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Day 2: Tracking the special session      

UPDATE: 9:30 p.m.

After a 10-hour hearing, the Senate Appropriations Committee approved all the budget measures and adjourned at about 8 p.m.

Next, the 15 measures will be discussed in caucus, debated on the floor and then voted on by the Senate. Lawmakers hope to vote on the measures on March 10.

UPDATE: 7 p.m.

The Senate Appropriations committee voted to approve S1008, the budget measure dealing with education policies. But the vote was close as five Republicans supported it, and three Democrats and one Republican opposed it. Sen. David Braswell, a Republican from Phoenix, voted against the bill after raising concerns about a provision that would wipe out funding for full-day kindergarten.

UPDATE: 5:51 P.M.

The House Appropriations Committee has approved the entire Republican-crafted budget package, setting the stage for floor debate, amendments and a possible vote tomorrow.

With only one exception, the bills were approved with party-line votes, as Republicans supported the measures – often while voicing concerns over various provisions – and Democrats opposed them.

The bills aim to close a $2.7 billion deficit in the upcoming year and fill in nearly $700 million in red ink for the current year. Democrats railed against deep cuts to education and social services, and one called the budget plan “phony” because it requires voter approval of some components.

“It depends on nearly $1 billion of ‘ifs.’ I think a billion dollars is an awful lot to ‘if’ on,” said Rep. Kyrsten Sinema, a Phoenix Democrat.

One ballot referral in the November election would ask voters to repeal an early childhood development program they created in 2006, instead shifting more than $300 million already collected by a tobacco tax into the state’s general fund. In the future, the tax would also go to the general fund.

The other ballot measure would take $123 million from another voter-created fund designed to preserve open spaces and combat urban sprawl.

Several Republicans opposed to various parts of the budget, including shifting programs to counties without providing them additional funding. But Rep. Vic Williams, a Tucson Republican, said he supported the package because there is no perfect budget.

“This is compromise. Compromise is needed by all members,” he said.

The bills approved were:
H2001 (general approps): 8-5
H2002 (capital outlay): 7-3
H2003 (budget procedures): 8-5
H2004 (regulation): 7-5
H2005 (general gov’t): 8-4
H2006 (criminal justice): 8-5
H2007 (environment): 8-5
H2008 (K-12): 8-5
H2009 (higher ed): 8-5
H2010 (health): 8-5
H2011 (welfare): 8-5
H2012 (revenues): 8-5
H2013 (TPT tax credit repeal): 11-1
HCR2001 (First Things First repeal): 7-5-1
HCR2002 (land conservation fund sweep): 8-5

UPDATE 4:21 P.M.

Despite objections by county officials and individuals who have worked with juveniles, the Senate Appropriations Committee approved a proposal to shut down the Arizona Department of Juvenile Corrections and shift the responsibility of jailing juveniles to counties. County officials showed up in force and testified in committee that the proposal could lead to bankruptcy. They said they neither have the facilities nor the resources to run such a system, a concern that some lawmakers shared.

“I think there is bipartisan concern that we do the right thing with this department,” said Sen. Al Melvin, a Republican from Tucson.

Coconino supervisor Elizabeth Archuleta said she had recently visited a state juvenile corrections facility and what she saw was a city within a wall because it is a self-contained
environment. “If this was transferred to counties, there was no way we could handle that,” she said.

Sen. Sylvia Allen of Snowflake said she would be voting “yes” but said she hopes that the concerns raised would be addressed before the measure moves to the floor.

Sen. Rebecca Rios, a Democrat from Apache Junction, said the Legislature is being petty-wise and pound-foolish. “We are saving money at the expense of juveniles and at the expense of public safety,” she said.

S1006 was approved by vote of 6-3 with Democrats in opposition and Republicans in support.

UPDATE 2:25 P.M.

After S1001 was approved, the Senate Appropriations committee hearing is going more smoothly.

In almost staccato manner (compared to the lengthy discussion on S1001), the committee approved S1002, S1003, and S1004. They are now discussing S1005.

Almost as soon as the hearing began this morning, senators on the committee bickered.

As she prepared to ask questions to staff, Sen. Paula Aboud, a Democrat from Tucson, noted that she just got the budget packet last night and hadn’t had the time to look at it. She said the purpose of the hearing is to inform the public. Sen. Sylvia Allen, a Republican from Snowflake, retorted that when Democrats came up with that 2008 budget, she didn’t see it until after they were about to vote on it. Aboud said the 2008 budget was drafted with Senate leadership.

The blame game over the state’s financial mess would continue for some time, with nearly everyone chiming in with their thoughts.

Nearly everyone who testified in committee spoke against the budget packet.

UPDATE 2:24 P.M.

The House Appropriations Committee has approved a budget bill that would shut down the Department of Juvenile Corrections and shift its responsibilities to counties.

County officials objected, saying the bill will force bankrupt some small communities because they can’t provide services for juvenile inmates that are required by federal law.

