Representative Bill Konopnicki LD 5 Legislative Update

Budget Update

On Friday March 5, 2010, Governor Brewer called the legislature into seventh special session, to begin on Monday March 8, 2010 at 2 PM.  The session was to address the budget problems for both the FY 2010 and 2011 budget.  The final budget was 15 bills that dealt with most of the areas of state operations.

Areas of concern:

Let’s be frank. The State cannot borrow its way out of its financial problems.  It will take careful cuts, borrowing and some revenue enhancements.  All have to be done carefully.  The state cannot borrow money for its current debt and pay it back over 20 years.  If there is another downturn, there are no options for the legislature to use.

Some examples:

Borrowing:  I am increasingly concerned about the mounting state debt. The legislature has borrowed over $ 4 billion since January.  The money was used to take care of current debt and is to be paid back over 20 years.  This practice of borrowing is something NO one would do with their personal finances.

Interest Payments:  The state’s budget problems are being passed to others rather than being solved.  The interest payment (no principle) is over $100 million a year.  In addition, there is $2 billion in rollovers (not making payments to schools, university and healthcare) with no plan to repay.  Total state borrowing, without this, is now over $10 billion with interest payments of $363 million a year.  As you can see, the state has dug a huge hole that will take 20 years to repay.

Fees: Nor can the legislature pretend that a fee increase is not a tax increase.  In addition, every fee the state charges has been raised.  This will impact almost everyone.  This is a MAJOR tax increase.  The legislature has also swept (stolen) fees from every organization and put them in the General Fund.  Most of these fees were paid for a purpose by citizens who now have paid for services they will not receive.  The state has taken $58 million from the parks in the last eighteen months and now the parks face closure.  The parks can pay for themselves but the legislature has to leave their money alone.  Now the talk is to turn the parks over to someone else to run and let them make the $58 million not the citizens of Arizona.

Buck Passing to the Counties: Counties have been forced to take a large amount of the state General Fund expenses when their budgets are tight and they cannot afford to pay these additional state costs.  Working with the counties, we are able to make some changes in the budget to help small counties in FY 2011, but there are still major cash flow problems in FY 2010.  Most small counties do not have the money that the Governor and legislature are requiring them to pay.  The only way they can meet these new expenditures is a local property tax increase.  A state wide property tax increase would have been around $ .12 cents but local counties are looking at an average of $ .70.

Hurts Rural Hospitals: The roll back on Prop 204 (voter approved health care) will have a major negative impact on our rural hospitals.  Many of our rural hospitals will close because of this legislation.  In addition, Arizona will lose over $2.7 billion in federal two for one matching dollars.  Arizona will still pay for these citizens healthcare cost, but will not have the federal match.  It is estimated that 42,000 healthcare workers will lose their jobs, 320,000 adults, 60,000 children and 22,000 seriously mentally ill will lose their healthcare coverage.  They will still have healthcare issues, but now will be forced to use the emergency room for their healthcare issues.  This decision will result in a court battle to see if the legislature has the authority to override the voter’s decision on this proposition.

Colleges.  Our community colleges have cuts that will result in the loss of services.  We are working to correct this problem BUT if the $.01 cent sales tax does not pass, the cuts to the colleges and K to 12 educations will be huge.