Martin Calls for Return to 2005-06 Spending
Written on September 29th, 2009
Arizona State Treasurer Dean Martin said the actions of the governor and Legislature show a “disconnect with reality,” and he’s calling for a return to 2005-06 spending levels.
Martin stopped in Lake Havasu City Tuesday as he travels around the state speaking with residents and city and county officials about the state’s current budget crisis.
Currently the state is short about $1 billion, and next year the deficit is expected to hit $3 billion to $4 billion.
“The budget continued to grow even as the recession hit. In fiscal year 2008 spending increased 10 percent while revenue declined that much. In FY 2009 spending was up 6 percent while revenues dropped 19 percent,” Martin said. “That’s a disconnect with reality.”
Martin also questioned Gov. Jan Brewer’s insistence on a new sales tax.
“The economy is at its weakest point right now. No time is a good time for a tax increase but this is absolutely the worst time,” Martin said. “And even if it passed, we’re not at a sustainable level.”
To get to the point where revenues could support state services, Martin said the immediate solution is to reduce the budget back to Fiscal Year 2005-06.
“If you talked to most private sector businesses these days, they’d be happy to be at 2005 levels. They’ve cut back even further,” he said.
He also suggests that reserves — currently depleted thanks to legislative drawdowns over the past two years — be set by major budget sector and those agencies take responsibility to maintain the reserve levels as set by law.
“And we have to deal with a major spending leak — the entitlement programs,” Martin said. “We’ve grown welfare while cutting K-12 (education) and public safety.”
The problem involves the use of tobacco settlement money. Under the voter-approved plan, the first 20 percent of the budget for the Arizona Cost Containment Health Care System has to be paid for from the state’s general fund before the tobacco money is used.
“So you have to pay that 20 percent and if revenues to the state are off 10 percent, that’s even more that has to be made up somewhere else,” he said.
Martin said the solution he’s suggesting is two ballot questions. The first asking voters if the public health insurance and welfare system be funded solely by the tobacco funds and nothing come from the general fund. The other would be whether voters would like a tax increase to make up the difference between the tobacco funds and the expenditures.
“ACCHS is currently at $1.5 billion. Even in the best of times the state can’t sustain that,” he said. “But only the voters can solve this one.”
Meanwhile the state is looking to borrow about $500 million, pledging its revenues against the loans to cover the day-to-day operations. Bids from major lenders are due today and will be decided on next month.
“The state has never done anything like this before,” Martin said. “We’re not sure how those bids are going to come back.”
He said that internal borrowing sees the state pay anywhere from .5 to 1.5 percent in interest, and he expects the bids from the private sector lenders to come in at about that level or a bit lower.
“But if the market freezes or the state’s financial condition worsens, that could go up,” Martin said, noting there is a 2.5 percent cap set by law.
“You can’t spend more than you make,” he said. “Essentially the state is broke. We have to bring expenditures and revenues in line.”
David Bell , Havasu News
State Treasurer Criticizes Sale of State Capitol Buildings
Written on September 9th, 2009
State Treasurer Dean Martin, who is considering runnng for governor next year, lambasted the state’s plan to sell certain state properties to generate fast cash and then lease them back.
He implied that lease-purchase programs are a budget gimmick that weakens finances and erodes respect for Arizona.
“It makes us look like Rent-A-Center,” he said Wednesday in a speech at the Sheraton Wild Horse Pass Resort & Spa. He was the keynote speaker at a convention of the Arizona Agents Alliance Association, a group of independent insurance agencies.
Gov. Jan Brewer on Sept. 3 signed a part of the budget that allows the state to sell properties. Among the possibilities are the House and Senate buildings at the Capitol, the State Hospital and state fairgrounds. Government functions at those sites would continue. The state has made sale/leaseback deals in the past. But apparently this is the first time the state has earmarked revenue from the sales to finance general government operations.
The state can sell a building only once, he noted.
“Do you want to invest in a state that’s renting its Capitol building?” he asked.
“It’s a temporary solution,” he said. “Even if it gets us through this recession, we’re going to be in the same boat for the next recession.”
Also creating a solid rainy-day fund to help the state weather future recessions would be prudent and would build confidence in Arizona, he said.
As it is now, he fears that companies leaving California will skip over Arizona and head for Texas. He said Arizona’s infighting, its lack of a balanced budget put together on solid principles and its lack of foresight does not engender confidence in the state.
He also criticized Brewer’s veto of the repeal of the equalization property tax.
The tax, also referred to less often as the County Education Property Tax, was suspended three years ago by the Legislature.
The bill sent to the governor this year would have permanently repealed the tax, but she vetoed it.
