Friday, January 16, 2009

Goldwater Institute: Correcting the Record: On Balance, the Budget Never Was

ByronBy Byron Schlomach, Ph.D.
In her State of the State address, Governor Napolitano made two rather remarkable statements. She said, "I have always presented you with a balanced budget plan that moved Arizona forward," and "We have passed a balanced budget every year."

010709 Ladner GraphMy recollection is that the fiscal 2008 budget passed in June 2007 with a wink and a nod by all parties and before summer was over it was publicly acknowledged that budgeted spending would outpace revenues. It was belatedly "balanced" by bonding school construction, draining the rainy day fund, and suspending a monthly payment to schools, among other gimmicks.

Chastened, many members of the legislature were determined that the fiscal 2009 budget would actually be balanced. The JLBC, with its three revenue forecasts, repeatedly estimated revenues significantly below the governor's rosy prognostications. In the end, the 2009 budget was not only full of gimmicks, it flouted the state's constitutional balanced budget requirement. Even on the day it was passed, no one involved can credibly claim they honestly thought this year's budget would be in the black.

Some members of the legislature are considering requiring the state's treasurer to certify whether future budgets are balanced. As a statewide elected official with a clear mandate, the treasurer could be held directly accountable for failure to call over-spending legislators to account. This is a desperately needed measure that really ought to have constitutional teeth.

Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.

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