Arizona’s fiscal 2011, which ended June 30, was expected to end with a $332 million shortfall. As it happens, the shortfall was instead around $30 million, mainly due to a big uptick in corporate income tax collections.
Most regular people think a deficit of any size means we are out of money, but believe it or not, some at the state Capitol are already thinking of ways to spend the $300 million instead of saving it in case the economy gets worse or paying off debt.
There are several problems with spending this money now.
First, in the previous three years, Arizona experienced very severe state budget deficits. Just to keep the lights on, Arizona ran up $3.6 billion in debt. This fact alone negates the idea of a surplus.
Second, there is a hopefully still-temporary sales tax that will expire in a couple of years. Take that temporary money away and we’re in an $800 million hole.
Third, things are still uncertain in the broader economy. Some think the nation is already in a double-dip recession. If it is, Arizona is not likely to be spared.
It’s never a good time to be cavalier with taxpayers’ money. Now it’s even worse. The state should do what taxpayers would do with their own money and pay down debt while it can.
— Byron Schlomach is the director of the Goldwater Institute’s Center for Economic Prosperity.