Wednesday, November 21, 2007

Goldwater Institute: Chinese Finger Trap

Cutting this year's budget won't fix the long run shortfall

By Byron Schlomach, Ph.D.

A prominent public official recently said that due to dedicated revenue spending and spending that is dictated by past voter initiatives, the Arizona legislature directly controls only 35 percent of state spending.

If that's true, and assuming that half the money budgeted for this fiscal year has been spent by January, the $600 million shortfall represents one-third of the remaining discretionary funds for the 2008 fiscal year. No wonder legislators are hesitant to rely only on budget cuts to balance the state budget.

In only five years, the Arizona Health Care Cost Containment System budget is slated to more than double. Department of Economic Security spending will nearly double, and so will that of the Department of Health Services. Combined, these increases add up to almost $1.4 billion, dwarfing the current estimated shortfall.

For that matter, one-third of the current shortfall can be attributed to the new all-day kindergarten program. It is costing $209 million in this fiscal year. In fact, other new state programs instituted in just the last five years are costing over $160 million this year.

Beyond this year's budget crunch, Arizona's larger fiscal challenge is to get all spending, formula and otherwise, under control.

Although its origins are disputable, a famous quote describes how democracies tend to founder on excessive spending as majorities essentially vote to themselves more of the public treasury. Let us hope Arizona finds a way out of this trap.

Dr. Schlomach is the director of the Center for Economic Prosperity at the Goldwater Institute.

No comments: