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Line in the sand

It may have been the opening shot to an all-out war.

While Arizonans were celebrating President’s Day on Feb. 20, legislative leaders, frustrated by what they described as Gov. Jan Brewer’s unwillingness to negotiate, unveiled a budget that ditched her major spending initiatives.

Then they passed it out of committee the next day.

The Governor’s Office responded in kind, describing the legislative budget as “shortsighted” and “reckless,” criticizing it for failing public safety, education and health care. And the governor sent out a comparison sheet — to show what the Senate-House proposal was lacking.

The move was straight out of the Democrats’ playbook — a tactic the minority party often uses to criticize Republicans. And for a moment, it seemed as though the two sides didn’t belong to the same party.

The turn of events in the middle of session portends a potentially drawn-out battle of wills between a recalcitrant governor and an equally headstrong Legislature.

• • •

Both sides have expressed optimism that the budget standstill will get resolved — eventually.

But their actions appear to be driving a bigger wedge between them.

Brewer has instructed her staffers to stop meeting with their legislative counterparts until, a spokesman said, lawmakers “address some of her key concerns with the proposal that they put forward.”

Meanwhile, some Republicans said they are willing to go a step further, pass their budget and send it to Brewer — a move that would only escalate the tension and force her to veto it.

“People want to play games and say it’s not a real budget. It’s a real budget,” said Senate Majority Whip Frank Antenori. “We’re going to put the bills through caucus. We’re going to COW it and we’re going to pass the damn thing out.”

As could be expected, not everybody is willing to force the governor’s hand.

Rep. John Kavanagh, chairman of the House Appropriations Committee, said he hopes both sides will come to the table, averting confrontation.

“It is my hope, based on public input, input from the Democrats, and input from the governor, that we can come to a compromise that everyone can agree on,” Kavanagh said.

House Speaker Andy Tobin expressed the same sentiment.

“Eventually, we’ll come to an agreement, and that’s what we will pass,” he said.

Many anticipate that the House-Senate proposal will change. The pressure to make amendments is also likely to come from rank-and-file members.

For example, Mesa Republican Sen. Rich Crandall, who on numerous occasions expressed some reservations about the budget — especially when it came to funding for education — voted for the Senate-House proposal in committee with “assurances” from leadership that this is the only the “first step… in a long process.”

“If this were the final budget, I’d have a tough time (supporting it),” Crandall said. “If this was the final budget and I knew it was going to pass and become into law, yeah, I’d be a ‘no’ on it.”

The two sides are expected to meet again on the budget, but it’s unclear when that will be.

Pressed for when he thinks that will happen, Senate President Steve Pierce answered: “As soon as (Senate Majority Whip) Andy (Biggs) and I can sweet-talk her into sitting down with us.”

• • •

It will likely take more than “sweet talk” to get the two sides to negotiate, although Capitol observers say it will happen whether now or later.

Gubernatorial spokesman Matthew Benson said Brewer is not asking lawmakers to meet all of her wishes.

But lawmakers have come up with a plan that falls “significantly short” of her budget priorities, he said.

“The governor is a patient woman and we don’t have any plans to go anyplace,” Benson said.

Lawmakers said adjusting their budget as a precondition for negotiations is out of the question.

“That would mean we would be negotiating against ourselves,” Pierce told the Arizona Capitol Times.

Meanwhile, Sen. Ron Gould, a Lake Havasu City Republican, said it’s not lawmakers’ job to “meet the governor’s demands.”

• • •

If this path feels like déjà vu, it’s because lawmakers and the governor have walked it before.

In 2009, the financial crisis had engulfed the nation, and Arizona was in financial straits.

Faced with a never-before-seen dip in revenues, the governor and lawmakers struggled to at least keep the state limping through the crisis, and they didn’t see eye-to-eye on a proposal to temporarily raise revenue.

The fight dragged on, acerbic words were exchanged and the state’s finances hung in the balance.

Things got worse before they got better.

Legislative leaders tried but failed to cobble together enough support to pass Brewer’s 1-cent sales-tax referral. So when they sent her a budget without it, the governor line-item vetoed the entire general fund portion of the state’s K-12 education budget, and rejected 15 other budget bills.

The state survived on stop-gap measures until lawmakers decided to refer Brewer’s tax hike to the ballot. In short, the governor got what she wanted.

