Town, County Weather State Budget Impact

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Already battered counties and towns this week heaved a cautious sigh of relief with the adoption of a state budget that left fresh bruises — but didn’t actually throttle them.

“When all was said and done, we were able to hold to no additional cost shifts to counties,” said Gila County District One Supervisor Tommie Martin.

However, the $8.6 billion state budget for the fiscal year that starts in June left in place some expensive financial shifts from this year — including the loss of gas tax money, a requirement that counties pay for insane prisoners held in the state mental hospital, a cut in funding for school resource officers on school campuses.

The Town of Payson also found some muffled measure of relief in scrutinizing the details of the compromise budget plan reached in negotiations between Gov. Jan Brewer and Republican legislative leaders.

Payson Mayor Kenny Evans said town budget officials are now hopeful that they can avoid three layoffs — and maybe even a proposed $24,000 cut in funding for the Rim Country Regional Chamber of Commerce.

However, the town will likely still face a hiring freeze and an effective pay cut for all its employees as their health premiums rise by up to $180 monthly, said Evans.

Lawmakers also abandoned a plan to impose a surcharge on the town water department to raise $7 million for the state Department of Water Resources.

Overall, the $8.6 billion state budget featured almost no relief from the deep cuts imposed in the course of the last two years — but also didn’t inflict many new wounds.

The economic projections suggest the state will collect an extra $900 million in the fiscal year that starts in June. Gov. Brewer wanted to spend most of that increase to restore some of the cuts in education and health care made in the past two years. However, the legislative leadership finally agreed to only about $200 million in new spending, with the rest stashed in reserves — including a $450 million rainy day fund.

The budget included no increase at all in the $65 million state budget for community colleges, which the Legislature slashed by about 70 percent last year. Supervisor Martin lamented the failure of an effort by the county and others to push through a bill to equalize funding for Gila Community College, which as a provisional college gets only a fraction of the per-student funding that goes to other community colleges statewide.

The state budget spending increases for the upcoming fiscal year included $50 million to build privately run prisons, $40 million to help third-graders master reading, a $27 million increase for the state’s universities, and $39 million to provide services for the seriously mentally ill in response to a long-standing court order.

The budget plan included several business-oriented tax cuts. That includes a 25 percent reduction in the tax on investment-related capital gains. In addition, the law provides added tax cuts for new manufacturing.

Those tax breaks will likely cost about about $108 million annually by 2019. Last year, lawmakers cut business taxes by $538 million.

The business tax cuts of the past two years amount to almost 20 percent of the general fund budget for K-12 education statewide.

Republicans hailed the budget as a return to financial responsibility, with a surplus set aside to cushion the scheduled expiration of a $1 billion annual sales tax surcharge in June of 2014.

State Rep. Phil Lovas, R-D4, hailed the creation of the $450 million “rainy day” fund and the continued spending cuts. He noted that projections show a surplus again next year and a $159 million deficit the following year, when the sales tax expires.

House Minority Leader Chad Campbell condemned the budget for its abandonment of education in favor of business tax cuts.

The Legislature spurned the governor’s plea for more money to provide health care for the working poor. Last year, the Legislature cut funding for the Arizona Health Care Cost Containment System (AHCCCS) by about $500 million by barring thousands of people from the rolls of the mostly federally funded program. About 30 percent of Gila County residents rely on AHCCCS for their health care.

Some 137,000 kids remain on the waiting list for AHCCCS-provided Kids Care, one of the programs the Legislature cut off last year.

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