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Republican Gov. Jan Brewer
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Arizona Fiscal Woes 2nd-Worst in USA
PHOENIX
(Wire Services)
November 12, 2009 — Arizona
has
known
for some
time it
has a
serious
budget
problem.
On
Wednesday,
it found
out just
how
serious.
A new
report
rated
the
state as
second
only to
California
in terms
of its
fiscal
problems.
The
report
from the
Pew
Center
for the
States
blames
dismal
ranking
on
Arizona's
high
foreclosure
rate,
its
year-over-year
drop in
tax
collections
and its
yawning
budget
deficit.
Arizona
tied
with
Rhode
Island
as the
second-worst
state.
"While
the
national
economy
may be
out of
deep
water,
the
states
may be
drowning,"
said Sue
Urahn,
managing
director
of the
Pew
Center,
which
tracks
state
policy
issues
and
works on
solutions.
"The
bottom
line is
state
budget
problems
are
likely
to get
worse
before
they get
better,"
Urahn
said.
The
special
report,
"Beyond
California,
States
in
Fiscal
Peril,"
was
hardly
news to
Arizona
lawmakers,
who were
quick to
note
that the
state is
worst in
the
nation
in terms
of
largest
deficit
when
measured
as a
percentage
of the
overall
budget.
Rep.
John
Kavanagh,
who
chairs
the
House
Appropriations
Committee,
said
portraying
Arizona
as one
of the
lowest-ranking
states
only
underscores
the
enormity
of the
budget
problem.
"While
the
nation
may have
turned
the
corner,
Arizona
has
not,"
said
Kavanagh,
R-Fountain
Hills.
"Arizona's
still in
freefall."
The
state
has a $2
billion
deficit
for this
year,
although
lawmakers
are
expected
to meet
in a
special
session
next
week to
start
chipping
away at
the
shortfall.
After
that,
they
face a
potential
$3.3
billion
hole for
fiscal
2010-11.
The
report
examines
the
factors
that led
California
to its
epic
budget
morass
and $26
billion
deficit
earlier
this
year and
finds
common
threads
in other
states.
"They
share
important
characteristics
with
California,
but they
may not
be
destined
to
follow
in the
Golden
State's
footsteps,"
the
report
summarizes.
Those
common
elements
are
familiar
to
anyone
who has
followed
Arizona's
downward-spiraling
fiscal
condition:
• An
unbalanced
economy.
In
Arizona,
that
means a
heavy
dependence
on
growth,
which
screeched
to a
crawl as
the
housing-foreclosure
rate
skyrocketed,
eclipsed
only by
foreclosures
in
Florida
and
Nevada,
according
to data
gathered
by Pew
researchers.
•
Revenues
and
expenditures
are out
of sync.
Currently,
Arizona's
budget
calls
for $10
billion
in
spending,
but
there is
only
$6.4
billion
in
projected
revenue.
•
Limited
ability
for
policy
makers
to act.
In
Arizona,
voter-approved
mandates
to
increase
education
and
Medicaid
spending
make it
impossible
for
lawmakers
to rein
in
spending
in these
fast-growing
areas.
Likewise,
a
voter-approved
requirement
that
two-thirds
of
lawmakers
must
approve
any tax
increase
makes
tax
hikes
virtually
impossible.
•
Delaying
tough
decisions.
Arizona
lawmakers
and Gov.
Jan
Brewer
struggled
through
the
summer
to find
a
mutually
acceptable
balanced
budget,
to no
avail.
Brewer
vetoed
key
parts of
the
budget
in
September,
putting
it out
of
balance,
and
lawmakers
balked
at her
request
to send
a
temporary
tax hike
to the
ballot.
The
report
does not
delve
into
potential
solutions.
But
Urahn
said
states
traditionally
have
turned
to
short-term
solutions,
such as
delaying
payments
or
borrowing.
Those
might
work
during a
short-lived
downturn
but
don't
solve
anything
during a
protracted
recession
like the
nation
has seen
in the
past
year and
a half.
Some of
the
structural
changes
at which
the
report
hints,
such as
loosening
constraints
on
lawmakers'
ability
to both
cut
programs
and
raise
taxes,
can't
happen
fast
enough
to solve
budget
problems
this
year and
next,
Urahn
said.
In
Arizona,
Assistant
House
Minority
Leader
Kyrsten
Sinema,
D-Phoenix,
said
Arizona's
problems
have
only
deepened
as
lawmakers
and
Brewer
have
fought
to an
impasse
over
cuts vs.
tax
increases.
"I don't
know,"
Sinema
said
when
asked
how the
looming
budget
gaps
might be
bridged.
Cuts
alone
won't
balance
the
budget,
she
said,
because
large
parts of
the
state
budget
are
off-limits
to
further
cuts.
Likewise,
a tax
increase
won't
generate
enough
money to
paper
over the
$2
billion
hole.
And an
approach
that
blends
tax cuts
with tax
hikes
has not
gained
traction,
despite
nearly a
year's
worth of
struggle.
After
Arizona,
the
other
states
ranked
as in
fiscal
peril
are
Michigan,
Oregon,
Nevada,
Florida,
New
Jersey,
Illinois
and
Wisconsin.
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