Burns on budget: We’re out of gimmicks and time
In today’s Arizona Republic, Senate President Bob Burns says let voters decide what they’re willing to do to help our state recover:
Your state government is in trouble. The money we collect in taxes and fees from you, your neighbors and your employers has declined sharply during this economic crisis. The money the state spends to educate our children, provide healthcare and welfare benefits and public safety services, is far outpacing the money we’re taking in.
The latest estimate of our current budget deficit is $2 billion. There are really four major components to that number. The first is that plummeting revenue that caused last year’s budget to fall short by $500 million. That’s money we already spent. Whether we like it or not, we will have to find the revenue for it in FY 2010.
Another factor affecting the deficit is the aftermath of the governor vetoing significant parts of the budget package the Legislature sent her last summer – the Department of Economic Security (welfare) and K-12 education budgets, and the bill containing budget provisions relating to taxation and revenue. That added another $500 million to the deficit.
The remaining $1 billion of the $2 billion deficit stems from a number of projections that are considered highly likely: that our tax revenues will continue to fall ($700 million) and that demand for healthcare for the poor will grow and other provisions of the FY 2010 budget will not generate the savings we had hoped for ($300 million).
Meanwhile, the overall public message to the Legislature has continued to be “Don’t raise taxes and don’t cut spending.” The previous governor, despite clear signs of economic stress and dropping revenues, insisted on significant increases in spending. While I think we should have been much more aggressive in our effort to control or decrease spending, the fact of the matter is that we are essentially budgeting the same spending level as when the recession began.
To maintain a general fund budget of about $10 billion over the last few years of this recession, your state government – Republicans and Democrats alike – have depleted our savings, delayed payments, swept funds from other accounts, used one-time federal stimulus dollars, and gone deeper into debt. Our projected ongoing revenues are only $6.4 billion, meaning the budget has a structural deficit of $3.6 billion that will plague us in the future until we enact permanent solutions.
Now we’ve hit the wall on short-term budget maneuvers and gimmicks. Those options are no longer available. We will have to cut spending or increase taxes, or both. There is very little else of substance we can do at this point.
Many of you know that I have a reputation as a fiscal conservative from my many years as chair of the appropriations committees in both the House and Senate. When it comes to making decisions on how to spend taxpayer dollars, I have always seen my role as that of a gatekeeper, not a gift-giver.
Over the years I have come to the opinion that many people tend to exaggerate the restrictions on the Legislature’s legal authority to reduce spending. Nevertheless, there are real limits that come in various forms: federal, constitutional, judicial, and electoral.
We need to act decisively, and time is not on our side. It won’t be long before state employees won’t be able to cash their paychecks. This insolvency of state government will affect more of you than you might think.
I surprised many people when I announced earlier this year my support for putting a one-cent sales tax increase on the ballot. Do not misunderstand me. The revenue generated from such a tax increase (less than $900 million in current economic conditions) will not entirely solve the problem. I also recognize the distinct possibility that voters may reject any such proposal. In either case, I will continue to advocate for more reductions in state spending to balance the budget.
I will support putting the referral to a vote in the Legislature whenever and as many times as we need to in order to get the question to the voters. But I will not be supportive of higher state spending as a price to get those votes.
We have lost enough precious time already. The question needs to be asked: Are you willing to pay, in addition to your current tax burdens, another penny on the dollar in sales tax in order to provide more revenue for your government? There may not be an official declaration that Arizona is in a state of emergency, but in my view, we’re in one.