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Arizona State Treasurer Dean Martin: Time to End Budget Game
Written on August 21st, 2009
PHOENIX — State Treasurer Dean Martin says it’s time for Gov. Jan Brewer to sign a budget for the current fiscal year, which began eight weeks ago, and get on with business.
Martin said Brewer and state lawmakers are engaging in a multi-billion dollar game of brinkmanship over the budget and it needs to end. The latest move came Thursday when lawmakers shipped the governor a budget that once again does not include the temporary 1-cent increase in the state sales tax that she has demanded.
“Everybody should just realize that this tax increase for 2011 — there isn’t the votes for it right now,” Martin said. “But, we still have to balance 2010. Let’s get 2010 put behind us.”
On Twitter, the governor said Thursday evening that she had a lot of bills on her desk, “going to have to make some BIG decisions.”
Martin said if a budget isn’t signed soon, the state could have partial shutdowns this fall and the effects could last for years.
“Who wants to invest in a state that not only is having to sell its own Capitol building and rent it back, but can’t pay its own bills?” said Martin. “It doesn’t sound like an attractive place to invest. We really need to solve this problem.”
Meanwhile, Senate President Bob Burns has fired up a new commission to hunt down wasteful state spending.
Sen. Thayer Vershoor, a Gilbert Republican, will head the Arizona Budget Commission until the legislative session ends.
“The idea would be for us to go in and look at agencies like the Department of Economic Security, look at the K-12 system, the Department of Health Services, other agencies,” said Vershoor, who said he views himself as more consultant than hatchetman.
He said he doesn’t want to be arbitrary about budget cuts.
“We want to make sure that, as we look at these reductions, we’re reducing them in a way that serves the taxpayers of Arizona.”
Among things Vershoor is looking at is why K-12 funding jumped by 40 percent in the past four years, with a lot of the increase not reaching the classroom.
House Speaker Kirk Adams said he got no assurances from the governor during negotiations that she would sign the latest budget plan. She vetoes parts of a similar plan last month because it did not include the sales tax — either the Legislature passing it or putting it before voters in November.
“I am not in a position to predict what she will or will not do,” Adams said.
GOP leaders at the Legislature said they will continue to try to resurrect the Republican governor’s proposed sales tax hike by coupling it with $400 million in income tax cuts for individuals and corporations. The sales tax hike and income tax cuts were approved by the House in late July, but didn’t clear the Senate.
Republican Sen. Russell Pearce of Mesa said the Senate is probably one vote short of getting the income tax cuts approved and putting the sales tax proposal on the ballot for voters to decide. “The tax package is a win either way,” Pearce said. “It’s just a bigger win if that tax goes down at the ballot.”
Democratic Sen. Rebecca Rios of Apache Junction, who voted against the sales tax hike, criticized the coupling of the two ideas, saying revenue from the sales tax hike would be used to pay for income tax cuts totaling $200 million for individuals and $200 million for corporations.
The governor has until late Wednesday to act on the budget package.
“She hasn’t made any final determinations yet on what she is going to do with the bills,” said Brewer spokesman Paul Senseman.
The budget plan would use spending cuts, funding delays, borrowing, asset sales and federal stimulus money to close the deficit of more than $3 billion. The budget includes state spending of $8.3 billion padded by an additional $1.1 billion of federal stimulus funding.
The package includes the repeal of a state property tax that has been suspended for three years but was set to take effect again. Lawmakers missed a Monday deadline for approving the bill before counties were required to set tax rates. Legislative leaders say they still have a few days to get the bill signed and give counties enough time to readjust rates before they mail bills to property owners.
By Associated Press Writer
Information from:
http://www.aztreasury.gov/media/2009/KTAR-08-21-09.html
Arizona State Treasurer Dean Martin: Arizone is Broke, Needs to Enact a Budget
Written on August 20th, 2009
PHOENIX – Arizona Treasurer Dean Martin says the state must enact a new state budget by the end of the week to keep its flexibility to borrow money from banks so the state can continue paying its bills.
