Legislators propose raiding special funds - East Valley Tribune: Arizona

Legislators propose raiding special funds

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Posted: Thursday, October 22, 2009 5:05 pm | Updated: 1:24 am, Sat Oct 8, 2011.

Arizona voters need to give lawmakers permission to raid some special funds to get the state out of its immediate financial hole, the chairman of the House Appropriations Committee said Thursday.

And they need to do it soon.

The proposal by Rep. John Kavanagh, R-Fountain Hills, came as a panel of economists concluded that the gap between revenues and expenses for the current fiscal year is now just shy of $2 billion. Just days ago, Gov. Jan Brewer pegged the shortfall at $1.5 billion.

Kavanagh said some of that can be made up if Brewer finally agrees to sign legislation with close to $500 million in budget cuts that had been agreed to previously. But those cuts never occurred, lost in the middle of gubernatorial vetoes over other things in the same legislation.

Kavanagh said he's willing to put a measure on the same ballot asking voters to approve some sort of temporary sales tax hike. But he said there is no way that levy could raise enough by the end of the fiscal year on June 30.

A 1-cent surcharge on the state's 5.6 percent sales tax generates about $80 million a month. Even if the election were in February - possibly the earliest date at this point - tax collections could not begin until March 1, meaning only about $320 million in new cash to plug that $2 billion hole.

What could raise a lot of cash, quickly, is raiding the special funds that are now off-limits to lawmakers.

Kavanagh singled out in particular funds that are being collected from an 80-cent-a-pack tax on cigarettes approved by voters in 2006. That cash is earmarked for programs to improve early childhood development.

He said there is about $350 million in that fund.

"It's crazy to be banking hundreds and hundreds of millions of dollars in dedicated tax money for special areas that we could use to help get us out of this mess," Kavanagh said. "I don't see how you get out of a $2 billion hole without using every resource that you can."

Taking those funds, however, would require voters to amend a 1998 constitutional measure that prohibits legislators from altering what voters have approved. That election - assuming voters go along - would have to be completed before June 30, giving lawmakers the time to take the cash and use it to balance the books for the current fiscal year.

Kavanagh acknowledged it might be difficult to convince voters to let lawmakers raid that fund and others dedicated to specific programs like smoking cessation programs and buying land for conservation. But he said they need to realize that the alternative is far worse.

"If we don't get that money, we'll be shutting down all the state parks because there just is no money left to run this government," he said. "You just can't have bank accounts overflowing with cash that some of these groups aren't even spending."

Kavanagh said there are better uses for those dollars than programs designed to help get small children off to a better education start.

"I'd rather be spending that money for preschool children health care and other issues that they need," he said.

Liz Barker Alvarez, spokeswoman for the First Things First program, said lawmakers should keep their hands off the cash.

"The voters gave us our charge, and we are holding firm to the responsibility they gave us," she said in a written response to questions. "The legislature needs to do the same."

She said it is the state's obligation to fund "safety net" services.

"If there is a question about why sick children in Arizona don't have access to the health care they need - or any other safety net services - then that's a question for the Legislature, since it is their responsibility to fund those basic services," she said. Anyway, she continued, all of the funds her organization has received already are committed to programs and services that have been identified by individual communities as what they want for children and families.

Gubernatorial press aide Paul Senseman noted that Brewer endorsed the idea in March of giving lawmakers more flexibility in spending money that voters had earmarked for other purposes. But Senseman said the governor's position on a special election depends on seeing more specifics from Kavanagh.

"We'll look forward to hearing more details," he said.

The underlying problem is that tax collections this year are expected to total only $6.4 billion. But the state is spending more than $10 billion.

Some of that is being made up with federal stimulus dollars, accounting maneuvers and the sale of $735 million worth of state buildings. But even with all of that, Richard Stavneak, staff director of the Joint Legislative Budget Committee, said the books are still nearly $2 billion out of balance.

Stavneak said there are indications that the economy will be slightly better next budget year.

He cautioned, though, that doesn't mean the economy will be back on its feet. In fact, the revenues for next year are estimated at just $7.2 billion, and $7.7 billion the year after that - the amount of money Arizona collected in the 2005 fiscal year.

And there is no estimate as to when revenues will return to what they were in 2007 - before the recession - when Arizona collected more than $9.6 billion in taxes.

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