Advocates for state services and programs shouldn’t hold out hope that Arizona’s improving fiscal situation means cuts made to keep the state budget in the black will be reversed any time soon, an official said Friday.
Top aides to Gov. Jan Brewer acknowledged that the improving economy has revenue now outstripping spending. But the economy remains weak, and other circumstances won’t permit lawmakers working on the next state budget to restore funding that was cut, they said.
Most state programs and services have seen cuts in recent years, with higher education, social services and health care hit particularly hard. K-12 schools and prisons also were cut but not as deeply.
“There will be no restorations,” Brewer Chief of Staff Eileen Klein told an Arizona Tax Research Association luncheon audience. “I hope we can eliminate that word from the budget vernacular.”
Brewer budget director John Arnold previously cited two challenges that will either slash revenue or increase spending — the mid-2013 end to the state’s temporary sales tax increase and a Medicaid expansion in 2014 and 2015 under the federal health care overhaul.
The state’s projected $500 million in additional costs for Medicaid could prove to be even larger depending on how the federal government’s handles its own budget troubles, Arnold said in a separate address to the business group.
“The feds pay 85 percent of that (total) cost,” he said. “My fear is that they won’t pay 85 percent of that cost.”
Arnold said if any spending is going to be restored, I would be for behavioral health, a longtime priority for Brewer. He also cited a need to start a multiyear program to replace the state’s 19-year-old computerized accounting system that he and Klein said in danger of crashing.
Klein and Arnold said such a crash would be catastrophic to state government operations, including payments to providers of state services. “We simply cannot let the system fail,” Klein said.
While the next budget stands to have a surplus at its end, Arnold said he considers that to be only “bubble cash,” partly because at least one major revenue spike probably won’t be repeated.
Arnold said one possible use of that cash would be to pay back some of the more than $2 billion in borrowing or end funding delays on the state’s books that occurred as a result of budget-balancing maneuvers and gimmicks the state used in early years of the budget crisis.
Brewer and Republican lawmakers eschewed repeats of those approaches when enacting the current budget last spring, instead resorting to deeper spending cuts. Klein said Brewer won’t ask voters to renew the temporary tax increase.
It appears that Brewer again will be on the same budget page with Republican legislators, as House Speaker Andy Tobin and Senate President-elect Steve Pierce also said they expect the state won’t relax its tightfisted ways any time soon.
“We’re not planning to go to the place we were,” Tobin said.
Democratic Sen. Kyrsten Sinema acknowledged the projected “modest surpluses” don’t provide leeway for significant spending restorations or additions. However, she said the state should consider strategic investments in education that could help spur the state economy.