State lawmakers working to close a nearly $1 billion budget deficit found Tuesday that much of the money they hope to save is already gone.
More than half of this fiscal year is over, and state agencies have already spent money that leading Republican legislators are proposing to axe.
“We’re going to have to find money that doesn’t exist,” said Sen. Bob Burns, R-Peoria.
Arizona’s economic woes have opened a $970 million deficit, according to the Joint Legislative Budget Committee. Gov. Janet Napolitano estimates the shortfall as lower, at $870 million.
Next fiscal year, which starts July 1, is projected to bring a $1.7 billion deficit.
“The economic situation at this time is getting worse,” said Richard Stavneak, director of the budget committee, “it’s not getting better.”
The House and Senate appropriations committees opened hearings Tuesday to decide how to balance the state’s budget.
Burns and Rep. Russell Pearce, R-Mesa, chairmen of the Legislature’s appropriations committees, are asking for deep cuts across much of state government. In total, they propose reducing spending by $630 million and pulling $350 million from the state’s rainy day fund.
The proposal includes shifting $106 million from the Highway User Revenue Fund to pay for the state Department of Public Safety’s highway patrol. That fund now pays for road construction.
Cities and counties would lose $52.5 million from that fund intended for their own road projects, cash they have been receiving and spending for months.
Mesa’s streets program relies heavily on the highway fund, said Jeff Martin, the city’s transportation director.
“This is obviously going to have a negative impact on our ability to keep up with maintaining the streets,” he said.
These proposed retroactive budget cuts are complicating an already complex process.
And it was clear at the first hearing that some lawmakers are wary. “I question the fairness of this,” Sen. Jeff Flake, R-Snowflake, said of the highway fund proposal.
Napolitano’s budget proposal calls for a mix of cuts totaling $214 million, $260 million from the rainy day fund and nearly $400 million in borrowing to pay for school construction.
Pearce and Burns argued lawmakers cannot compromise between their proposal and Napolitano’s, because even their cuts do not close the deficit.
“I believe if we end up somewhere between, we have failed miserably at what we are supposed to have done,” Burns said.
But closing the state’s deficit might create financial problems for others.
Under the Burns and Pearce proposal, the state’s 10 community college districts would have to return $20 million they received for construction and equipment.
However, the state doled out those dollars in July and some colleges have already spent them, said Mark Barnes, lobbyist for the Arizona Community College Association.
To return the money, those colleges would have to take it from funds provided by local property taxes for operations and academic programs.
The Maricopa County Community College District received $11.2 million for construction.
Chris Chesrown, a district spokeswoman, said MCCCD officials are working to determine how much of that has already been spent.