“We are certainly being set up for a situation where some counties…will literally be prepared to declare bankruptcy. That is not an exaggeration,” said Maricopa County Manager David Smith.

Republicans voted for the bill, while Democrats voted against it.

Several Republicans, though, said they had some concerns. Reps. Rich Crandall, Russ Jones and Nancy McLain said they would need to see significant changes to the proposal and an evaluation of its impact on counties before they could support it on the floor.

Glendale Republican Rep. Rick Murphy said the proposal didn’t seem complete.

“The Juvenile Correctoins portion of this bill strikes me as an idea, not a plan,” he said.

UPDATE 2:19 P.M.

After a nearly four hour discussion, the Senate Appropriations Committee approved S1001, the main budget bill that contains budget cuts, transfers and sweeps.

It passed by a vote of 6-to-2. As expected, Democrats opposed it while Republicans backed it.

UPDATE 2:01 P.M.

Below is a list of bills to be considered during the special session:

S1001/H2001 – general appropriations
Commonly known as the “feed bill,” it sets spending levels for the fiscal 2011 budget. It also makes various budget revisions, transfers and supplemental appropriations for fiscal 2010. Many state agencies face cuts, including AHCCCS, K-12 education, Economic Security, Corrections and the closing of the Department of Juvenile Corrections. The bill also includes $867 million in additional cuts that would happen if voters reject a one-cent temporary sales tax increase in a May election.

S1002/H2002 – capital outlay BRB
The bill makes appropriations for maintenance and repair of state buildings in the upcoming fiscal year. Capital projects include improving the Ben Avery Shooting Range, remodeling and expanding the Silver Creek fish hatchery and various statewide highway projects.

S1003/H2003 – budget procedures BRB
Among other things, the bill repeals employee performance pay, effective May 29, 2010. It also reduces state employee pay by 2.75 percent and requires furlough days: one in the current fiscal year and six in each of the next two fiscal years. University employees and employees of elected state officers would be exempted from the pay cuts.

S1004/H2004 – regulation BRB
The bill allows several regulatory agencies more flexibility in paying for operating costs, including using some money from dedicated funds. It also suspends the requirement that administrative appeals be heard within 60 days of filing.

S1005/H2005 – general government BRB
The bill contains various provisions, including repealing the scheduled $27.5 million payment into the 21st Century Fund, reducing the governor’s emergency fund from $4 million to $2.9 million and cuts the Military Installation Fund by $2.8 million.

S1006/H2006 – criminal justice BRB
The bill contains nearly three dozen provisions for public safety agencies. One provision undoes part of the current year’s budget, which required the Corrections Department to privatize at least one state prison. The largest reform in the bill is closing the Department of Juvenile Corrections by March 1, 2011.

S1007/H2007 – environment BRB
Both the departments of Agriculture and Environmental Quality would be permitted to continue to raise fees in fiscal 2011 under this bill. Additionally, the State Parks Board is allowed to take about $700,000 from a fund dedicated to off-highway vehicle trails.

S1008/H2008 – K-12 education BRB
Among other things, it maintains base student spending at the same level as the current year and allows school districts to use money generally reserved for books and supplies for operating costs. It also repeals the state law that required schools provide full-day kindergarten, reverting back to half-day kindergarten classes. It also allows for additional spending cuts to education if the sales tax is rejected by voters.

S1009/H2009 – higher education BRB
This provides some flexibility to community colleges by allowing them to use capital outlay money for operating expenses. It also continues to suspend a requirement that half of medical student loans be given to students at private medical schools.

S1010/H2010 – health BRB
This bill will end the KidsCare program, which provides health insurance for poor children. It also makes various statutory changes to allow the cuts called for in the general appropriations bill.

S1011/H2011 – welfare BRB
This legislation continues to require recipients of cash benefits pass a drug test to receive their benefits, reduces eligibility for child care programs and cuts the time people can claim cash benefits from five years to three years.

S1012/H2012 – revenues BRB
Among other things, it allows the departments of Health Services, the Land Department and others to continue paying for operations through fees. The bill also permanently eliminates state transportation assistance funding to cities, requires Maricopa and Pima counties give the state $22 million, reduces sales tax revenue shared with cities by $20 million and lowers the threshold for estimated sales tax payments from $1 million in tax liability to $100,000 through fiscal 2012.

S1013/H2013 – sales tax accounting credit
As permanent law, this would eliminate a tax credit businesses can claim for expenses related to reporting and accounting for sales tax receipts. It would require two-thirds approval in both chambers because it increases state revenues.

SCR1001/HCR2001 – First Things First repeal
In November, voters would decide whether to continue First Things First, which they created in the 2006 election. All of the money in the fund would be shifted to the general fund. The 80-cent-per-pack tobacco tax that funds it would continue, with the revenues being deposited into the general fund and spent on health and human services for children.

