Senate leaders announce budget proposal

PHOENIX—A day after House Republican leaders unveiled a budget proposal, top state Senate leaders on Tuesday offered a rival $2 billion plan that is roughly split between cuts on one hand and borrowing and accounting gimmicks on the other.

Both proposals are aimed at putting a new state budget in law by the July 1 start of the next fiscal year while erasing a revenue shortfall officially projected at $1.9 billion but unofficially put as high as $2.3 billion.

The effective deadline to approve a new budget is Monday, the last day of the current fiscal year.

However, the surfacing of rival budget proposals that both enjoy significant support leaves it unclear how the full Legislature will resolve the issue in time to avoid at least the possibility of a partial state shutdown.

The proposal outlined Tuesday by Senate President Tim Bee, R-Corona de Tucson, and Senate Minority Leader Marsha Arzberger, D-Willcox, was developed in consultation with House Democrats and Democratic Gov. Janet Napolitano. The House Republican leaders’ offering has been praised by a Senate Republican leader, Majority Whip John Huppenthal.

Overall, the Senate leaders’ plan includes more borrowing and fewer cuts and transfers than the House Republican leaders’ version. However, details of the Senate leaders’ proposal were not immediately available since legislation to implement the plan was still being drafted late Tuesday.

Bee called the plan “reasonable, responsible and sustainable” and a way to keep vital functions of state government going in the face of dire economic conditions.

“We used the financial tools available to us to resolve this deficit,” said Arzberger.

As announced, the Senate leaders’ package adds up to $2 billion. Roughly half of that comes in forms of borrowing that include financing new school construction and postponing some school operations and other expenses into the next fiscal year. The proposal also includes spending cuts and raids on special-purpose funds.

Unlike the House Republican leaders’ proposal, the Senate leaders’ plan features a major add-on: a $1 billion borrowing proposal for university building projects. Not directly a budget issue, it was folded into budget consideration recently as supporters tried to win legislative backing.

Under the university borrowing proposal, money to repay bonds sold to investors would come from Arizona Lottery proceeds expected to grow due to expanded advertising and added games.

While House Speaker Jim Weiers, R-Phoenix, on Tuesday said layoffs could result from the House Republican leaders’ proposal, depending on how agency heads implement lump sum cuts, Bee and Arzberger said their proposal likely would reduce through a continued hiring freeze.

“There are going to be programs that operate with fewer people and agencies also but I don’t think that’s going to be accomplished through layoffs,” Arzberger said.

The House GOP leaders’ plan includes restrictions on some state services, including an enrollment freeze for the Healthcare Group insurance plan, while Bee and Arzberger said they included no such limits.

Even the size of the shortfall varies between the rival plans. The Senate leaders’ plan puts it at roughly $2 billion. The House Republican leaders stuck with the previous $1.9 billion figure.

Many Republican lawmakers have objected to any extensive reliance of borrowing to solve the state’s budget mess, but Bee and Arzberger defended their plan as pragmatic.

“We don’t know where this is ultimately going to go but we’re hopeful that this will get us through this time and move on to a brighter day,” Bee said.

Said Arzberger: “This is a balanced budget. It meets the deficit. It proposes things that will get us through this year.”