Arizona Capitol Times Your Inside Source for Arizona Government, Politics and Business

Legislative leaders from both parties were guardedly optimistic they would reach an agreement when they began negotiating a solution to the fiscal 2010 deficit with the governor last month, and even when it appeared the talks were faltering, some saw hope as long as the parties kept talking.

Caught in what could be described as a perfect storm, the Arizona arts community is struggling to stay afloat. Hit by reductions in public funding, cutbacks by corporate donors and a skittish audience that is staying home, arts advocates nevertheless are following that long-standing tradition - the show must go on.

Lawmakers may shift the responsibility for education funding to local property owners as a way of coping with staggering budget deficits in the near future, even though it would translate to higher property taxes.

Retired Supreme Court Justice and Arizona icon Sandra Day O'Connor is spearheading an effort to make major structural changes to state government in advance of the 2012 centennial. "We love this state and see the need for a few changes," she said.

Legislative Republicans may have to reconcile themselves to at least one year of the state equalization property tax. It would be theoretically possible to repeal the tax retroactively during the next legislative session, so that property owners would be reimbursed for the taxes already paid under the equalization rate. But any lawmaker hoping to do so can expect fierce opposition from county treasurers.

World War II jolted the U.S. out of its last massive financial crisis, but with no global war to propel a recovery this time states are scrambling to staunch the red ink splashing across their budget sheets.

Most states are swimming in red ink, but Arizona is on the verge of drowning in it. Federal stimulus dollars intended to prop up government revenues and help states weather the economic storm have been spent, and the Grand Canyon State is facing deficits that could reach $3 billion in each of the next three years.

The governor’s actions on the state budget drew jeers from both Republicans and Democrats, but for wildly different reasons. House Speaker Kirk Adams and Senate President Bob Burns, both Republicans, said Gov. Jan Brewer increased state spending by more than $350 million with her line-item-vetoes of cuts to K-12 education and the Department of Economic Security, which provides benefits for Arizona’s poor.

Blaming “extremists” from both parties for holding up the budget process and threatening the state with bankruptcy, Gov. Jan Brewer on Sept. 4 signed large swaths of the budget that she said will help the state “weather the storm” until the next legislative session. But she vetoed parts of the main spending bill, including $300 million in cuts to K-12 schools and DES. She also vetoed the bill that included the equalization property tax.

During her 27 years in public office, Gov. Jan Brewer has never lost an election. But if she runs for a full term in 2010, some are predicting that streak could come to an inglorious end in the Republican primary.