Monday, June 15, 2009

Goldwater Institute: Honest budget debate requires common starting point

ByronBy Byron Schlomach, Ph.D.

It's easy to be confused when it comes to the state budget and the competing plans for closing next year's deficit.

On the one hand, Governor Brewer says there is a $4 billion deficit going into 2010. On the other hand, the Legislature says it's a $3 billion deficit. The Legislature's plan claims to trim the budget by $630 million, while the Governor claims $930 million in reductions. Yet, it's consistently reported in the news that the Legislature is cutting more than the Governor.

Clearly, the two sides are using different starting points, making it rather hard to get at the truth. The Legislature apparently starts with the current 2009 budget; but the governor starts with the 2009 budget as written before January, and doesn't take into account the budget reductions that were already made this year.

To help address this problem in the future, the Goldwater Institute has recommended that state finances be independently certified by the State Treasurer's office to provide lawmakers with an accurate figure upon which to base the budget.

But the biggest subterfuge of the budgeting process to-date is the amount of state spending reported and the degree of shrinkage that has occurred in government. Since 2007, General Fund spending in Arizona has been pretty much flat, around $10 billion, as shown in the graph below. Total state spending, however, including all special funds, fund sweeps, and federal monies, has increased every single year (with the possible exception of yet-to-be-completed FY 2009).

In other words, by using fund sweeps, increased federal funding, and other gimmicks, policymakers have mostly avoided actually reducing state government. In fact, state government employment increased through most of 2008 and as recently as February was still higher than in 2007. Local government employment has also continued to grow throughout the recession.

Perhaps with a common set of assumptions and an honest look at the big picture, we could finally get the state budget problem resolved. Regular Arizona taxpayers' pocketbooks are shrinking; it's high time government shared the pain.

Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.
Learn more:
Governor's Office: Governor Brewer's Budget

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