SCR1002/HCR2002 – Growing Smarter
If approved by voters in November, the remaining balance in the Land Conservation Fund would be transferred to the general fund. Voters originally approved the fund to conserve open space and combat urban sprawl.

UPDATE 1:23 P.M.

After a lengthy debate on the main budget bill, the House Appropriations Committee has approved a third of the bills on its agenda. A budget bill centering on state regulatory agencies, H2004, and another dealing with general government, H2005, have both been approved by party-line votes.

The panel is currently discussing H2006, which focuses on criminal justice policy. It includes statutory changes necessary to shut down the Department of Juvenile Corrections and would also end the effort to privatize state prisons.

UPDATE 12:54 P.M.

The House panel has approved the main appropriations bill by a party-line vote, with Republicans backing the spending bill and Democrats opposing it.

Democrats cited the deep cuts to state spending for their votes against the bill.

“These cuts are devastating,” said Phoenix Dmeocrat Cloves Campbell.

Kyrsten Sinema, a Phoenix Democrat, said the budget was “the worst bill I’ve ever seen” at the Legislature and called deep cuts to health care “immoral.”

“We have choices. The choice that is being made today is the worst possible choice,” she said.

But Republicans defended their votes – and the plan they designed – and said there weren’t any other options.

“We’re out of options, we’re out of time and, more importantly, we’re out of money,” said Vic Williams, a Tucson Republican.

And Chairman John Kavanagh said there is an overriding need for lawmakers to be fiscally responsible.
“You can’t run from fiscal responsibility,” he said. “In the end, it catches up with you and it’s caught up with Arizona.”

The bill, H2001, was approved by a 8-5 vote. The committee has also approved H2002 by a 7-3 vote and H2003 by a 8-5 vote. Those two bills deal with capital funding and budget procedures, including pay cuts for state workers, respectively.

UPDATE 11:49 A.M.

Lawmakers in the House spent the better part of an hour discussing the impact of the budget cuts on Arizona’s health care system. Laurie Liles of the Arizona Hospital and Healthcare Association told the panel that the cuts will total $2.7 billion to health care if lost federal money is considered. That will result in 42,000 lost jobs, she said, and will force newly uninsured citizens to seek treatment in emergency rooms.

“All of us will pay more. We will pay higher health insurance premiums because of these cuts,” she said.

Liles also said “safety net” hospitals in rural and impoverished areas will be hit hard. State funding designed to reimburse them for treating large numbers of uninsured were at $26 million in recent years, but will be cut to $500,000.

And the cuts could jeopardize Arizona’s ability to collect an additional $480 million federal stimulus money for health care Congress is currently considering, said Democrat Kyrsten Sinema. To be eligible, the state must fund health care programs to 100 percent of the federal poverty level.

She said the money is designed to fill state budget holes and prevent deep cuts to health care and won’t require the state spend any money.

“We are actually losing money by doing this,” she said of the plan to cut $385 million in health care funding.

UPDATE 10:29 A.M.

The Senate Appropriations Committee has begun hearing the budget bills.

The hearing started around 10 a.m.

UPDATE 10:18 A.M.

The House Appropriations Committee is debating H2001, the general appropriations bill, which cuts $1.1 billion from fiscal 2011 funding. Much of the debate thus far has focused on the constitutionality of taking money from voter-approved programs without voter permission.

One of those cuts would be to AHCCCS, which would see its eligibility greatly reduced and trim its rolls by more than 340,000 people. Chairman John Kavanagh said the Legislature’s legal opinion is that it can take the money because the ballot measure that requires the state pay for the insurance if its costs exceed revenue from a tobacco lawsuit settlement because the general fund money isn’t available.

“Our interpretation is that there’s no available funds because we’re $3.4 billion in the hole,” he said.
Rep. Matt Heinz, a Tucson Democrat and medical doctor, said dropping those people from state-funded health insurance doesn’t mean they won’t need care.

“These people won’t stop coming,” he said, noting many of them will crown emergency rooms for routine care.

The panel also debated sweeping $325 million from the First Things First fund, which was approved by voters in 2006 to fund early childhood development. The budget package would ask voters in November to repeal the program, along with the tobacco tax it imposed.

UPDATE: 9:55 A.M.

The House Appropriations Committee meeting to consider special session budget bills got underway about 20 minutes late.

The plan includes $1.1 billion in spending cuts in fiscal 2011, and $124 million in cuts for fiscal 2010.

The state’s health insurance program for the poor, AHCCCS, faces more than $400 million in cuts, including rolling back eligibility to 34 percent of the federal poverty level; it is currently at 100 percent. Education would also face nearly $400 million in cuts, and the Juvenile Corrections agency would be shuttered, and counties would be made responsible for juvenile criminals.

The main budget bill also includes $867 million in additional cuts that would be triggered if voters reject a temporary sales tax increase in a May special election.

-Reported by Jim Small and Luige del Puerto

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