Governor Napolitano says it appears that the state will end up with a cash balance of nearly $117 million when the books are closed on fiscal 2003, which ended June 30.

“We should set this aside for right now,” Ms. Napolitano said during a July 2 press briefing. “If we need additional funding for prisons, K-12 education or AHCCCS, we will have a cushion to use, but we should use it if only absolutely necessary.”

Ms. Napolitano said state revenue collections for fiscal 2003 should end up nearly $72 million higher than fiscal 2002 collections.

“I think this shows that the economy might have bottomed out in fiscal 2002 and now we are beginning to see a bit of an up-tick,” she said.

Corporate income tax collections are up 30 per cent from last year, she said, while Lottery sales are up $3 million and individual income tax withholding increased 0.5 per cent.

Ms. Napolitano pointed out that revenue collections will probably exceed projections she released in January when she put out her proposal for the fiscal 2004 budget. Legislators were quick to criticize her projections as “too rosy,” she noted.

Legislators then came out with their own lower projections, which Ms. Napolitano characterized as “unnecessarily pessimistic as a reason to cut into funding for education and other vital services.”

Ms. Napolitano said the projected $117 million cash balance assumes the state will not get any money from the State Compensation Fund. During a special session in March to make adjustments to the fiscal 2003 budget, the Legislature projected $50 million in revenue from the sale of state assets to the State Compensation Fund.

That transaction has collapsed, and the State Compensation Fund filed suit June 20 challenging the provision that would have required the fund to purchase state assets.

In a press release on the suit, the State Compensation Fund, which provides workmen’s compensation insurance to more than 50,000 businesses in the state, said the legal action was taken to protect its assets.

Final figures on how the state fared in fiscal 2003 are expected to be available in September. —