Thursday, June 26, 2008

AFTA: This is the worst budget we have ever seen... But good news on HCR 2072

The emerging FY2009 budget is the worst budget we have ever seen. (And we have seen some really bad budgets in recent years.)

The runner-up for worst budget was the FY2005 budget—the one that passed in 2004 when renegade Republican legislators teamed up with Gov. Janet Napolitano and Democratic legislators. That budget resulted in a record 17 percent increase in spending. It was a reckless budget, with spending growth at well more than double the rate of growth of the private economy (which was a very healthy 7 percent). But at least that budget was mostly balanced.

The FY2009 Senate budget (also the result of renegade Republican legislators teaming up with the Governor and Democratic legislators) proposes to spend at least $11 billion, when the available cash is at $9.1 billion. Deficit spending would be at least 21 percent higher than available revenue.

At a time when the private economy is hurting, the Senate’s FY2009 budget would continue to push government spending to unsustainably high levels, paving the way for future tax increases.

The House budget is better. House leadership has worked hard to craft a budget that has $150 million more in spending reductions, does not have a $330 rollover gimmick, and does not borrow for non-capital expenditures such as all-day kindergarten. And the House, so far, has not gone in for the Senate’s scheme to borrow $1 billion for accelerated university construction, to be paid back by unleashing the state lottery on Arizona’s amateur gamblers.

Unfortunately, the House budget still allows for deficit spending that is 18 percent higher than available revenue. We are concerned that well-meaning House members will expend great efforts to produce marginal improvements that will then be watered down in negotiations with the Senate and the Governor, resulting in a final budget bill to which self-respecting fiscal conservatives should not lend their good names. Regardless of how the negotiations end, the Legislature in January will find itself looking at an unconstitutional cash deficit carry-forward of over $1 billion.

The bright spot in this year’s legislative Session may end up being the referral of HCR 2072 to the November ballot. If approved by the voters, HCR 2072 would keep a $250 million property tax from coming back next year, saving an average of $100 per year for the Arizona homeowner. HCR 2072 passed 6-4 in the House Ways and Means Committee today.

If it passes the House and Senate, the referendum would bypass the Governor, who vetoed an earlier version that was not a referendum (HB 2220). In March, the non-referendum version of HCR 2072 (HB 2220) passed the House with the votes of 32 Arizona Representatives (31 Republicans and 1 Democrat). We have listed the names and districts of the Good Guys here:

At the same time, 28 Representatives (26 Democrats and 2 Republicans) voted against HB 2220. We have listed the names and districts of the Bad Guys here:

In April, 16 Arizona Senators (15 Republicans and 1 Democrat) voted for HB 2220. 14 Arizona Senators (12 Democrats and 2 Republicans) failed to vote to protect property taxpayers. Here is the list of Good Guys and Bad Guys for the Senate:

If those narrow majorities hold in favor of HCR 2072, Arizona voters will have an opportunity to stop a major tax increase.

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