Privatizing prisons and transferring a portion of vehicle taxes to the general fund are two of the options a Senate panel will consider today as part of several measures intended to close a $3-billion budget gap.
The budget hearing is a major shift in strategy for the Senate, whose leaders have said they would not get a budget packet out of committee unless they have enough support to pass it on the floor.
“I changed my mind, yes,” Senate President Bob Burns said. “Based on the fact that time is slipping away from us, I think we have to make some changes in our plans of action.”
The budget measures have been agreed on by the leadership teams of the House and the Senate. But legislative leaders have yet to brief all members on the plan.
The Senate budget plan is based on a set of budget bills approved by a House committee last week, Burns said. The Senate version includes some changes, but details are scarce at this point.
Sen. Russell Pearce, chairman of the Appropriations Committee, said one of the options to raise revenue is to privatize up to three state prisons, which would generate at least $100 million in upfront money. In addition, contracting with private firms to run the prisons is expected to generate about $13 million in savings to the state annually.
The Senate plan also calls for a portion of the vehicle license tax (VLT) revenue to be transferred to the general fund, which would generate about $190 million for the fiscal 2010 budget.
Pearce said that would mean taking a portion of cities’ share in the vehicle license tax. To alleviate the impact, municipalities would be allowed to replace the lost revenue with development impact fees – money collected from developers to pay for growth related costs.
But that might put cities in a precarious legal position.
Ken Strobeck, executive director of the Arizona League of Cities and Towns, said cities would be courting a lawsuit from developers and residents if they used impact fees for purposes other than for which they were intended.