Gov. Doug Ducey and Republican leadership in the House and Senate have reached an agreement on the budget that makes deep cuts to state universities, although whether that budget can win the votes it needs to reach the governor is still unclear.
House and Senate GOP leadership both held several rounds of meetings with small groups of Republican lawmakers Tuesday evening, attempting to lock up votes for their negotiated budget.
The alternative budget would slightly increase total spending over the governor’s proposal, while cutting Ducey’s revenues and maintaining a structural imbalance for a year longer that Ducey previously said he would tolerate.
“We’ve got a budget deal. We’re excited about where we are. This has been a tough process. The focus has been to balance a budget. It’s been to protect the most vulnerable. We think we have a budget that reflects the values of Arizonans,” Ducey said.
The proposal would deepen Ducey’s proposed cuts to higher education, with universities facing a $104 million cut, instead of Ducey’s proposed $75 million, according to documents obtained by Arizona Capitol Times.
Cuts to three community college systems would double from Ducey’s proposed $8.8 million to a $17.6million cut, completely eliminating state funding for Maricopa, Pima and Pinal county community colleges.
Ducey defended taking more from the universities, saying it was necessary to slash deeper there to ensure a balanced budget.
“We have a budget that reflects the values of Arizonans,” he said.
“We protect children, we protect K-12,” the governor continued. “And we’re making the difficult decisions that are necessary so that we can live within our means.”
But Eileen Klein, president of the Arizona Board of Regents, said the additional lost dollars could result in the presidents at the University of Arizona and Northern Arizona University seeking higher tuition hikes than planned, at least for students not in guaranteed tuition programs. She said the universities will lobby lawmakers to return to the Ducey’s original proposal, calling the higher figures “a serious step backwards in terms of economic development.”
Arizona State University is expected to stick to its pledge not to hike tuition, no matter what. But Klein sees the revised budget, coupled with prior cuts, as a bad sign for the state university system.
“Right now, they’re on a path to defund,” she said.
The budget also would reduce Ducey’s proposed $96 million cut to public school formula funding to only $5 million. It also calls for eliminating district-sponsored charter schools, an issue that was a major point of contention in the current year’s budget.
The budget would also cut $10 million to eliminate the small-school weight for multi-site charter schools. It would also eliminate $18 million in Ducey’s proposal to cap the homeowners’ tax rebate at 44 percent.
The newly created Department of Child Services would see $9 million less than Ducey’s proposal.
The proposal would decrease Ducey’s proposed funding to build 3,000 new private prison bedsto cover only 2,000 beds, and postpone the funding altogether until next year. It would also allow county sheriffs to bid on housing the prisoners themselves.
It would also cut $130 million in revenue from Ducey’s budget overall – not including the lost revenue from Ducey’s scrapped proposal to increase the vehicle registration fee to cover funding to the Highway Patrol.
The state would end the year with a structural deficit of $241 million – about 30 percent higher than Ducey’s proposal – and the deficit would carry into fiscal year 2017, something Ducey expressly said he wanted to avoid.
While Ducey’s original proposal aimed to structurally balance the state’s budget by FY17, the Joint Legislative Budget Council shows a structural deficit of $111.7 million that year, with the budget not reaching a structural balance until FY18. But Ducey insisted that the budget would still be structurally balanced by the end of FY17 under the deal he reached with legislative leadership.
The discrepancy appears to result from a disagreement in revenue forecasts. According to Ducey spokesman Daniel Scarpinato, the Governor’s Office is projecting $9,163.8 billion in revenue in FY16 and $9,459.2 billion in FY17. But JLBC’s budget documents show $8,768.2 billion in FY16 and $9,093.5 billion in FY17.
“Projections are projections. There are different projections on this. But everyone’s in agreement on getting our budget in structural balance and everyone agrees that this plan puts us on that path to achieve it in the near future,” Scarpinato said.
House Speaker David Gowan said that he is still shopping the budget to Republican lawmakers in hopes of rounding up votes.
“Once the members have said this is where we’ll go, that’s what we’ll do,” he said.
Democrats are already calling the new proposal worse than the governor’s original proposal, citing the increased cuts to higher education and a “shell game” being played with K-12 education funding.
“The budget just got worse,” House Assistant Minority Leader Bruce Wheeler of Tucson said.
Wheeler and other Democrats said that, in talking to their GOP counterparts in the House and Senate, it is clear Republican leadership doesn’t have the votes necessary to pass a budget, although that could change. The main hang-up among GOP lawmakers are the cuts to higher education, as a bloc of Republicans were already pushing back against Ducey’s lower cuts.
Republican Sen. Kelli Ward of Lake Havasu City said there are things she likes and dislikes about the budget compromise.
At least one aspect she’s not happy with are the increased cuts to higher education.
“I don’t think we should cut the universities so much,” she said.
House Minority Leader Eric Meyer said that, although K-12 appears to get an increase in the negotiated budget, at the end of the day, a lot of money is shifted around and school districts won’t actually see a per-pupil funding increase.
“There’s not an increase. The reality is on a per-pupil basis, there’s not an increase,” Meyer said.
Senate Majority Leader Steve Yarbrough of Chandler said the Legislature may work through Saturday to finish the budget this week “if that’s what it takes.”
–Includes information from Jeremy Duda of the Capitol Times and Howard Fischer of Capitol Media Services