The state’s $15.6 billion budget includes a massive surplus

PHOENIX — Republican legislative leaders are trying to sell what they touted as a $15.6 billion budget for the new fiscal year that begins July 1, but actually contains billions in additional spending buried in detail.

And the problem with vote alignment, according to Senate Speaker Karen Fann, is that the state, flush with tax revenue, has a $5.3 billion surplus. That, she says, means everyone has an idea of ​​how to spend all that money.

“Parents will tell you when there’s no money, when it’s hard and difficult, at least you can just say, ‘I’m sorry, there’s no money, we can’t not allow us,” the Prescott Republican said.

The state went through this more than a decade ago, not only having to cut spending and gain voter approval for a temporary one-cent sales tax hike, but also having to borrow money in selling public buildings with an option to rent and eventually buy them. return.

“Now we have like a boom year, our chance to really, really invest in K-12 infrastructure, higher education, pay down some of our credit cards, our debt,” Fann said.

“We have this unique miracle opportunity to do so many great things,” she continued. “And here we are arguing because it’s not enough.”

This is exactly the claim raised by Marisol Garcia, vice president of the Arizona Education Association. She argues that state revenues leave enough funds to provide an additional $1.2 billion for public education.

The GOP announces that its plan adds nearly $900 million to K-12.

But that’s not entirely true.

The actual new dollars invested in the base for the coming year — ongoing funds schools can count on year after year — is only about $540 million, a figure the House Minority Leader , Reginald Bolding, D-Laveen, said “doesn’t even match inflation.”

The way the GOP achieves its highest figure is to include projected future spending, dollars that won’t be available until at least the 2023-24 school year. And these are not for general public support that schools can use as they see fit, but for specific programs, like increasing public support for students from low-income households and l extra dollars for English language learners.

There is also a one-time injection of $200 million for building and repairing schools. In addition, it includes the inflation index mandated by voters, although it is only 2%.

Buried in all the numbers is something else: The actual spending plan Republicans want to approve is actually bigger than that $15.6 billion figure they claim is the bottom line. Much bigger.

The key is the use of fiscal maneuvers.

For example, that $15.6 billion figure does not include nearly $1 billion in allocations for road projects sought by individual lawmakers. They manage to put those dollars in the budget — where they should be counted — instead asking the state treasurer to take that money out of sales tax proceeds and give it directly to the Department of Transportation.

Another budgetary sleight of hand is the setting aside of $335 million for the construction of a border fence. Again, the dollars are not factored into the $15.6 billion spending plan, but are a direct diversion of sales tax.

Ditto for an additional $209 million for a “border security fund” to provide more dollars for things like helping local sheriffs and prosecutors, $334 million for a plan that has yet to pass to securing more water and a $425 million deposit in the state. “rainy day” fund.

Garcia said it was clear the state could do more for education.

“We have an influx of money to the point the state has never seen,” she said.

It’s also the assessment of most Democrats who say they can’t support a spending plan they say bypasses public education.

On the flip side, however, some Republicans view the spending plan as too big.

“This is the most exaggerated and spendthrift budget ever,” said Sen. Michelle Ugenti-Rita, R-Scottsdale.

She is expecting a big tax cut, in the order of $1 billion. She’s also not deterred by concerns that would eat away at what’s available for K-12 funding, saying voters care more about their own finances.

And Ugenti-Rita said if a recession is looming, it makes no sense to increase government spending.

Rather, she says, leave the money in taxpayers’ pockets.

So far, she told Capitol Media Services, those pleas for GOP leadership have fallen on deaf ears.

“When I have conversations with them about taxpayer relief, cuts, they act like I speak Mandarin,” Ugenti-Rita said.

Fann said the refusal of some Republicans to follow put her in the position of having to craft a budget designed to attract at least some Democratic votes.

So, for example, the plan provides more money for disability service providers. There are also additional dollars for universities and $87.5 million for the housing trust fund which helps build affordable housing.

But then there is a $330 million reduction in property taxes.

The big winners, by definition, will be the companies with the most taxable assets. And that includes utilities.

Fann does not dispute this. But she said that’s not why the cut is in the plan.

“The reason we did this is because of the 8% inflation that’s going on right now, and especially our seniors who are living on fixed incomes, let alone our low-income people,” Fann said. “They are being kicked out of their homes.”

But Republicans favored another proposal to help those at the bottom of the income scale: an earned income tax credit for those earning less than $50,000 a year.

Proposed by Gov. Doug Ducey, it would benefit about 572,000 taxpayers with an average benefit of $128 a year according to the governor’s aides.

It is modeled on a similar credit that anti-poverty advocates say is a boon for low-wage workers, offering a lump sum cash payment at tax time.

Fann said that turned out to be a non-runner.

“I have members who didn’t want it,” she said of her majority in the GOP. But what’s being proposed instead “as a trade-off” is to eliminate the ability of cities to levy a sales tax on residential rentals, which reduces local revenue but doesn’t affect the bottom line. ‘State.

All of this assumes that votes can be mustered for the plan, something that is so nebulous that there is already a plan B: adopting a “lean budget” that effectively keeps the state operating at current levels, deferring decisions to increased funding until after the new fiscal year begins.

In fact, the House Appropriations Committee voted Tuesday for that alternate plan in case the full GOP budget, which it also approved, ultimately fails.

Fann is ready to follow suit.

“If I can’t get these guys involved…I’m going to start taking things out of this budget,” she said, saying the reason a lot of this new spending was included was to get the votes needed before July. 1 delay. But if there are no votes for the package as it stands, Fann said, then the state must be prepared to keep the lights on past June 30.

“We might end up doing a lean budget next week because we’re not going to let the government shut down because I have a few members saying, ‘It’s not enough,'” she said.

There are signs that a bipartisan budget might be possible.

On Tuesday, Rep. Cesar Chavez, D-Phoenix, voted with Republicans on the House Appropriations Committee to support the plan.

He expressed concern that the state is rapidly approaching the new fiscal year. And if there is no budget passed, Chavez said, state agencies will have to close, which he called unacceptable.

But Rep. Jake Hoffman, R-Queen Creek, a member of that same committee, declined to follow his GOP colleagues, saying the spending plan was too big.

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