The tax applies to businesses and homes. Rep. Steve Yarbrough, a Republican from Districtc 21, warned about the possibility of the cancellation of a permanent repeal when he spoke in January 2008 at a legislative breakfast in Chandler.
The tax means about $77 more to be paid on a home worth $200,000, he said then.
“There’s never a good time to raise taxes, but this is the worst possible time,” Martin said Wednesday. Legislative leaders and Brewer need to “stop infighting and start solving problems, to start planning and thinking long term,” he said.
He criticized the current state budget, which is close to a billion dollars in the red and which Martin said is cobbled together.
The dithering is costing taxpayers, he said.
“The quicker you solve the budget problem, the cheaper it is,” he said.
Martin recommended starting to balance the budget by taking a hard look at entitlement programs.
“We’ve been growing welfare spending while cutting education and public safety,” he said.
Ten years ago, ACCCHS, the state’s low-income health care program, had a budget of $200 million; today is more than $1.5 billion, he said.
The ACCCHS budget is growing 75 percent faster than the rest of the state budget, he added.
Martin was elected state treasurer in 2006. He served six years in the state Senate, where he was chairman of the Finance Committee.
By Luci Scott
Walk and Talk with: Dean Martin
Written on September 8th, 2009
As the economy crumbles, the man with his eye on the state funds, Arizona State Treasurer Dean Martin, believes the worst may soon be behind us.
Despite losing his wife of 13 years while she was giving birth to their son, who passed away days later, and despite being the treasurer of a state smashed to economic bits by the real estate bubble, Martin remains optimistic.
In his address to the League of Arizona Cities and Towns at the Hilton El Conquistador Hotel last Thursday, his PowerPoint slideshow poked fun at the economic rollercoaster our state and country has been riding and explained the numbers that matter.
The Arizona Daily Wildcat got a few minutes to walk and talk about the future of the state with the numbers guru who served for six years as a Republican state senator before being elected to the office of state treasurer and, if the rumors circulating the blogs and papers are true, may make a bid for the governor’s office in 2010.
Here are some excerpts from the conversation:
DW: What do you see for the near future for Arizona’s university students?
DM: You’re going to have continued pressure from student loans. Student loans are going to continue to be difficult because of the problems in the financial market. Because of the credit freeze, it’s hard to get capital for those lending. That will be improving over the next couple of years but it’s going to be slow. It won’t be as bad, I think, this year was the worst year for student loans.
DW: What about state funding for the universities?
DM: It’s such a big hole right now, I don’t see anything different coming out of it. They’ve got three years worth of problems that they have to deal with. The economy is going to start recovering next year, but it’s going to be slow. It’s going to take three to four years to fully dig our way out of it. So it’s going to be a while before you start seeing increases to funding outside of the normal. And even then, that may not happen.
DW: What do you think is the best thing the state can do to turn our budget situation around?
DM: Rip the band-aid off quickly. We know we have to get spending in line with revenue. We know we can’t spend more than we make. Everything that they’re doing is just prolonging the inevitable. The math doesn’t go away, the math doesn’t change, the math only gets worse the more you ignore it. It’s the best thing you can do for everybody, every agency, and it’s fix it now so they can start going forward. The longer they wait, the worse it’s going to get. Every day that goes by you’re spending money that’s going to result in more cuts later. There’s no new revenues coming in. (The governor’s) tax proposal is getting bigger the longer you wait. The revenues are the same and everyday you wait it’s more expensive.
DW: What budget would you vote for if you were still a senator?
DM: The key thing is we need a balanced budget. You can’t spend more than you make, it’s very simple, we need a balanced budget. Getting into all the budget discussions, that’s a whole other hour-long discussion.
DW: Have you seen any budgets that would actually be a balanced budget?
DM: The one (Gov. Brewer) has on her desk is the closest thing we’ve got right now, based on the time and effort. There’s no such thing as a perfect budget, but we need something. We need these things in place and what we’ve been getting is piecemeal and so as much as I don’t like what’s happened and where we are, we’ve got to get done with 2010 so we can start on 2011. It’s kind of funny, we don’t have a 2010 budget but on Monday, the first, all agencies had to turn in their 2011 budget. So you’re turning in your 2011 budget when you don’t even know what your 2010 budget going to be. That’s part of the problem, we need 2010 done now.
DW: Are you going to put in a bid for governor?
DM: (Laughs) No. (Laughs)
(Lady standing close by: “I hope I can campaign for you soon.”)
DW: Is that a real no?
DM: Um, I haven’t made any decisions. I mean, right now the plan is to run for reelection, but as you see, lots of people have been asking me for six months or more. And so I’ve been saying, ‘No no no, I have too much to do.’ But now I’m like, ‘Yeah, I’ll think about it.’ But no more than that, I haven’t made any decisions.
Hank Dean Stephenson