The state was operating $386 million in the red as of Wednesday and has been making up for it by borrowing money from state government funds.
But Martin says the state will lose its flexibility to make internal loans when the figure hits the $500 million mark and will then need to borrow money from banks that aren’t willing to loan money to the state until its budget is balanced.
Arizona isn’t projected to reach its internal-loan limit until Oct. 15.
Still, Martin said the budget must get enacted this week to give the state the six to eight weeks needed to set up bank loans.
Information from:
http://www.aztreasury.gov/media/2009/FOX-08-20-09.html
Arizona State Treasurer Dean Martin: State is Broke and Needs to Enact a Budget
Written on August 19th, 2009
PHOENIX — Arizona Treasurer Dean Martin said Wednesday that the state must enact a new state budget by the end of the week or it will lose the flexibility to borrow money from banks to continue paying its bills.
The state was $386 million in the red as of Wednesday and has been making up for it by borrowing money from some of the 1,800 state government funds. But Martin said the state will lose its flexibility to make internal loans when the figure hits the $500 million mark. Then it will need to borrow money from banks, but they’re not willing to lend to the state until its budget is balanced.
Although Arizona isn’t projected to reach its internal-loan limit until Oct. 15, Martin said the budget must get enacted this week to give the state the six to eight weeks needed to set up bank loans.
“It’s like living paycheck to paycheck with your credit cards also being maxed out. That’s basically where the state is right now,” said Martin, a Republican.
The GOP-led Legislature has approved a budget-balancing package but hasn’t yet sent it to Gov. Jan Brewer. The package doesn’t include Brewer’s proposal to ask voters to approve a sales tax increase, and the Republican vetoed key parts of a similar budget package last month because the tax proposal was missing.
Legislative leaders declined to specify when they would send the package to the governor, and the governor’s office has declined to say whether she would sign it.
Brewer spokesman Paul Senseman said the state isn’t in danger of running out of money to pay its bills, but the cash flow predicament could become more of a problem later.
Eileen Klein, Brewer’s budget director, said it’s not a certainty that the state would have to take out loans to improve its cash flow. The state could avoid such borrowing through the use of federal stimulus money and the enactment of a state budget.
“We remain hopeful that we will have the sales tax,” Klein said.
If the state can no longer make internal loans and bank loans aren’t already set up, Martin said the state will have to consider issuing IOUs and making late payments on the debts that it owes.
California last month started issuing $1.95 billion worth of IOUs to state vendors and taxpayers owed refunds while the legislature worked to plug a $24 billion budget deficit. Officials said last week that they could stop the practice because California’s revised budget would allow the state to get short-term loans to pay daily expenses.
Brewer’s office said Arizona IOUs are a possibility, but such discussions are premature because the state must first consider other options, such as borrowing from banks.
The state’s cash flow problems prompted some legislators to complain about the state spending $100 million more than it did at the same point last year.
“Every day this state is in danger of actually starting to bounce checks,” Sen. Thayer Verschoor, a Gilbert Republican, told his colleagues Tuesday.
Despite efforts to cut state spending, the state has incurred more expenses this fiscal year because more people are on the state’s Medicaid program, the state’s prison population has risen, and the number of students at schools continues to grow, Senseman said.
Meanwhile, the state has less tax revenue than in the past. Brewer’s answer is the sales tax increase.
Senate President Bob Burns, a Republican from Peoria, said he doesn’t know how to get enough votes to refer the sales tax hike to voters. The referendum fell two votes short of passage in the Senate.
“I don’t see how we get that,” Burns said. “We have tried numerous ways to put together a bill that had the referral on it, and we have been unsuccessful in doing that.”
Jacques Billeaud, The Associated Press
Information from:
http://www.aztreasury.gov/media/2009/USAToday-08-19-09.html
Arizona State Treasurer Dean Martin Says Arizona Must Enact Budget This Week
Written on August 18th, 2009
PHOENIX – Arizona Treasurer Dean Martin said Wednesday that the state must enact a new state budget by the end of the week or it will lose the flexibility to borrow money from banks to continue paying its bills.
