Ducey signs $9.8B state budget

Gov. Doug Ducey inked his approval Friday to a nearly $9.82 billion spending plan for the new budget year that begins July 1.

Overall spending for the coming year will be about $208 million more than the current budget.

The largest change is in K-12 education. Most of that – $127.9 million – is just to keep schools where they are now. That includes required increases to compensate schools for increased enrollment, as well as the legally obligated additional funds for inflation.

But there’s also $34 million for a 1.06 percent state-funded teacher pay raise, above and beyond whatever local school districts can provide.

Lawmakers have promised an identical increase for the coming school year. But that is subject to actual approval by the 2018 Legislature.

Another $37.6 million is set aside for “results-based funding.” These are additional dollars that go to high-performing schools.

And there’s $8 million to provide state-funded full-day kindergarten – with a promise of $12 million next year – but only for a handful of schools that serve the most needy. The Republican-controlled Legislature had provided $240 million for full statewide funding in 2005 as part of a deal. In exchange, Democratic Gov. Janet Napolitano agreed to sign a 10 percent cut in estate income taxes.

But five years later, with the state looking for money, lawmakers rescinded the funding. That 10 percent cut in state income taxes, however, remains.

In 2007-2008, the state provided $4.67 billion in basic aid for maintenance and operation of public schools, a figure that computed out to $4,487 per student.

This current year the state put in $4.84 billion. But with increased enrollment, that divides out to $4,324 per student. And if inflation since 2008 is taken into account, those dollars are really worth just $3,735 per student.

Legislative budget analysts are still computing how much the new education dollars mean in per-student funding for the new school year and whether this may reverse a decade-long slide.

Another big increase in spending this year comes in the Arizona Health Care Cost Containment System, where an increased number of people eligible for care translates to an additional $44.1 million in state dollars.

Meanwhile, the three state universities are getting an additional $15 million in one-time funding. But lawmakers also removed a one-time $19 million infusion for the current fiscal year.

And even that $15 million has strings attached, with the University of Arizona having to use $1 million of its $4.2 million allocation to fund a so-called “economic freedom schools,” which was started with seed money from foundations run by the Koch brothers, whose financial interests range from Georgia-Pacific paper products and Stainmaster carpets to jet fuel and cattle. There’s an identical $1 million earmark out of the $7.6 million for Arizona State University; Northern Arizona University gets $3.2 million in one-time dollars.

The budget also includes an additional $33 million specifically to increase what the state pays to private firms that provide services to the developmentally disabled.

These companies negotiated contracts based on being able to pay their workers as little as the minimum wage, which was $8.05 last year. But that was before voters mandated an immediate increase to $10, going to $12 by 2020. And employers must provide at least three days of paid sick leave.

After several years of refusing to fund new schools as required by law, the budget does include $62.9 million for three new schools in Chandler, two in Vail and one in Queen Creek.

Those dollars, however, is unlikely to undermine the lawsuit filed earlier this month for failing to fully fund a formula, which requires the state to not only build new schools as necessary but also provide cash for ongoing repairs. The schools that sued say the formula funding, enacted after the Supreme Court concluded the state was not living up to its constitutional obligations, is close to $300 million a year.

There is $30 million in the budget for local road construction and repair. But that simply offsets the money the budget takes from gasoline taxes and vehicle registration fees to fund the Arizona Department of Public Safety.

Ducey has a separate bill on his desk to authorize the state’s three universities to borrow $1 billion for needed construction and repairs. The first funding won’t come until the first payment of $27 million in debt servicing is due the following fiscal year.