Thursday, June 4, 2009

Goldwater Institute: How deep do budget cuts go?

With less than a month before the 2010 fiscal year begins, Governor Brewer has announced a specific budget plan that proposes cuts in spending of less than $1 billion. The Governor's cuts for 2010 are smaller than those already made in 2009, despite the state's staggering deficit of nearly $3.5 billion.

It can be difficult to compare apples to apples when looking at
Arizona's General Fund spending from one year to the next due to the common use of budget gimmicks. Nevertheless, such comparisons can still be revealing.

Byron chart
The above chart shows General Fund spending since 2001. The fiscal 2009 figure accounts for spending cuts that have been made, but understates actual spending due to gimmicks, like fund sweeps and delaying school district payments. The fiscal 2010 figure is the spending level proposed by Governor Brewer after all real cuts--actual spending reductions--are accounted for. Spending is flat since 2007, with hardly a hiccup since the recession started, and the modest state spending reduction in 2009 is largely restored in 2010.

This illustrates the reluctance on the part of many in state government leadership--including Governor Brewer--to adjust to reality. The state's unemployment rate is currently 7.7 percent, well above the 6 percent reached in the 2002 recession, but state spending has scarcely taken a hit. Various legislative proposals would cut little more. Arizona families have adjusted their budgets to new realities. It's time the state did the same.
Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.
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