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The Prescott Daily Courier | Prescott, Arizona

home : opinions : editorials November 26, 2015

1/21/2013 9:59:00 PM
Editorial: State's rainy-day fund could dry up
The Daily Courier

Earlier this month, the Arizona Legislature opened for business with millions of dollars in the bank.

We are talking about the $450 million the Legislature previously set aside in a rainy-day fund, according to the Associated Press. In addition, the state could have another $676 million for the next fiscal year, for a total of about $1.126 billion.

That's nice, very nice - compared to two and three years ago. An extra $450 million or $676 million is not pocket change. For most Arizonans, it's a sum beyond imagining. But don't break out the bubbly yet. That amount is just a morsel when it comes to the voracious appetite of government.

Ahead on Arizona lawmakers' radar screens are many issues, including but not limited to education, water resources, and sales tax revenues. Some are up, others are stagnant, and the rest are down or struggling.

"Our biggest issue is still jobs and the economy and keeping the budget balanced until we're out of this black hole we're in, and that's going to be a challenge," said Rep. Karen Fann, R-Prescott.

The first problem is that the state's temporary one-cent sales tax - approved in 2010 for a three-year run - ends in May.

Secondly, these savings and the corresponding expenses show the challenges facing lawmakers - the need for careful prioritization, and the necessity of reining in government to preserve fiscal sanity. Otherwise, the old rule is true: Government spending will increase to match or exceed available revenue.

Arizona is not alone. Indiana has a $500 million budget surplus and $2 billion in reserves. Iowa has an $800 million surplus, Florida has more than $400 million, and Michigan has an extra $1 billion.

But despite the extra money, Stateline.org reports that states "say that much of their surpluses will cover sweeping cuts anticipated in federal funding later and increases in Medicaid costs."

Finally, yes, don't forget Medicaid, which is gobbling up an increasing share of state funds nationally. Some states, such as Texas and Louisiana, have rejected federal aid for the Medicaid expansion under Obamacare. And, if they do not - as is the case with Arizona - they face a three-year sunset, like with the sales tax.

That's right, the federal government will help with Medicaid, but after three years we're on our own. Washington would pay the entire cost of the Medicaid expansion for the first three years, gradually phasing down to 90 percent of the cost after that.

Budget surplus? Rainy-day fund? Slow economic recovery? We don't care what you call it, just don't put your umbrellas or your thinking caps away just yet.

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Reader Comments

Posted: Wednesday, January 23, 2013
Article comment by: Biz Guy

The reason it won't last is that the number was smoke in the first place: an accounting trick, similar to checking your bank balance right after you deposit your paycheck but before you pay your bills. Brewer's a trainwreck when it comes to actually managing anything, but she never misses an opportunity to toot her own horn in the media, and using trumped-up numbers to show how well she managed the budget when in fact she hasn't is just another example.

In the corporate world, she could face a fraud investigation for reporting a number like this. This is really all Enron did, just for years on end.

Posted: Tuesday, January 22, 2013
Article comment by: Yellow Dog

"Our biggest issue is still jobs and the economy and keeping the budget balanced until we're out of this black hole we're in, and that's going to be a challenge," said Rep. Karen Fann, R-Prescott.

Our Republican Legislative members might stop digging and re-prioritize the tax burden in alignment with the true needs of the State. Speaking of realigning priorities, have you quit the corporate lobby group ALEC yet?

Posted: Tuesday, January 22, 2013
Article comment by: Dear Mr. Steele

Which industries us a "minimum" of water?

Posted: Tuesday, January 22, 2013
Article comment by: We Need More Working Voters

Maybe we need to cut some of the welffare/food stamp programs and find more tax paying jobs. This country needs more working voters and less non-working voters. How can any country survive without working citizens?

Posted: Tuesday, January 22, 2013
Article comment by: Hooty Hoo

Courier: You'd better research your figures about Medicaid. First you said AZ is on it's own after 3 years and next you said the Feds would pay 100% for 3 years and winnow down to 90% after that. I believe both of those conflicting statements are wrong. I think it's 90% at the start and winds down to like 60% after that. You should print a correction. AZ should save some money because we are still highly dependant on sales taxes which are the source of income that varies the most. Texas not so much.

Posted: Tuesday, January 22, 2013
Article comment by: Mr Maverick

Since the Republicans run the State only one party is at fault. In the Editorial I see whining about our already high sales tax. Spending cuts not increased taxes is the answer. Stop the privatizing and take that layer of profit back. Our State is ranked as the third wost managed State according to Reuters.

Posted: Tuesday, January 22, 2013
Article comment by: Tom Steele

If the state wants to pullout of Arizona's slump and stay out, it needs to bring in industry with good paying jobs. Good paying jobs are good tax paying jobs. They are year around verses the construction of homes which are off and on. Also, industry uses a minimum of water. It's a win-win for all Arizona if the legislature would act on this.

Posted: Tuesday, January 22, 2013
Article comment by: Hey, Wait A Second

I thought by lowering Az business taxes our economy would take off?

Posted: Tuesday, January 22, 2013
Article comment by: David Kerr

The numbers are at

The Obama tax and spending hikes assume that taxpayers and corporations will not modify their behavior and won't listen the advice from CPAs and consultants.

Corporate decision makers, home buyers, investors and businesses should be planning for the next recession, which is likely to occur in 2-4 years. When the federal, state and local government spending bubble bursts, it is likely to be even larger than the tech stock bubble or the housing bubble.

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