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By Anonymous Mike, pseudonymously.

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Tuesday, July 29, 2008
Critical Condition

The last 2 state budgets bled red ink all over the floor and the Governor closed it with borrowing, accounting tricks, and by sweeping cash reserves. Right now I'm projecting a starting point of a $1.3 billion deficit for FY2010

Earlier in the year, Senate Appropriations Chairman Bob Burns wrote a piece in the Arizona Republic about the fact that the state budget increases automatically $500 to $600 million per year without any legislative action. You combine those spending pressures with the facts that the Legislature needs a 2/3 majority to raise taxes and that about half the general fund is off-limits to budget cuts and you have a recipe for fiscal meltdown.

How did it get to this point, well you combine 1 part AHCCCS with 1 part ballot initiative, and a dash of political fly-trap made with cheap federal money. A paper from the American Enterprise Institute has the details.

So what does the future hold for the next budget?

Leave aside the poor economy and the very real prospect that the Legislature will have to come back and re-do the current budget. Even with a fairly normal economy, the long-term budgetary outlook for the State of Arizona is dire. State spending automatically (without any legislative action) increases at about a 7.5% clip. On the last budget, the State spent about $10.6 billion; due to various ballot initiatives, the Legislature has the ability to curtail spending on little more than half of that.

What you have is the triple of convergence of building spending pressures, tight or declining revenues, and the inability of the Legislature due to changes to the state constitution to balance the previous 2. In short, the State is on auto-pilot to the fiscal abyss.

I know people meant well, but you know what the road to Hell is paved with...