Thursday, July 9, 2009

Goldwater Institute: Budget blown wide open by political wrangling

Last week Governor Brewer line-item vetoed pieces of the budget sent to her by the legislature. With that she blew the budget wide open. Even by the lax standards of state government accounting, the budget is nowhere close to being balanced, a direct violation of the spirit, if not the letter, of the state constitution. But there's more.

calculatorThe legislature's late-day actions on Monday did nothing to close the $2 billion gap the governor's vetoes created. In fact, in order to get a veto-proof majority to keep the schools open and restore Department of Economic Security spending, more money had to be spent than was called for in the original plan. The hole the governor has created is far larger than the half-billion dollars her disastrous sales tax plan would raise. But there's even more.

The legislature took a shortcut in the budget they passed that has come back to bite them, and the taxpayer. Rather than identifying the amount of money each state agency is allowed to spend, the legislature delivered an appropriations bill that had negative numbers. In other words, the appropriations bill didn't just appropriate funds; parts of it identified the amount of spending each agency would need to cut relative to last year. So, effectively, with her line item vetoes, Brewer was able to increase government spending with a stroke of a pen.

It's important to note that the legislature's budget that Governor Brewer said was "fatally flawed" and embraced cuts she called "excessive," still kept the state on track for 4 percent growth in annual spending since 2000 and that doesn't account for the state spending bubble in recent years. Governor Brewer's tax increase proposal would grow current General Fund revenues by yet another 10 percent. All of these budget increases are on the table despite the fact that we are facing the largest per-capita deficit in the country.

After this ugly episode, it's clear that the legislature should stop drafting appropriations bills with negative numbers. They should plainly state how much money they want each agency to spend and avoid putting the state in even tougher circumstances come next year.
Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.

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