Tuesday, March 9, 2010

Goldwater Institute: State Agencies Offer Guide to Fixing State Budget

Goldwater Institute points to $2 billion in possible savings already identified 
PHOENIX--As Arizona legislators convene for a special session focused on closing the state's budget deficit, they could save billions by adopting recommendations made by various state agencies to streamline operations, says a Goldwater Institute policy memo sent to lawmakers last week.
Last fall, Governor Jan Brewer directed all state agencies to explain how they would handle a potential 15 percent reduction in funding. State agencies responded with lists of programs and services that could be scaled back or managed in ways that rely less on general tax dollars. In a December special session, the Legislature approved some of those suggestions and generally reduced funding for agencies not related to public education by 7.5 percent.

Arizona's projected budget deficit for this fiscal year still stands at $700 million and could reach $2.6 billion in the next fiscal year that begins July 1, according to the Joint Legislative Budget Committee.

The Legislature could eliminate most of the deficit simply by committing to the full 15 percent in reductions and following through on other recommendations that state agencies offered months ago, writes Dr. Byron Schlomach, an economist with the Goldwater Institute.

"The state agencies themselves have provided a roadmap for Arizona to navigate out of its fiscal crisis," said Schlomach. "Those recommendations coupled with a few additional steps that would lead to better long-term budget policy would allow the Legislature to eliminate more than $2 billion in spending, without crippling state government and without any general tax increases."

In addition to combining some boards and commissions with existing agencies, in some cases, Dr. Schlomach suggests entirely new agency funding models:
· Allow the Department of Insurance to become self-funding and supported entirely by the industry it regulates, instead of supported by the general taxpayer. Total savings: $5.6 million

· Keep state parks open by allowing private companies to collect the gate fees and keep them maintained. Total savings: $20 million

· Eliminating the Automobile Theft Authority and allow the Attorney General to manage any required functions. Total savings: $5 million

· Give state government workers health care plans more closely matched to health care plans offered to taxpayers who work for private companies, like HSAs with high-deductible insurance plans. Total savings: $80 million
Read Dr. Schlomach's memo on Arizona's budget reduction opportunities here, or call (602) 462-5000 to have a copy sent to you by mail.

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