The state legislature and newly seated Gov. Jan Brewer face mounting budget deficits, which will inevitably shrink the operations of state government.
State agencies at all levels will feel the pinch as Arizona’s economy continues to produce less taxable income. It is a fact of life that when businesses and individuals spend less, tax revenue drops.
Various harsh budget reduction proposals have already thumped down on the table with a sickening thud. All have flaws — none will take effect without changes. But state legislators must find a way to cut projected rates of increase across all state budget line items by about 25 percent over a two-year period to pull the state’s budget in line with revenue, according to some estimates.
One suggestion is to just impose an across the board cut and be done with it. State agencies have grown significantly in the past decade as the governor and legislature scrambled to spend the bounty of a humming economy.
Now the bill has come due, in the form of dwindling revenues. The projected deficit in the current budget amounts to $1.6 billion, and next year will balloon to $3 billion — numbers that seem to change by the day.
The Town of Payson, like some other towns and counties throughout Arizona and elsewhere, has already trimmed its budget — even at the cost of layoffs. Payson alone cut the projected increases by 10 percent in July and another 26 percent in December.
The state now has to do the same. A myriad of groups from education, to health, to transportation advocates will all plead to protect their programs.
Where then does state government reduce its spending?
For instance, schools account for a major share of state spending. But school districts make a strong case they should not be cut. Educators, both at the local school district and higher education level say legislators would be sacrificing our children’s future with severe cuts. So if education funding is sacred, where do you cut?
When you have $100 coming in the front door and $125 going out the back door each month, something has to give.
The legislature and governor must come to terms with the regrettable reality that serious cuts are needed for the remaining part of this budget year and for next year. There will be pain, but the legislature has little choice but to reduce spending to bring revenue inline with expenses, as people do every month.
Tough times will result in tough decisions.
We do hope that the Republicans who now hold uncontested sway with the departure of Democratic Gov. Janet Napolitano will nonetheless consider incorporating some of the ideas in the essentially dead letter budget she left behind.
And even though the legislature she so consistently outmaneuvered must take satisfaction in her departure, she did leave some budget ideas behind. Admittedly, she uses some budget gimmicks to get through the current year — including using up the entire rainy day fund and borrowing more than a billion dollars, which will cost more billions to repay in the future.
We would hope that legislators will not place the full burden of balancing the state budget on education. Sure education will take some cuts, but the cuts must be examined carefully and not be a wholesale slaughter of education funding. The recent joint proposal by the heads of the senate and house appropriations committee places far too much of the burden on education.
Moreover, the legislature must not ignore the financial impact of its decisions on the faltering state economy. One of the lessons economic historians have gleaned from the Great Depression is that President Herbert Hoover did exactly the wrong thing when he cut spending to balance the budget as the economy weakened. But FDR’s measures didn’t work either.
So even though the state is constitutionally required to balance its budget without the kind of deficit spending the federal government has embraced to stimulate the economy, the legislature must carefully consider the economic impact of any cuts it imposes.
We do not envy lawmakers their choices right now.
But we hope they will take a flexible, pragmatic and realistic approach — taking good ideas where they find them and avoiding the reflexive embrace of ideology.
The cuts should be fair and careful — and if a fiscal juggle postpones the damage until the economy revives, so much the better.