PHOENIX -- Legislative budget analysts raised their estimate of Arizona's midyear budget shortfall to nearly $2 billion, up from approximately $1.5 billion. The growing shortfall, roughly a fifth of the budget, prompted calls to cut spending, increase taxes and raid voter-mandated programs.
The Joint Legislative Budget Committee staff on Thursday cited the latest drops in tax collections, increased spending for safety-net programs and newly reduced expectations from some budget-balancing maneuvers as it boosted its shortfall estimate on the current state budget.
Other elements of the shortfall already included a nearly $500 million deficit carried over from the last fiscal year and about the same amount of budget savings lost when Gov. Jan Brewer vetoed parts of the budget on Sept. 4.
The budget has roughly $10.1 billion of state spending, including $1.1 billion funded by federal stimulus dollars. Before being augmented by the federal money, borrowing and other maneuvers, regular state tax collections provide only $6.4 billion.
Arizona's economy has been hit hard by the recession, and economists said Thursday the recovery will be slow and long.
Brewer's budget staff is now using a shortfall estimate of $1.75 billion, and JLBC Executive Director Richard Stavneak and Brewer spokeswoman Paul Senseman said officials from the two branches agreed to work with that as the floor and $2 billion as the ceiling.
"There is no question that the severity of the deficit is increasing," Senseman said.
There have been informal talks on the possibility of holding a special session in the next month or so but there is no sign of an agreement on timing or planned action.
House Appropriations Chairman John Kavanagh, R-Fountain Hills, said the bigger shortfall estimate "makes the need for a special session more urgent."
He said lawmakers should re-approve spending cuts and other budget-balancing maneuvers that Brewer vetoed—some were in a bill she vetoed to kill the repeal of a state property tax—and approve additional spending cuts.
Along with sending Brewer's proposal for a three-year sales tax increase to voters in a special election, the Legislature also should request authorization to divert money from voter-mandated programs such as early childhood services, a new initiative being funded with tobacco tax dollars.
"I don't see how you get out of a $2 billion hole without using every resource that you have," Kavanagh said.
Brewer recently had agencies submit reports on what services or programs they'd eliminate or reduce to implement midyear 15 percent funding cuts, and Kavanagh said that approach could be used, with exceptions for prisons and the Highway Patrol.
"We're going to have to cut government big time," he said.
Liz Barker Alvarez, a spokeswoman for First Things First, an early childhood-education fund created under a 2006 ballot measure, later said the Legislature should "hold firm" to the program's voter mandate.
"The obligation of the state is to fund safety-net services. If there's a hole in the safety net, is up to the state to fix it and the Legislature to fund it," she said.
Sen. Paula Aboud, a Tucson Democrat and a member of Senate Appropriations Committee, said she supports a tax increase.
"When we're in flush times we give tax cuts and when we're in need we reach out to our citizens so we don't decimate the state of Arizona. To only cut will decimate Arizona," she said. "The governor is right."
Aboud and fellow Democrats as well as a few Republicans balked at Brewer's sales tax proposal while working on the budget earlier this year, but Democratic leaders have since said it's more palatable now that Brewer vetoed the property tax repeal.
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