A state senator said he plans to file legislation that would ask voters to temporarily lift a constitutional provision that prevents lawmakers from tinkering with voter-approved measures so that legislators could cut more deeply into education and health care spending to help balance a staggering budget deficit.
Sen. Russell Pearce, a Republican from Mesa who chairs the Senate Appropriations Committee, said he is waiting for a handful of his colleagues to sign on as co-sponsors before he files the measure.
“It’s on my desk. A couple of folks have asked me to hold onto the thing so they can sign it, they want to sponsor it,” he said Jan. 14.
Pearce told Arizona Capitol Times he would sponsor the legislation shortly after he and other lawmakers were briefed on the state’s budget woes by legislative budget analysts. Arizona is facing a $1.6 billion deficit in the 2009 fiscal year — the estimated shortfall has continued to rise month after month as state revenue collections weaken.
Lawmakers must close that gap first, then turn their attention to crafting a budget for the upcoming fiscal year, which starts July 1 and has an estimated shortfall of $3 billion.
During a November assessment of state budget deficits, the National Conference of State Legislatures found Arizona had the second-worst deficit, in terms of a percentage of the total budget. The $1.2 billion estimate at that time translated into 12 percent of the budget; the latest estimate gives Arizona a deficit that equals 16 percent of its general fund budget.
Regarding estimates for fiscal 2010, NCSL said Arizona is expected to have the worst budget crisis in the nation, with a 26-percent shortfall. The updated estimates presented to lawmakers this week bump that percentage to 29 percent of the budget.
Pearce said addressing the deficit is even tougher than it seems because of a 1998 amendment to the Arizona Constitution that prevents lawmakers from reducing voter-approved spending. More than half of state spending is on K-12 education and public health care, large portions of which were mandated by voter-approved measures and are untouchable.
“If we had the whole budget on the table, this problem would be much easier to solve, rather than half the budget. It’s asking us to do a very difficult, difficult job with one arm tied behind our back,” he said.
Pearce’s proposal would call for a special election in May that would ask voters to allow lawmakers to cut funds for education and health care that are otherwise off-limits. But even if voters gave their stamp of approval to the idea, it wouldn’t help the state cope with the $1.6 billion deficit in the 2009 fiscal year.
A fix to the current year needs to be passed by Feb. 1, Pearce and House Appropriations Chairman John Kavanagh told lawmakers Jan. 15.
But House Majority Leader John McComish said it would be of minimal use to hold a special election in May to address the estimated $3 billion budget shortfall in fiscal 2010, because it would require lawmakers to put off crafting a budget for that year until after voters had cast ballots.
“That’s not a tenable option,” he said, explaining that GOP leaders plan to finish the budget much sooner.
Meanwhile, Economist Elliot Pollack and other financial experts appeared before the Finance Advisory Committee on Jan. 13 to update lawmakers on the budget outlook.
Pollack said the economic downturn is based on psychology rather than economic principles. Investors and consumers alike are scared and are holding onto their money, making the economy contract even more, which in turn frightens more people, and so on, he said, until something breaks the cycle.
Richard Stavneak, who leads the Joint Legislative Budget Committee, said tax collections in the first half of the 2009 fiscal year have met Pollack’s low expectations.
“How are we doing year-to-date? The answer to that is, simply, not well,” he said, noting that monthly revenue was down 10.1 percent since July.
The biggest reason for the slumping revenue collections is tumbling retail sales. Stavneak and the JLBC have predicted $4 billion in sales-tax collections this year, far below the peak of $4.51 billion in 2007. Sales tax revenue will continue to lag below that figure until at least the 2013 fiscal year.?