Monday, October 04, 2010

Foreshadowing: even more massive cuts to education coming next year

On Wednesday, September 29, the Finance Advisory Committee (FAC) of the lege's Joint Legislative Budget Committee (JLBC) met to discuss the economic and the state budget situation in Arizona.

Their briefing materials are here.  Much of it is just a gathering in one place of economic and revenue info in one place, and all of it is incredibly dry, but it's worth downloading the .pdf and studying it in depth.  The video of the meeting is here.

There was *far* too much data presented for me to do an adquate job of covering it here, but here is a brief summary of some of the discussion:

- They generally think that the recession in AZ is over (in a "cautiously optimistic" way, as state treasurer Dean Martin phrased it)

- However, while we have reached bottom, a recovery hasn't started - consumers, the fundamental driver of AZ's (and America's) economy, are still screwed.  They're either looking for a job or are worried about the security of the jobs that they have, and aren't spending money that they don't absolutely have to spend

- However2, corporate profits are near or at their pre-recession peak, but they're holding on to the profits instead of investing them and creating jobs

- Real estate prices, both residential and commercial, will stay depressed for the foreseeable future.  Vulture investors actually moderated the price declines by snapping up distressed properties, but now they are keeping the market values down when they put their investment properties on sale in an already glutted market

- The state's revenues are better than they were last year, but still weak, and less than projected when the latest budget was crafted.  The budget shortfall for the remainder of the current fiscal year is  up to $825 million, if the two ballot questions sweeping voter-approved funds aren't passed by the voters in November. (The legislative Rs present in the room Wednesday wanted to stress that point for some reason)

- Current projections show an estimated budget shortfall next year of $1.4 billion

- Those figures don't include currently suspended formula funding ($1.4 billion more next year if the formula funding is reinstated)

- The R legislators' eyes widened when they heard that the "maintenance of effort" requirements that were part of accepting the federal money used to balance the last couple of budgets expire at the end of the current fiscal year in June.  Currently, the lege can't cut education funding below 2006 levels.  In the fiscal year starting July 1, 2011, they'll be able to cut education as much as they want

- This is especially significant in light of the fact that federal law limits a state's ability to change eligibility standards for Medicaid (AHCCCS in Arizona), regardless of the fiscal year

- Anecdotal good news:  the FAC representative from the Salt River Project (SRP) reported that large industrial concerns are now buying more power.  The hope is that ramped-up production will lead to a ramped-up jobs picture

- More anecdotal good news (OK, it's more of a lack of bad news, but in the economy, it's "good" news when there isn't bad news to report): Construction sector employment figures are stagnant.  Which is an improvement after months of job losses in that sector.

- Highlight of the meeting: State Senator Jack Harper accidently rolled his chair off of the dais, waking everybody up (including himself).  Why is it that some of the most important stuff is also the most boring?

Anyway, the meeting illustrated why we need to elect Terry Goddard as governor.  More major budget cuts are coming.   Deal with it.  The money just isn't there and won't be for at least the near future.

Education will bear the brunt of the cuts.  Deal with that, too.  It's easily the largest segment of the state's budget.  In down budgetary times, it will face the most cuts.

The Republicans in the legislature are sharpening their meat cleavers and oiling their chain saws in gleeful anticipation of inflicting mortal wounds upon public education in Arizona during the next budget cycle.

However, the presence of Terry Goddard in the governor's office will serve to mitigate the carnage.

He and his veto pen will be there to force the anti-society extremists in the legislature to the negotiating table and force them to minimize the long-term damage.

Of course, electing Terry Goddard only sets up a strong, but not impenetrable, defense to the worst of the lege's machinations.

Right now, the Rs in lege have a majority in both the House and the Senate.  That gives them the ability to bypass the governor and place measures directly on the ballot.  Their access to virtually unlimited funds from lobbyists and corporations gives them a strong advantage there.

Electing more Democrats to the legislature, maybe even enough to tie or take control of one of the chambers, would go a LONG way toward stopping the R-led slaughter of Arizona's physical and societal infrastructures.

Other coverage: 

Mary Jo Pitzl of the Republic has a point here about the timing of the meeting.  Many people, including the Goddard campaign, found the timing of the meeting to be suspect.  They believe that the meeting was called in order to influence voting on the ballot questions.  Pitzl pointed out that the FAC always meets once in the fall, usually in September or October.  Her point is valid.  However, it should also be pointed out that the two most recent fall FAC meetings took place in October (2009 and 2008) and that most of the previous years' meetings took place in early September, not the week before early ballots dropped.

Arizona Republic coverage of the meeting here.

AP coverage, via Googlenews, here.

East Valley Tribune coverage here (in which Senate President Bob Burns is quoted as saying that Arizona may ignore the "maintenance of effort" requirements that are going to expire soon anyway.)


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