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Ducey unveils state spending plan

Gov. Doug Ducey (Photo by Gary Grado, Arizona Capitol Times)

Gov. Doug Ducey (Photo by Gary Grado, Arizona Capitol Times)

The bleeding is over and spending is inching back up under Gov. Doug Ducey’s proposed budget plan, but those who took steep budget cuts last year shouldn’t expect to get much of it back.

Following through on his pledge to hold the line on new spending, Ducey today unveiled a proposed $9.5 billion spending plan for fiscal year 2017. Some agencies and programs that took the biggest hits during last year’s budget crisis won’t see that funding restored, including universities and vocational school districts.

While the executive budget plan includes about $284 million in additional funding, nearly half of that money will go to one-time spending, while $116 million is statutorily required caseload spending on things like education and prisons. Of the additional spending, $168 million will go to new initiatives, ranging from border security to technical education to child safety. Only $32 million of the funding increases will go to new, permanent, discretionary spending.

Ducey spokesman Daniel Scarpinato said structurally balancing the budget is a top priority for the governor, and the spending plan will help achieve that goal. Under Ducey’s plan, the Governor’s Office expects the state’s budget to be structurally balanced by the end of FY17 through a combination of restrained spending and better-than-projected revenue and employment figures.

“We’re responsibly investing in these programs but we’re not going to obligate the state to a bunch of new spending that we can’t afford in the years ahead,” Scarpinato said.

Universities, which saw a $99 million cut in fiscal year 2016, will only get $8 million in new funding. And that money will go to a new model which is intended to focus on in-state students.

Joint technical education districts will receive a $30 million boost, but in a far different form than the $30 million that will be cut from their budgets beginning in July. Rather than replacing ongoing funding, the $30 million is a one-time appropriate intended to last for three years that will go to a new grant program.

The grant program, which will be run by the Governor’s Office, will require JTEDs to train students in specific skills needed by local businesses. To qualify for grants, JTEDs must partner with business that would provide matching funds. Gubernatorial staff said the new program is a superior option to simply restoring last year’s funding cuts because it will lead students to waiting jobs.

JTED funding is part of the $90 million funding boost that Ducey’s budget proposal includes for K-12 education. More than half of that figure, $46.5 million, goes to formula-driven baseline funding increases that are required by law.

If voters in a May 17 special election approve Proposition 123, a measure crafted to settle a long-running K-12 funding lawsuit, schools will get an additional $224 million, about $52 million of which also goes to formula-based funding.

In addition, Ducey is proposing $15 million in both the current fiscal year and FY17 for building renewal at K-12 schools.

Furthermore, the Ninth Floor plans to “repurpose” about $24 million approved in the current year’s budget for a fund designed to help high-performing public schools to borrow against state-backed credit. The proposal, initially unveiled last year and funded in the FY16 budget, would allow A-rated schools to borrow against the new Public School Credit Enhancement Program. Lorenzo Romero, Ducey’s budget director, emphasized that the state’s general fund would not be on the hook for schools that default on their bonds, and that the bonds would be backed up by the $24 million fund.

Ducey’s budget plan calls for $87 million, $39 million of which would be added to the FY16 budget, for children who are in state care. The money would go toward new beds, support services and permanent placement of children who have been removed from their homes.

The Department of Child Safety will receive $4 million in additional funding, along with $4.3 repurposed from existing funding, to reduce the massive backlog of cases at the embattled agency. Lorenzo Romero, the governor’s budget director, said the money could pay for as many as 50 new case aides, though DCS will have the discretion to use the new funding as it sees fit. Ducey’s budget would provide another $9.3 million to reduce court delays that contribute to the DCS caseload by providing additional funding the court system and Attorney General’s Office.

One of the biggest sources of new funding is the governor’s Border Strike Task Force Bureau within the Department of Public Safety, which is slated to receive $31.5 million in new spending. According to Romero, only $10 million of that money will be ongoing, while the rest will be one-time funding.

Ducey’s budget proposal did not include figures or details for any proposed tax cuts. In his State of the State address, Ducey committed to lowering taxes in FY17 in and subsequent years, which follows a campaign pledge he made in 2014 to cut taxes every year of his governorship. Scarpinato said Ducey will work with the Legislature on the tax cut issue during the 2016 session.

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