate and critical role and confine our planning and spending to
that role. Protecting our citizens, educating our youth and helping
those who cannot help themselves are essential government functions.
After we eliminate substantial components of State government, the
surviving core components must focus on vital services, which require
adequate funding.
To ensure that State government can perform its core functions at
acceptable standards, I stand by my call for a temporary one-cent
increase in the Transaction Privilege Tax (TPT). The increase, to go
into effect in the fourth quarter of FY 2010 and continue through FY
2013, will generate additional revenues at the rate of $1 billion per
year.
I have maintained my support for the temporary revenue only after
long, careful deliberation and concluding that the alternative – i.e.,
preventing the State from properly fulfilling even its essential
functions – is no alternative at all.
Further, as an Arizonan, as a mother, and as a person who feels great
compassion for the vulnerable and less fortunate, it is only with great
reluctance that I advocate a number of deep reductions in funding, some
of which are listed below. As Governor, I have a duty to preserve State
government’s fiscal integrity and to ensure Arizona’s long-term health.
Consistent with the core principles stated above, we must make dramatic
changes in the way State government fulfills its mission.
Specifically, the Executive Budget Recommendation:
- maintains State support for K-12 education FY 2006 levels, despite
reductions in federal support;
- maintains university funding at FY 2006 levels (75% of FY 2008
levels);
- reduces the AHCCCS rolls by 25%, or 310,000 individuals, and
eliminates the KidsCare program, which provides health coverage for
nearly 47,000 children;
- reduces services for 17,000 seriously mentally ill adults –
approximately half of that population;
- eliminates cash assistance for 10,000 families;
- places a hard cap on day care assistance and eliminates services for
more than 10,000 children of low-income working parents;
- closes the Department of Juvenile Corrections, transitioning the
custody of minors to county detention centers and laying off an
additional 900 State employees;
- reduces State employee pay by 5%; and,
- redirects Lottery revenue stream.
Even with these painful reductions, State government will have to
borrow and defer $1.5 billion. That reality underscores the undeniable
necessity of my proposed tax increase.
In a few short years, this recession has pillaged what took decades
to build, and years will pass before we fully undo its devastating
effects. We must continue to display in the months and years ahead the
fiscal discipline we demonstrated during calendar year 2009, when
together we cut the size and scope of State government and worked to
secure a sustainable path. And we must begin the long process of paying
down our debt and undoing our fiscal tricks. Once this debris is cleared
away, we will be left with a solid foundation for future prosperity.
The good news is that, together, we can solve this problem. Seasoned
by the hard work we have performed in the last year, we are better
prepared than before – and arguably better prepared than any preceding
generation of Arizona’s leaders – to guide our state through this fiscal
valley and commit to an Arizona revival equal to the promise of her
second century.
Sincerely,
Janice K. Brewer
Governor
|
