Lawmakers will face $450M shortfall if voters reject ballot measures in Nov.

Lawmakers may find themselves back at the Capitol for another budget round if voters in November knock down a proposal to eliminate an early childhood development program and take its money, and sweep funds reserved for preserving Arizona’s open spaces.

That’s because policymakers didn’t write a Plan B to account for the possibility of those two ballot measures failing eight months from now.

The budget package reached by Gov. Jan Brewer and legislative leaders includes a ballot referral that would repeal First Things First, a tobacco tax-funded program for early childhood development, and transfer all of program money to the state. Another measure would sweep money from the Land Conservation Fund into the state’s dwindling coffers.

Approved by voters in 1998, the Land Conservation Fund aims to preserve the Arizona’s open spaces. Lawmakers hope to get $124 million from this fund.

They also hope to peel away an additional $325 million from First Things First.

If both measures fail, the state will have a shortfall of almost a half-billion dollars. That will be difficult for lawmakers to fill considering the state has used up nearly every tool and accounting gimmick – such as mortgaging its buildings, deferring payments to schools, borrowing, asking for a sales tax increase, sweeping agencies’ funds – to balance past budgets.

A whole different set of cuts would take effect if voters reject a temporary 1-cent sales tax increase in May. But those were already outlined in legislation that the governor signed on March 18. Brewer and Republican legislative leaders drew up a contingency plan to reduce the fiscal 2011 budget by an additional $866 million in case the May sales tax referral fails.

But there’s no backup plan if HCR2001, which gets rid of First Things First, or HCR2002, which sweeps the Growing Smarter Fund, fail to get approval in November.

If lawmakers have to fill another budget gap, they could do so in special session after the November election, or they could wait until January when a new set of lawmakers is in power.

Historically, lawmakers have chosen two paths when they find out that the state’s budget is out of balance. Two years ago, they waited until the new crop of lawmakers took office and let the new Legislature face the problem; in 2009, they doggedly pursued a budget solution all year, even going into a special session in December.

“My preference would be for us to clean up the problem ourselves rather than pass it to new legislators who haven’t yet got their legislative legs,” said Rep. John Kavanagh, chairman of the House Appropriations Committee.

Kavanagh’s sentiment is shared by many, including those on the leadership team in the Senate. But that sentiment partly emanates from this feeling that the state’s recovery will be sluggish and revenues may yet dip again before the year is over.

“I wouldn’t be surprised if we do have to come back after November anyway because of the economy,” said Senate President Bob Burns, a Republican from Peoria. “If there is not some kind of strong recovery then, there is a good chance we will still be short. We will still be out of balance.”
Burns, probably of all lawmakers, has been most focused and most conscious of the Legislature’s responsibility to balance the budget.

During the past two years that he has been Senate president, he has shown his readiness to set aside everything else to face the state’s budget woes; that included imposing a moratorium on non-budget bills last year and refusing to tackle the House’s so-called “jobs bill”
before the budget is completed.

“It is still our responsibility until we are out of office … to balance the budget,” Burns said. “And I think it is also our responsibility to do as much as we possibly can to eliminate the structural deficit.”
Sen. Frank Antenori, a Republican from Tucson, said lawmakers will either come back to the Capitol soon after the November election or fix the deficit – assuming the propositions failed – during the first few weeks of next year’s regular session. But no decisions need to be made until the outcome of the ballot measures is sealed.

“We’re dealing with five-meter targets right now. That’s a 100-meter target,” said Antenori, who served in the U.S. Special Forces.

Sen. Rebecca Rios, the assistant minority leader, said the Republican- led Legislature lacks the vision to think that far ahead.

“This Legislature hasn’t really been real proactive in terms of, ‘What are we going to do?’ I mean that’s way down the line, I think, as far as the view of my Republican colleagues,” Rios said. “I don’t see a lot of vision out of that group.”

Proposition 105 is the reason lawmakers need voter approval to take the money controlled by First Things First and the Land Conservation Fund. Approved in 1998, the proposition banned lawmakers from amending laws and funding mechanisms approved by voters unless the change furthers the purpose of the initiative and is approved by three- fourths of the Legislature.

Voters made the move in response to lawmakers repeatedly overturning what they had approved at the ballot – in some cases just months after a proposition had passed. Former Attorney General Grant Woods argued in 1998 that lawmakers have “no right to thwart the mandate of voters.”

So this year, with the two ballot measures in November, Brewer and lawmakers are counting on voters to reverse course and eliminate programs that voters approved years ago.

Should the ballot measures fail and either the Legislature or the Governor’s Office become Democratic, the Republican-dominated Legislature would want to return before the year ends to do the fixing, which may entail more spending cuts.

If the Legislature remains Republican and the Governor’s Office turns Democratic, there may be an added incentive for Republicans to do the fixing while Brewer is still in office.

But Senate Minority Leader Jorge Garcia, a Democrat from Tucson, thinks any special session will happen next year, when the new crop of lawmakers comes in.

“I think the reality is that at that point people are just going to be so burned out and so wasted by the whole issue of cuts and the penny increase or the penny failure and this $450-million failure,” he said.

“They’ll just say, ‘Let the newbies do it’.”