Legislative budget analysts gave lawmakers a list of options they can use to erase billions of dollars of red ink this year. The solutions range from the elimination of some government services to sharply increasing property taxes.
The options from the Joint Legislative Budget Committee (JLBC) were released about a week after the JLBC produced its annual baseline budget for fiscal 2011. Traditionally, that document represents the Republican majority’s budget plan. But this year, the JLBC described the depth of the state’s financial hole and provided no ideas on how to fill it.
Arizona is facing a $1.5 billion deficit in fiscal 2010 and $2.6 billion in fiscal 2011, according to the JLBC. The options to fix the fiscal 2010 deficit total $2.3 billion; the options for fiscal 2011 total $6.1 billion.
One of those options is to shift the burden for education funding to property owners by raising the qualifying tax rate to $4.25 per $100 of assessed value from $2.75 per $100 of assessed value. That comes to a tax increase of $225 on a home worth $150,000. That maneuver would shift $657 million in K-12 education costs to property owners instead of the state’s general fund.
Potential general fund spending cuts total $705 million in fiscal 2010 and $2.1 billion in fiscal 2011, including reducing most state agencies’ personnel expenses by 10 percent. It outlined cuts of $145 million to K-12 education and a reduction of $164 million to state universities and community colleges. Changing sentencing guidelines for state prisoners would save the state as much as $132 million.
Analysts also pointed to borrowing as a potentially quick way to raise cash. One way would be to issue bonds totaling nearly $1 billion over the two fiscal years or selling another $300 million in state property.
Earlier this month, the state completed the sale and lease-back of $735 million of property, including the House of Representatives and Senate buildings.
While Gov. Jan Brewer has called for a temporary increase to the state’s sales tax, the legislative option list identifies a number of other ways to generate more revenue. The state could increase the gasoline tax or the tax on vehicle registrations, or create a tax on vehicle transfers. Taxing electricity generation is another option.
The Governor’s Office pegs the budget deficits at $1.4 billion in fiscal 2010 and $3.2 billion in fiscal 2011.