Arizona governor proposes $11.4 billion budget

Published 01-19-2019

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PHOENIX (AP) - With a sizeable surplus to divvy up for the first time in a decade, Gov. Doug Ducey on Friday proposed an $11.4 billion budget for Arizona that focuses much of the new spending on schools and universities while depositing more than a half-billion dollars in the state's rainy day fund.

Ducey's proposal would increase spending by 9.2 percent and would be the largest single-year increase since he took office. It reflects several years of higher-than-expected tax collections and expectations of continuing economic growth, which have allowed Arizona to amass a surplus that Ducey pegs at $1.1 billion.

The proposed spending plan would implement the next wave of teacher pay hikes Ducey and lawmakers promised last year, when teachers walked out of classrooms, marched on the state Capitol and ultimately secured a promise of a 20 percent raise by 2020.

Ducey and the Republican-controlled Legislature will now spend the next several months negotiating a final spending plan for the fiscal year that begins July 1.

The Republican governor, who was first elected on a pledge to reduce taxes every year and get income taxes as close to zero as possible, did not propose large-scale tax cuts. His plan would increase the value of tax credits for parents and veterans that will reduce revenue by about $5 million.

"We have to be cognizant of our budget, of our obligations, and of preparing for the future so we want to make sure there's certainty in the economy and anything we do is conservative and responsible budgeting," said Daniel Scarpinato, Ducey's chief of staff.

To prepare for an economic downturn, Ducey wants to make a $542 million payment to the state's rainy day fund, more than doubling its balance to $1 billion. His aides say the state doesn't have enough money in the bank to weather an economic downturn.

A payment that large is already facing pushback from lawmakers in both parties, who have their own priorities for the money.

Rep. Regina Cobb, a Republican from Kingman who leads the budget-writing Appropriations Committee, said she'd prefer to spend some of the state's windfall to pay off debts, including some of the $930 million in school payments that have been deferred every year since the Great Recession. She said a rainy day fund target of $700 million is more appropriate.

Sen. David Bradley of Tucson, the top Democrat in the Senate, said saving is important, but holding onto too much money now means deferring road maintenance and other needs longer, ultimately increasing their cost.

The governor's budget focuses much of the new spending on K-12 and higher ed

To prepare for an economic downturn, Ducey wants to make a $542 million payment to the state's rainy day fund, more than doubling its balance to $1 billion. His aides say the state doesn't have enough money in the bank to weather an economic downturn.

A payment that large is already facing pushback from lawmakers in both parties, who have their own priorities for the money.

Rep. Regina Cobb, a Republican from Kingman who leads the budget-writing Appropriations Committee, said she'd prefer to spend some of the state's windfall to pay off debts, including some of the $930 million in school payments that have been deferred every year since the Great Recession. She said a rainy day fund target of $700 million is more appropriate.

Sen. David Bradley of Tucson, the top Democrat in the Senate, said saving is important, but holding onto too much money now means deferring road maintenance and other needs longer, ultimately increasing their cost.

The governor's budget focuses much of the new spending on K-12 and higher education. It includes $786,000 that his aides say would allow the state to hire 10 more staff members to work on charter school oversight, including six people to oversee academic performance, three for finances and an audit manager.

The number of charter schools operating in the state has soared to more than 500, according to Ducey's aides, and some have come under scrutiny for poor performance or delivering multi-million-dollar windfalls to their private owners.

Ducey also wants $21 million to expand scholarships for up to 3,800 college students training to be teachers and $60 million to expand a program that directs extra money to the best performing schools. The program, known as Results Based Funding, would shift from using scores on the AzMerit standardized test to the A-F letter grades conferred by the Department of Education.

He wants to boost spending for school renewal and new construction to keep up with growing re

Rep. Regina Cobb, a Republican from Kingman who leads the budget-writing Appropriations Committee, said she'd prefer to spend some of the state's windfall to pay off debts, including some of the $930 million in school payments that have been deferred every year since the Great Recession. She said a rainy day fund target of $700 million is more appropriate.

Sen. David Bradley of Tucson, the top Democrat in the Senate, said saving is important, but holding onto too much money now means deferring road maintenance and other needs longer, ultimately increasing their cost.

The governor's budget focuses much of the new spending on K-12 and higher education. It includes $786,000 that his aides say would allow the state to hire 10 more staff members to work on charter school oversight, including six people to oversee academic performance, three for finances and an audit manager.

The number of charter schools operating in the state has soared to more than 500, according to Ducey's aides, and some have come under scrutiny for poor performance or delivering multi-million-dollar windfalls to their private owners.

Ducey also wants $21 million to expand scholarships for up to 3,800 college students training to be teachers and $60 million to expand a program that directs extra money to the best performing schools. The program, known as Results Based Funding, would shift from using scores on the AzMerit standardized test to the A-F letter grades conferred by the Department of Education.

He wants to boost spending for school renewal and new construction to keep up with growing requests from school districts. And he proposes hiring more police officers, counselors and social workers to be posted in schools.

Democrats said the new funding for education isn't enough to put Arizona on a sustainable path to reduce class sizes and raise teacher pay to the national average. They've advocated creating a new education revenue source.

On health care, Ducey wants to spend $2 million next year and $9 million the following year to continue funding KidsCare, a health insurance program covering children from low-income families.

It's currently funded entirely by the federal government, but the Legislature said new enrollment would freeze if the federal government stopped funding 100 percent of the program, which it's scheduled to do in September. The governor's office estimates enrollment in the program would drop 80 percent by 2022 without a change.

The governor also wants lawmakers to authorize spending $56 million in federal funding for subsidized childcare, split between a rate hike for existing providers and more slots so about 5,000 additional children get care. The Legislature declined to approve the expenditure last year.

About 45 percent of the state's workforce would get a raise under the governor's plan, mainly people who work in public safety including Department of Public Safety police officers and corrections officers who guard prisons.

Ducey's assumptions about state finances largely parallel those made by the Legislature's independent budget experts, who released their own projection of a $1.1 billion surplus on Friday.

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