The state was $386 million in the red as of Wednesday and has been making up for it by borrowing money from some of the 1,800 state government funds. But Martin said the state will lose its flexibility to make internal loans when the figure hits the $500 million mark. Then it will need to borrow money from banks, but they’re not willing to lend to the state until its budget is balanced.
Although Arizona isn’t projected to reach its internal-loan limit until Oct. 15, Martin said the budget must get enacted this week to give the state the six to eight weeks needed to set up bank loans.
“It’s like living paycheck to paycheck with your credit cards also being maxed out. That’s basically where the state is right now,” said Martin, a Republican.
The GOP-led Legislature has approved a budget-balancing package but hasn’t yet sent it to Gov. Jan Brewer. The package doesn’t include Brewer’s proposal to ask voters to approve a sales tax increase, and the Republican vetoed key parts of a similar budget package last month because the tax proposal was missing.
Legislative leaders declined to specify when they would send the package to the governor, and the governor’s office has declined to say whether she would sign it
Brewer spokesman Paul Senseman said the state isn’t in danger of running out of money to pay its bills, but the cash flow predicament could become more of a problem later.
Eileen Klein, Brewer’s budget director, said it’s not a certainty that the state would have to take out loans to improve its cash flow. The state could avoid such borrowing through the use of federal stimulus money and the enactment of a state budget.
“We remain hopeful that we will have the sales tax,” Klein said.
If the state can no longer make internal loans and bank loans aren’t already set up, Martin said the state will have to consider issuing IOUs and making late payments on the debts that it owes.
California last month started issuing $1.95 billion worth of IOUs to state vendors and taxpayers owed refunds while the legislature worked to plug a $24 billion budget deficit. Officials said last week that they could stop the practice because California’s revised budget would allow the state to get short-term loans to pay daily expenses.
Brewer’s office said Arizona IOUs are a possibility, but such discussions are premature because the state must first consider other options, such as borrowing from banks.
The state’s cash flow problems prompted some legislators to complain about the state spending $100 million more than it did at the same point last year.
“Every day this state is in danger of actually starting to bounce checks,” Sen. Thayer Verschoor, a Gilbert Republican, told his colleagues Tuesday.
Despite efforts to cut state spending, the state has incurred more expenses this fiscal year because more people are on the state’s Medicaid program, the state’s prison population has risen, and the number of students at schools continues to grow, Senseman said.
Meanwhile, the state has less tax revenue than in the past. Brewer’s answer is the sales tax increase.
Senate President Bob Burns, a Republican from Peoria, said he doesn’t know how to get enough votes to refer the sales tax hike to voters. The referendum fell two votes short of passage in the Senate.
“I don’t see how we get that,” Burns said. “We have tried numerous ways to put together a bill that had the referral on it, and we have been unsuccessful in doing that.
By JACQUES BILLEAUD / Associated Press Writer
Information from:
http://www.aztreasury.gov/media/2009/Anchorage_08-19-09.html
State Could Run Out of Money by Mid-October
Written on August 17th, 2009
Arizona is on track to running out of money to pay its bills and its employees in the middle of October — if not sooner — if lawmakers don’t adopt a new budget plan quickly, state Treasurer Dean Martin said Monday.
Martin said by Tuesday the state’s books would already be in the red to the tune of about $360 million. The only thing that’s keeping Arizona afloat is about $500 million in accounts that belong to specific state agencies, money that is being loaned, with interest, to the general fund.
But Martin said the state is spending at the same rate it did last year despite the fact that tax collections are even less than last budget year. So that line of credit — Martin compares it to a credit card — will be “maxed out” in October.
That, however, doesn’t mean Arizona has until then to adopt a balance budget.
Martin said that, no matter what happens, the state is going to need to borrow money, even on a short-term basis, to pay its bills.
He said, though, it takes six to eight weeks to set up such a line of credit. And Martin said banks have told him they won’t even consider extending credit until the state has a balanced budget.
That, he said, makes this week or next the drop-dead deadline for lawmakers to approve a spending plan. Martin said if there is no action soon, Arizona “will be in exactly the same position that California was, sending out IOUs or not paying people or doing emergency furloughs.”
