Arizona Budget Plan Targets Health Care, Education

PHOENIX -- Cuts in health care and education provide the bulk of savings that make up a compromise Republican budget-balancing plan, with deeper spending cuts to school and higher education funding than Gov. Jan Brewer proposed but below those approved by the Senate.

The outcome was a compromise but still a positive, Brewer told The Associated Press. "I was successful," she said.

The House Appropriations Committee late Thursday approved the main spending bill in the 13-bill package on 9-3 vote along party lines. It wasn't clear when the full House would act on the package. House passage would send it to the Senate to complete legislative action.

The plan resembles, but does not mirror, a budget plan approved earlier this month by the Republican-led Senate.

Brewer and Adams said negotiations continued late Thursday on final elements of the plan.

An analysis released by the Legislature's budget staff listed more than $1.1 billion in spending cuts in the new plan, or roughly $400 million more than Brewer's January budget proposal and $200 million less than the Senate version.

Spending in the next fiscal would total $8.3 billion. That's below the current year's $8.5 billion and Brewer's proposed $8.9 billion but above the $8.1 billion approved by the Senate.

Those cuts and other steps would close a shortfall of nearly $1.5 billion. That shortfall amount includes $332 million of red ink left over from the current fiscal year. Hammered by the recession in general but also the housing industry's collapse, the state is about to enter its fourth fiscal year in crisis.

The biggest spending cut, roughly $500 million, would fall on the state Medicaid program. Brewer is proposing enrollment freezes in eligibility categories not mandated by the federal government, but the budget legislation doesn't specify how to find the projected $510 million of savings.

Adams said the omission was intended to give Brewer flexibility in negotiations with federal officials and to help the state fend off an expected court challenge to the Medicaid cutbacks.

Brewer said she was trying to get lawmakers to include specifics of her plan to scale back the Medicaid program.

The approximately $450 million of education cuts listed by the legislative budget staff would be spread among K-12 schools, community colleges and universities. Those reductions total approximately $130 million above amounts proposed by Brewer in January and about $100 million below the Senate's cuts.

However, Brewer and her staff said the education cuts were actually $50 million lower than reported by the budget staff.

Brewer repeatedly has said she was fighting to protect K-12 education funding, and Adams said the outcome was a compromise that reflected desires by lawmakers and Brewer for an honestly balanced budget.

"Given the situation we are facing and negotiating with the Legislature, I was successful," Brewer said. "I'm never happy about the cuts to K-12 but it certainly shields our schools from the worst of the cuts."

In another departure from Brewer's original budget proposal, the negotiated plan eschews new borrowing and certain budget maneuvers derided by critics as gimmicks to balance the new budget.

As a result, the budget reduces the size of government while providing the state with the first budget in five years that balances spending against revenue, Adams said. "This is a budget to be proud of."

Critics pointed to sacrifices that the budget would require.

Community colleges lobbyist Mark Barnes said a $73 million cut in funding would result in bigger class sizes, dampened educational opportunities and local property tax increases to make up some of the state funding cuts.

Arizona State Parks Foundation spokeswoman Christie Statler said planned sweeps of $3.5 million from two special funds used for park operations would force park closures. "We're operating on a thread and the thread is about to break."

Timothy Schmaltz, coordinator of the Protecting Arizona's Family Coalition, said Medicaid enrollment freezes will cause "havoc and chaos for people" and that thousands and thousands of Arizonans have already been hurt by previous cuts in health care and social services.

Appropriations Chairman John Kavanagh defended the cuts, saying difficult times require difficult remedies.

And many of the cuts aren't Draconian, Kavanagh said. Most agencies and programs have funding sources other than state appropriations and have had measures of success in continuing operations in the face of the state's continued budget woes.