Instead of balancing the budget by borrowing money, deferring payment to schools or resorting to any other accounting maneuver, the Senate is proposing to cut spending as much it can, even if it means the current fiscal year ends with the state in the red.
Under the Senate’s proposal, the state will cut spending by $118 million — about $46 million more than what the governor is willing to do — over the next three months to help balance a $543-million deficit in fiscal year 2011.
The Legislature will also sweep some $53 million in fees collected by state agencies.
But the rest of the deficit, totaling about $374 million, won’t be fixed.
Instead, that negative balance will be folded into and addressed in the fiscal year 2012 budget, which begins in July.
In the past, the Legislature had enacted budget plans that assumed revenues that eventually weren’t realized or budgeted using overtly optimistic revenue projections. And when those budgets became unbalanced at some point during the fiscal year, there were always attempts to adjust and make them balanced — at least on paper, if not in practice.
But the idea of deliberately ending the budget with a deficit is novel.
“We are not doing any accounting gimmicks to say, ‘Hey, you know what? We’re balanced when in fact we wouldn’t be balanced.’ That’s what has happened over and over in my observation,” said Senate Majority Leader Andy Biggs, who also chairs the Appropriations Committee.
“Most of the people ran here on the promise to our constituents that we are tired of budget and accounting gimmicks. We are tired of borrowing money and being disingenuous about it,” he said.
Biggs explained that there is cash to manage government operations even though the state, under the Senate plan, will carry a structural deficit through the end of FY2011.
Biggs said he believes that the Senate plan has House Speaker Kirk Adams’ support and that the two chambers have an agreement “in principle.” In response to a question, the majority leader also said he would characterize the budget plan as a “Senate-House proposal.”
The House’s support for a budget plan is crucial if legislative leaders from both chambers want to present a united front, which would put them in a strong position to negotiate a final budget plan with Gov. Jan Brewer.
But the Senate appears to be moving a little too fast for Brewer’s liking.
The governor said she’d rather that the chamber holds off on a budget until she and lawmakers have reached an agreement.
“I think it would have probably served us all better if we could’ve all come to agreement and made those decisions collectively. But I think we still will be back at the table working together and getting a budget out that satisfies all parties,” Brewer said during an appearance at Chamber Day at the Senate lawn on Tuesday.
For FY2012, the Senate proposes to cut the budget by about $1.3 billion — about $364 million more than what the governor is proposing.
But, as expected, the initial draft has been tweaked in several areas. Instead of paying of $200 million in debt, for example, the amount was reduced to $71 million.
All told, the Senate plan contains less new spending and cuts at least $364 million more than the governor’s budget proposal for fiscal year 2012.
It also removes nearly $264 million in spending increases in some areas of the budget that Brewer proposed.
The breakdown is as follows:
• Additional cuts to K-12 – $172 million?
• Additional cuts to the Department of Economic Security – $48 million?
• Additional cuts to Department of Health Services – $20 million?
• Additional cuts to universities – $65 million.?
• A statewide lump reduction – $12 million
The Senate plan also contains about $34 million more in funds transfers than Brewer’s budget. It also proposes $55 million in “local contribution.”
Finally, the plan calls for paying off $71 million in debt.