“We’ve already informed the governor’s office last week that they need to start creating a list of who gets paid and who doesn’t get paid,” he said. “Physically, there will be no money to cover those checks.”
That presumes things don’t get worse before the line of credit is in place: He said the money available internally to loan the general fund could run out as early as next month.
“If that’s the case, we’re already screwed,” he said.
But Martin’s predictions of financial meltdown, echoed by Senate President Bob Burns, R-Peoria, did not convince Gov. Jan Brewer to back off her demand that any budget must include putting a measure on the ballot asking voters for a temporary hike in state sales tax.
“The governor has made it very clear to the legislators for many weeks now that if they were not to send a budget that was acceptable to her that a financial crisis of order and magnitude the state has never seen would ensue,” said gubernatorial press aide Paul Senseman. He said any problems that result are the fault of legislative leaders, not the governor.
Senseman said Brewer “remains committed to securing additional revenues to protect those three core areas of education, public safety and health.” A one penny surcharge in the state’s 5.6 percent sales tax rate could generate an extra $80 million a month.
Burns said Monday, though, there are not the votes to fulfill the governor’s demand for a sales tax referral. So he intends to send her the budget, perhaps today, that Republican lawmakers have adopted, one that cuts spending sharply and uses other fiscal maneuvers, including borrowing, to deal with the fact that tax collections are far below where they were last year.
Burns said if Brewer agrees to sign the budget, he will commit to continuing to try to find additional revenues. But Senseman said Brewer has a different idea of how this should play out.
“The Legislature could adopt her entire package and send it to her with what she’s proposed,” he said.
Complicating matters, Burns also plans to send Brewer another measure permanently repealing the state property tax even though that actually would make the state’s financial situation $250 million worse. The Senate already has approved that repeal, with the House Appropriations Committee voting to follow suit.
That tax has not been collected for the last three years, the result of a 2006 budget deal between the Republican-controlled Legislature and Democratic Gov. Janet Napolitano.
It returns automatically this year absent legislative action.
“That’s a tax increase right out of the chute on homeowners and businesses who are struggling,” he said. “In my opinion, that is a problem to put a $250 million tax increase on a struggling economy at this time.”
Senseman said, though, Brewer agreed to forego the revenues from the property tax only in exchange for the sales tax referral.
The stalemate on the budget also means lawmakers didn’t repeal the property tax before supervisors in the state’s 15 counties had to set the tax rates Monday for this fiscal year. So, as of now, Arizonans are set to pay an additional 33 cents per $100 of assessed valuation on the tax bills that are due Oct. 1.
For the owner of a $200,000 home that adds about $66 a year. Businesses, which are valued for tax purposes on a different basis, face a higher burden: A $500,000 business would pay an extra $364 a year.
Burns and House Speaker Kirk Adams, R-Mesa, are asking county treasurers to delay printing and mailing out the tax bills while they make a last attempt to either reach a budget compromise or convince Brewer to sign the property tax repeal.
Assistant Senate Minority Leader Rebecca Rios, D-Apache Junction, said Monday there is another way to reach a deal: Negotiate with the Democrats who control 12 votes in the 30-member chamber.
“We believe that we can get a compromise budget done with Republicans in less than a week if we fully commit ourselves, which we’re committed to doing,” she said in a floor speech, with Burns presiding. “And we would ask, would you commit yourselves to work for an entire week?”
At this point, though, Burns said he intends to push forward with that Republican-only budget.
In the House, meanwhile, Democrats tried to get the Appropriations Committee to adopt a plan to expand the list of items subject to state sales taxes but lower the overall tax rate. Rep. Matt Heinz, D-Tucson, said the change, which would not take effect until mid-2011, would provide Arizona a more stable source of tax revenues.
Republicans said they could not support such a major change in tax policy without more time to study it.
Howard Fischer, Capitol Media Services
Information from:
http://www.aztreasury.gov/media/2009/EVTribune-08-17-09.html
East Valley Tribune