• • •

In a way, the current tension is only an extension of the natural push-and-pull between the two sides, which can be partly explained by the fact that the governor runs the entire state while lawmakers are answerable to their districts.

Kurt Davis, a political consultant who also served in Gov. Fife Symington’s administration, said this tension reveals itself when the economy is bad, but also when it begins to rebound.

“I think back when I served in the Symington administration. During the bottom of the economic downturn, there was a lot more conflict between the Ninth Floor and the Legislature, and then again when things started to improve,” Davis said. “There’s a large debate on to what level have things improved and what will the conditions be in out years.”

The focal point of disagreement between Brewer and lawmakers is over how much money the state will get between now and the middle of this decade.

The governor is more optimistic about the economy, predicting that it will produce more than enough to cover her new spending initiatives even when the 1-cent sales tax expires in mid-2013.

But wary of rosier projections and fearful of another deficit in fiscal 2014, lawmakers want to keep the spending level as-is. They also want to set aside money in a “rainy day” fund, which the state can dip into if things again go bad.

• • •

Another parallel between now and 2009 can help to explain the current budget standstill.

In 2009, Brewer had just assumed control of the Governor’s Office. Meanwhile, the Legislature had new leaders in then-Senate President Bob Burns and then-House Speaker Kirk Adams.

All three had to adjust to each other, which likely contributed to a tumultuous first year.

While this year is not the governor’s first budget, the Capitol again has new leaders in Pierce and Tobin.

“Even though they were both in leadership and involved in the past, the dynamic changes when you are now in charge,” said Mike Haener, who served as deputy chief of staff to former Gov. Janet Napolitano.

“They’re all three Republicans, so obviously they’re similar but their personalities are different,” he said, adding that part of the new equation is to get to know each other’s style.

Davis called it a period of acclamation and of “figuring out negotiating styles.”

• • •

The obvious question is when a state budget will be enacted.

It’s still early in the session, and leaders at the Capitol can afford to posture.

But it’s also an election year, and as it gets nearer to April, pressure will mount on Pierce, Tobin and Brewer to agree on a spending plan.

But Brewer might have the upper hand. She’s not facing re-election, while lawmakers are running in newly drawn districts.

When told the current budget situation is a movie the public has seen before, Benson, recalling the protracted budget battle in which the governor ultimately got her tax plan through, replied, “I don’t remember how that ended. I think it was a good ending for us, though, wasn’t it? A happy ending.”

— Reporters Caitlin Coakley Beckner and Jeremy Duda contributed to this report

Major differences between Gov. Jan Brewer’s and Republican-led Legislature’s proposed FY13 budgets:

Revenue PROJECTIONS

• Legislature: $8.8 billion
• Governor: $9.5 billion

Spending

• Governor includes an additional $100 million for K-12 building renewal, and another $100 million for supplies, equipment and other soft capital needs, while the Legislature keeps spending at current levels.
• Brewer wants $50 million for 500 new maximum security prison beds and $9.3 million for additional correctional officers that is not in the legislative budget.
• Legislative budget includes $250 million for the rainy day fund to prepare state for FY14 fiscal cliff, while Brewer includes none.
• The executive budget includes $106 million to buy back the House, Senate and Executive Tower, while the legislative budget scraps the buyback and puts $200 million into a debt reduction fund.
• Brewer wants an additional $7 million for the Office of Tourism, which the legislative budget eliminates entirely.
• The executive budget includes $9.2 million for 73 DPS officers, and another $7 million for new DPS vehicles, neither of which is in the GOP legislative budget.
• Brewer calls for an additional $15 million in performance funding for universities and $10 million for community college scholarships, while the Legislature keeps spending at current levels.
• The legislative budget doesn’t include the $42 million to offset federal funding cuts to Child Protective Services, foster care maintenance and elderly assistance programs that Brewer wants.
• The governor includes $105 million to replace the state’s accounting system and $7 million to expand the tax collection system, neither of which is in the legislative budget.
• The executive budget includes an additional $27.8 million for the state’s Medicaid provider network and $7 million for staffing and licensing at the Arizona State Hospital.

Fund sweeps

• Legislature: zero
• Governor:  $177 million in sweeps from more than 200 funds. Notable sweeps include $64 million from HURF, $27 million from the special employee health insurance trust and $10 million from ADEQ’s emissions inspection fund.

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