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Arizona Gov. Jan Brewer

Brewer Budget has Massive Cuts

PHOENIX (By Howard Fischer, Capitol Media Services) January 23, 2010 — Gov. Jan Brewer wants to turn juvenile offenders over to counties, repeal requirements to care for the severely mentally ill, kill state funding for full-day kindergarten, eliminate free health care for more than 300,000 low-income people, sell off more state buildings, borrow more money and cut state employee pay by 5 percent to balance the budget for the remainder of this year and the next one.

And even with all that, the governor still wants an immediate hike in state sales taxes.

She also wants, for the first time ever, to have Arizona tax labor costs for repairs on everything from automobiles to home appliances to support a $9.2 billion spending plan next year. Now customers pay tax only on the portion of the bill that covers parts.

Of note is Brewer's demand that lawmakers enact the tax hikes themselves so retailers can start collecting the extra one-cent levy on the state's 5.6 percent sales tax March 1.

That is designed to help plug the current $1.4 billion hole in the current budget as well as finance next year's spending. Other proposals to fix this year's budget include selling off and leasing another $300 million in state buildings on top of the $735 million just sold, and delaying payment of another $300 million to public schools and $100 million to universities.

Enacting an immediate tax hike, however, requires a two-thirds vote of both the House and Senate. But Brewer could not even convince a simple majority of senators to support just sending the issue to the ballot.

But gubernatorial press aide Paul Senseman said Brewer thinks they might now be convinced otherwise.

"I think the reality and increasing severity of our state budget deficit and its problems will convince many folks of the necessity of decisive and courageous actions on the state budget plan," he said.

And Senseman said if lawmakers don't go along, reductions to state programs will be even worse.

Brewer is giving up one source of revenue: John Arnold, her budget director, said the governor will not renew the state's two-year contract with Reflex Traffic Systems to operate fixed and mobile photo radar cameras throughout the state when it expires this summer.

That contract will net the state about $26 million this year and could generate up to $40 million if renewed.

"The governor's been clear ... that she doesn't like it," he said. But Arnold said Brewer would restore the program if voters agree to do that in November.

Brewer's proposed budget for the coming fiscal year does not cut basic aid to universities, community colleges or public schools. That, however, is only because she cannot: Once the state took federal stimulus funds for education, it committed not to slash funding below 2006 levels.

But that doesn't stop her from eliminating state funding for full-day kindergarten to save $218 million.

The state still would pay for half-day programs, as it did before 2006. And Arnold said local schools that want full-day programs are free to do what they did until then: pay for it with local funds or charge parents.

And federal law does not keep Brewer from taking another $180 million from "soft capital" allocations that cover everything from books and computers to school buses.

But even keeping basic funding the same still has an effect, reducing what schools get on a per-pupil basis. For K-12, the figure for the coming year will be about $3,370; it was close to $4,000 two years ago.

Maintaining the same level of support for universities will cut per-student funding to $7,100, versus $9,480 during the 2007-2008 school year.

That isn't the only shift in spending Brewer wants to balance the state's books.

Most significant is her plan to eliminate the state Department of Juvenile Corrections. That would require each county to house and pay for youngsters detained by judges.

Arnold said the decision was not solely to save money.

"The national movement is to decentralize the holding of juveniles," he said. "They do better when they're kept in their local communities."

Brewer, however, does not intend to give any of the $63 million to counties the state will save by closing the facilities and laying off 980 workers.

The governor also wants to cut the share of lottery proceeds that now helps local governments with transportation needs and reduce tourism funding. And she wants counties to pay the full costs of housing sexually violent predators from their communities in the state hospital rather than the current 25 percent share.

Brewer also wants lawmakers to repeal laws requiring the state provide comprehensive care for about 17,400 seriously mentally ill, instead funding only crisis intervention programs and medications.

Some of what the governor wants would need voter approval.

That includes her previously announced desire to scale back the Arizona Health Care Cost Containment System, the state's Medicaid program, to cover only what is required by federal law plus what can be financed by the revenues from the state's share of a settlement of a lawsuit against tobacco companies plus money coming from tobacco taxes. Arnold figures repealing the 2000 voter-approved mandate would shrink the rolls of about 1.2 million would shrink by about 310,500.

She also would need permission to repeal a requirement that the state set aside $20 million each year for open space preservation and take the $124 million now sitting in that account.

No vote is needed, though for Brewer's plan to eliminate the Kids Care program that provides nearly free health coverage to children whose parents don't qualify for AHCCCS but earn less than twice the federal poverty level.

The governor's proposed budget for coming fiscal year:

Total state spending - $9.2 billion

Money from general fund (not counting stimulus dollars and deferred payment of state bills) - $8.6 billion

Already anticipated revenues -$ 7.0 billion

Additional revenues:

- One-cent hike in sales taxes - $898 million

- New tax on repair services - $156.2 million

- Repeal credit for businesses to collect taxes - $20 million

- Add staff for Department of Revenue and make changes to ease collections - $17.8 million

- Sweep money from special funds - $184 million

- Redirect lottery proceeds that now go to local governments - $60 million

- Borrow money from First Things First program - $260 million+

Spending cuts:

- Eliminate state funds for full-day kindergarten - $218 million

- Cut "soft capital'' for schools - $180 million

- 5 percent salary reduction for state workers - $60 million

- Eliminate requirement to care for severely mentally ill - $36 million

- Have counties house juvenile offenders - $63.3 million

- Stop putting money into Growing Smarter fund to purchase parks and open space and take money already there - $124 million+

- Eliminate free health care for 310,500 adults - $358.5 million+

- Halt free care for 47,000 children of working poor - $10 million

- Redirect lottery proceeds that now go to local governments and elsewhere-- $60 million

- Reduce payments to AHCCCS providers - $57 million

- Cut state funds for "excess utility'' costs by schools - $100 million

Other policy issues:

- Require mandatory payments into "rainly day fund'' and make it harder to withdraw money except for emergencies

- Eliminate photo radar program unless voters reauthorize in November

- Force Department of Environmental Quality, Office of Tourism and Department of Water Resources to become self-funded through user fees and outside sources

- Form a Fee Review Commission to expand the use of fees and charges and determine what are appropriate

+ Contingent on voter approval

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