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House panel advances latest budget fix, filling $650M gap

Lawmakers on a House panel generally agreed an emergency measure intended to repair the fiscal 2009 budget amounts to bad policy, but the bill still managed to gain approval along a party-line vote.

One by one, legislators explained their objection to using accounting gimmicks and raiding funding in schools’ bank accounts.

“What a mess. This is dysfunction. This is legislative malfeasance,” said Rep. Matt Heinz, a Tucson Democrat. “Here we are, again, voting for bad policy that we all know is bad, for some reason.”

While all Democrats opposed the bills, Republicans generally voted to advance them.

The bill, H2028, aims to solve an estimated $650 million budget deficit in fiscal 2009 by delaying $100 million in payments to universities and $300 million to public schools until the next fiscal year. The accounting trick, known as a rollover, was particularly troubling for many members of the Appropriations Committee.

Yet seven of the eight Republicans on the committee ultimately supported the bill.

“It’s a choice of, do we cut off our hand or cut off our foot,” said Rep. Vic Williams, a Tucson Republican.

The bill also accounted for $250 million of stimulus money Gov. Jan Brewer agreed to spend in the current year.

Rep. Rich Crandall, a Republican from Mesa and former school board president, said he voted for the bill in exchange for concessions in the fiscal 2010 budget Senate Republicans had agreed to support. However, he declined to say what those changes might be.

Rep. Steve Court, a Mesa Republican, said the continued use of rollovers – a form of borrowing – prevented him from supporting the measure. A better option, he said, would be for Brewer to fill the deficit with stimulus money. Her refusal to do so forced the Legislature to act this week, prior to a May 15 payment due to schools.

“I personally think this is an artificial emergency that’s been thrust upon us,” Court said.

Court voted present on the bill.

State Treasurer Dean Martin told the committee that the state would not be able to make the May 15 payments to school districts without borrowing.

“We’re out of cash right now,” he said. “We’re literally living paycheck-to-paycheck right now.”

Some Democrats suggested delaying the May 15 payment until June 1 to allow time to consider a more permanent fix. Martin said that would help, but doubted the ability of such an agreement to be reached, given a deal was already in place on the bills considered by the committee.

“Something has to happen today,” Martin said.

Eileen Klein, director of the governor’s Office of Strategic Planning and Budgeting, said Brewer would sign these bills if lawmakers approve them. She also said the governor didn’t believe delaying the university payment would disqualify the state from receiving federal stimulus aid, although she conceded there had been no assurance from the U.S. Department of Education.

A companion bill, H2029, would require school districts to repay the state $250 million in unspent money by the middle of October. It was supported by the panel’s eight Republicans and opposed by its five Democrats.

A similar provision was included in the fiscal 2010 budget approved last week by the same committee.

Education advocacy groups opposed the second bill, saying the revenue it provided the state would not impact the fiscal 2009 deficit. Janice Palmer, a lobbyist for the Arizona School Boards Association, called it “premature” to be considering legislation that impacted the upcoming year.

Assistant House Minority Leader Kyrsten Sinema, a Phoenix Democrat, said the excess balance bill was likely a trade-off between Republican legislative leaders and Brewer, who had expressed concern last week at the GOP plan to take the balances from the schools.

“This was the hook to get the votes,” she said.

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