Thursday, February 12, 2009

Goldwater Institute: And now, the rest of the story on voter-protected spending

Byronby Byron Schlomach, Ph.D.

Arizona's Voter Protection Act passed in 1998 (Prop 105) mandates that spending approved by initiative cannot be reduced by the Legislature. Thirty-five percent of Arizona's General Fund budget is voter-protected. The way to amend voter-protected spending is for three-fourths of the Legislature to vote to override a mandate. But there is more to the Voter Protection Act story, which is sometimes used as an excuse for not reducing spending when it needs to be.

moneyOne major spending initiative passed in 2000 (Prop 204) required Medicaid eligibility for anyone below the federal poverty level. Prior to that initiative, everyone below 75 percent of the poverty level was eligible. Today, the Legislature considers all Medicaid spending voter-protected, even though less than a third of it is mandated by initiative. For example, none of the defined benefits are initiative determined.

Another major spending initiative passed in 2000 (Prop 301) is basic funding in public education. That level is set and automatically inflation adjusted. Basic funding, however, is only the beginning point in school funding formulas. Additional formula elements are entirely within the control of the legislature.

So, when it is said that 35 percent of the state's budget is off limits for reductions, this means at least 65 percent can be cut. Contrary to popular belief, there is plenty of fat to be trimmed from Arizona's budget. As we gear up for the 2010 budget battle, legislators should do themselves a favor and not take spending off the table that isn't required to be.
Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.
Learn more:
Joint Legislative Budget Committee: Arizona's voter protected spending (p.11)

Americans for Prosperity: Graph of Projected Deficits

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