Senate eyes budget fixes

PHOENIX - The state Senate is looking for a future fix to the state's budget issues. There are at least three bills in the Senate that would change how the state appropriates revenue.

Currently, the Legislature is not allowed to spend more than 7 percent of the state's total personal income as determined by the Economic Estimates Commission. The state can go beyond the 7 percent cap, but only with a two-thirds vote of approval from both houses of the Legislature for each issue that needs funding beyond the cap.

The state Constitution also allows the state to adjust the spending limit if Arizona assumes functions from the federal government or the local governments.

The first bill, Senate Concurrent Resolution 1026, would, starting in 2014, limit the amount of state revenue spent by the Legislature to the same amount that was spent the previous year with an adjustment for population and inflation growth.

The excess funds collected by the state would be added to the state budget stabilization fund, a state emergency fund and "any program established to proportionately refund excess state revenues to taxpayers."

SCR 1026 also limits funds transferred to the state budget stabilization fund to 10 percent of the current appropriations limit in any fiscal year.

It would also limit funds transferred to the state emergency fund from exceeding 5 percent in any fiscal year.

It would allow the spending limit to be suspended for one year with the approval of voters, with the following conditions: Two-thirds of both houses of the Legislature and the governor would have to agree to put the item on the ballot, and the issue would have to go to the ballot before the money could be appropriated.

There is also an emergency clause, which would with a three-fourths vote of approval from both houses and the governor, allow the state to exceed the cap without going to voters for approval. However, the funds could only be used to pay "current extraordinary, nonrecurring expenses that could not have been reasonably foreseen or prevented and that are required to preserve the health, safety and general welfare of the people."

The emergency clause also states that the funds cannot be used to pay the "ordinary costs of administering, maintaining or operating state government, its political subdivisions or to meet revenue or budget shortfalls."

The bill would also allow any state resident taxpayer to sue in court to enforce the spending limit.

The bill has passed the Senate Appropriations Committee and is currently under review in the Senate Rules Committee. If it passes it would be put on the ballot in the next general election. Once approved by the voters, it would become law.

The second bill, Senate Concurrent Resolution 1019, would lower the spending limit from 7 percent of total personal income to 6.4 percent of total personal income after June 30, 2013.

It would also allow a state resident to bring a civil action in county superior courts to force the state to comply with the new limit. The winner of the case would be awarded the cost of litigation.

The bill passed the Senate Appropriations Committee on Feb. 8 and is under review by the Rules Committee. If it passes, it would be placed on the ballot at the next general election.

The third bill, SB 1231, is very similar to SCR 1026 but does not require voter approval.

Starting in 2013, SB 1231 would require the Joint Legislative Budget Committee to estimate and publish the states total revenue and spending for the next year. Like SCR 1026, the spending level would be set at the same level as the previous year, with adjustments for inflation and population.

If the Legislature exceeded the spending limit, it would have to pass a resolution acknowledging that it had exceeded the limit and authorizing the spending.

Unlike SCR 1026, it exempts spending to repay outstanding state debt incurred before June 30, 2011, and spending to restore deferred payments from fiscal year 2011 to the current year from appropriation's limit.

The bill passed the Senate Appropriations Committee on Feb. 8 and is currently under review by the Rules Committee.

The fourth bill, Senate Bill 1408, would require the Joint Legislative Budget Committee, starting in 2012, to compute and transmit to the chairmen of the Appropriations, Finance and Ways and Means Committees of both houses an estimate of the state's spending for the current year, with adjustments for inflation and population by Feb. 15 of each year.

If the Legislature proposes spending in excess of the spending estimate, the Appropriations committees of both houses would have to hold a joint hearing and publish a public notice of the hearing. Any recommendation from the committees would have to be approved by a roll call vote and a news release would have to be issued after the meeting of the decision.

SB 1408 has already passed out of the Senate Appropriations Committee and is currently being reviewed by the Rules Committee. It would not require a vote of the people to become law.

While many people have touted the bills as a way of bringing state spending under control, the Children's Action Alliance has raised some concerns about the bills, especially SCR 1026.

The Alliance is an organization that lobbies the Legislature on issues involving health care, child abuse and neglect, early care and education, budget and taxes, juvenile justice, children and immigration, and working families.

The Alliance says the bill is too similar to a taxpayers' bill of rights law that passed in Colorado in 1992.

According to the Center on Budget and Policy Priorities, a Washington, D.C.-based, non-partisan research and policy institute, which analyzes federal and state fiscal policies, and public programs that affect low- and moderate-income families and individuals, Colorado's law limited the state's annual growth in revenues and spending to how much the state's population grew and the rate of inflation. The excess money gathered by the state was returned to the voters. In order to go beyond the spending limit, the Colorado Legislature had to go to the voters for approval.

According to proponents of the law, it effectively cut spending, yet allowed the state to continue to provide services to residents.

According to opponents, the law was too effective. It controlled spending and created a significant decline in services to Colorado residents.

According to the Center, the law's adjustment formula couldn't keep up with the growth in the state's schools, prisons or senior citizens' populations. The state also couldn't keep up with road maintenance and other necessary services.

According to the Center, the state fell from 35th in the nation to 49th in the nation in K-12 spending; funding for higher education dropped by 31 percent; and the number of low-income children who lacked health care in the state doubled.

When the economy took a nosedive, things got worse. Voters finally amended the law in 2005, effectively suspending it for five years and using the surplus revenues to pay for essential services, instead of returning them to taxpayers.

The Children's Action Alliance pointed out in a news release that Arizona already has a constitutional spending limit of 7 percent of personal income, requires a super majority in both houses to pass tax increases and restrictions on property taxes for school districts, cities and counties. A bill like SCR 1026 would only hurt Arizona the same way it hurt Colorado, the Alliance said.