Senate cuts $300 million in state spending

PHOENIX -- State senators voted to cut nearly $300 million in spending Wednesday in an effort to start dealing with an anticipated $2 billion deficit.

The preliminary voice vote came over objections from both legislative Democrats as well as representatives of various organizations that depend on taxpayer funds. They chided both Gov. Jan Brewer and the Republican-controlled Legislature for trying to balance the budget solely through spending cuts and ignoring options to generate more cash.

Senate President Bob Burns, R-Peoria, said lawmakers will deal with a proposal by Brewer to let voters decide if they're willing to hike the sales tax rate by a penny, to 6.6 percent.

But he would not push that proposal in this week's special session because there was no consensus among his members. And Burns said the best way to start chipping away at the deficit is to enact those measures which are the least controversial and will have no problems getting the necessary votes.

A final roll-call vote today (eds: Thursday) sends the package to the House for its approval, also expected later today.

The moves to fix the budget came as the state Department of Transportation said it was laying off 115 workers.

ADOT Director John Halikowski, who had warned lawmakers last month of his budget problems, said most of the employees to be let go are from the Motor Vehicle Division, the place Arizonans go to get or renew a driver's license and register their vehicles. He said the latest firings, coupled with previous layoffs, are likely to mean it will take more time for customers to get what they need.

And the action comes as state Treasurer Dean Martin is proceeding with plans to borrow money from Bank of America to pay the state's bills.

Martin had said in August that borrowing would be necessary because the rate of tax collections was not keeping pace with the bills becoming due. And Martin predicted he would have to go to the banks in October or November after he had borrowed the maximum $500 million he has in cash from other state accounts.

The state Loan Commission is scheduled to meet today to set the rate of interest the state will pay, a variable figure tied to national benchmarks.

About half of the cash lawmakers agreed to cut Wednesday will be taken from state aid to education for "soft capital' expenses, ranging from books and computers to school buses. The other half will come from the budget of the Department of Economic Security, with agency officials charged with figuring out where to cut staffing or services.

Sen. Amanda Aguirre, D-Yuma, said she recognizes the depth of the deficit. And Aguirre said she realizes that some spending cuts are necessary.

"I'm still very concerned about the cuts we are offering today to the schools,' she said. And Aguirre said lawmakers need "other solutions for revenue enhancement and not just keep cutting our way out of this economic crisis.'

Sen. Rebecca Rios, D-Apache Junction, was critical of the DES funding cuts, saying the agency's budget already has been cut by 31 percent.

"To target our cuts on children and families most in need is unconscionable,' she said.

While Democrats were willing to negotiate some spending cuts, that wasn't the case with members of the Arizona Budget Coalition. Andrew Morrill, vice president of the Arizona Education Association and a teacher in the Marana Unified School District, said the groups involved are not in denial about the size of the deficit.

"What we're in is a severe state of shock over chronic cutting and underfunding,' he said. Morrill said the coalition has options "that make the cuts being discussed right now unnecessary.'

These include higher taxes, having the state borrow even more money than it has to date, eliminating some tax credits and restoring staffing at the Department of Revenue to go after those who are not paying their taxes.

The package given preliminary Senate approval on Wednesday also makes changes in how many state agencies operate, including giving several of them the power to hike fees to cover their costs rather than rely on general tax revenues. That saves the state close to another $160 million.

That plan drew fire from several GOP lawmakers.

"This is a de facto tax increase on business,' said Sen. Ron Gould, R-Lake Havasu City. "We're sending a message to Arizona's businesses that we can't balance our budget by controlling spending, so we're going to allow our department agency heads to raise your fee for your regulation.'

Sen. Ken Cheuvront, D-Phoenix, said the fee hikes are necessary because lawmakers have slashed so much in state funding that the agencies are unable to do their jobs.

But Sen. Sylvia Allen, R-Snowflake, said that presumes that everything the agencies are doing is necessary.

"Maybe we need to some back on some of these regulations so it doesn't cost so much,' she said.

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