Budget doc reveals money stashed for ‘rainy days’ ahead

Lawmakers and the governor plan to set aside $450 million to offset anticipated deficits in the state budget in two years.

That’s money that won’t be available for critical needs now, but depositing it in the state’s “rainy day” fund reaffirms a fiscally conservative outlook that has dominated the Capitol following the fiscal crisis that led to several years of incessant budget slashing.

Reserving money for fiscal years 2014 and 2015 has been a priority for Republican lawmakers, who are adamant not to go through the same crisis again.

The cash reserves and other budget details emerged soon after lawmakers confirmed they’re closer than ever to reaching a final budget deal with Gov. Jan Brewer.

This afternoon, the governor and legislative leaders also declared that they finally concluded a budget agreement.

• SEE THE GOP BUDGET DOCUMENT
• SEE A JOINT STATEMENT BY GOV. BREWER, SENATE PRESIDENT STEVE PIERCE AND HOUSE SPEAKER ANDY TOBIN ANNOUNCING A BUDGET AGREEMENT

“With this plan, we are putting into action the wisdom of conservative principles that have helped bring our State back from the brink of fiscal ruin,” Brewer, Senate President Steve Pierce and House Speaker Andy Tobin jointly announced.

They said the deal restrains unnecessary spending, pays down debt and sets aside money for future fiscal challenges.

“This is a prudent budget that leaves us well-prepared for global and national economic uncertainties, as well as the financial fallout that may come with the outcome of lawsuits regarding ObamaCare and other issues,” they said.

An analysis of a budget document, obtained by the Arizona Capitol Times, shows that while the estimate for the FY15 deficit is technically $499 million, in practical terms it is only $149 million since there will be $350 million in the rainy day fund set aside to fill the hole. Under the plan, the other $100 million of the $450 million in reserves will be used to reduce the deficit in FY14.

Other notable issues included:

*$80 million to the Arizona Department of Administration over four years for automation

*$40 million for K-3 reading programs

*$12 million for K-12 building renewal

*$42 million of non-general fund money for the Department of Economic Security to backfill lost federal funds

*$39 million to DHS for seriously mentally ill

*$50 million over FY13 and FY14 for 500 maximum security prison beds

*$17 million for state employee pay increases

The $17 million is likely tied to the governor’s proposal to remove workers from the state’s merit system, providing for a pay hike as an incentive to be at-will employees.

The proposal also anticipates $50 million from a $98 million mortgage settlement that was reached by the Attorney General earlier this year with the nation’s big banks.

Additionally, it calls for fund transfers from several pots.

So far, rank-and-file members have warmly greeted the budget proposal that has emerged from the talks between the governor and legislative leaders.

Many were just happy to see both sides come within a striking distance of a deal.

Some said they’ll have to dig into the details of the proposal, but they’re so far encouraged by what they’re seeing.

Others, however, have privately raised concerns about specific items, such as putting all $40 million in just one pot — reading.

One Republican lawmaker from the metro Phoenix area, who agreed to speak on background, said a portion of that money could be used for soft capital (books and computers) or for a competitive grant which groups like Teach for America can apply to improve student learning.

Sen. Sylvia Allen, R-Snowflake, said she’s glad to see that while it includes some spending it also doesn’t set the state back so it faces a gigantic deficit by FY15.

“I don’t want to ever see anybody have to go through that again. It was terrible,” she said, referring to the painful decisions that were made at the height of the fiscal crisis.

Allen didn’t cite specifics, but she broadly described a proposal that’s favorable — or at least doesn’t hurt — rural communities.

Meanwhile, Sen. John McComish, R-Phoenix, said the proposal is a “huge step in the right direction.”

He and several members still share some concerns, but he’s optimistic they can be worked out, he said.

Sen. Steve Smith, R-Maricopa, also said the proposal is “much more palatable.”

But Sen. John Nelson, R-Litchfield Park, said he’s struggling to “break down” the budget document since it doesn’t provide details that compare actual dollar amounts between what is being spent now and what’s being proposed for next year.

“It’s going to be interesting to see what the final document is and then try to have some time to talk to department heads to see what it means,” Nelson said.

Related:

• GOP compromise budget gives $450M to rainy day fund, $7M to tourism