LD22 Meeting 9/10/2009

Every now and again, I am invited to attend LD (legislative district) meetings from outside my own area. If I kept a calendar, I'd probably remember to attend them more often, but at least I try to keep up with state goings-on. So anyway, last night I had to fortune and good luck to receive a call from Chad Heywood, the LD-22 GOP leader, who called to mention his meeting and to invite me to attend. There were a good host of speakers, and the agenda sounded like it would be really interesting, so I definitely wanted to make it out there.

I left a bit early from the house to make it down to the utterly fantastic Gilbert Public Library (which I had never been to before, but definitely want to check out again sometime), and I met Chad and two of his other friends, Brandon and Blake - two really good guys around my age and in similar employment situations who were helping to set up drinks, chairs, and other stuff for the meeting.

When we were allowed into the room, I was able to say hello to State Representative Andy Biggs of LD22 whom I had met at another previous LD meeting and who is the Chairman of the Transportation Committee in the House. I'd heard him discuss, among other things, photo radar and the state budget battles, and he was slated to give an update from the Legislature later on in the meeting.

I also said hello to newly elected Gilbert Mayor John Lewis, who defeated a rival incumbent in the last election back in May. I was unable to really be of any help in that election, but I think Mayor Lewis' platform of attracting new medium-to-large-sized businesses to Gilbert to ramp up their economic development. As I understand it (not well, since I don't live in Gilbert myself), their plans are going well.

Also there were Jenn Daniels of the Gilbert Town Council, also elected to her first term back in May and someone I'd met a few months back at an LD-22 meeting, and Mesa District 6 Councilmember Scott Somers. Scott was kind enough to talk to me at length after the meeting about Mesa's Fiscal Year 2010 balanced budget (what a feat for the Mesa City Council in a recession!) and about the differences in communications strategies between federal/state and local entities.

A few minutes past 7:00pm, they started the meeting with an invocation, the Pledge of Allegiance, and introductions of the different lawmakers, precinct captains, and visitors (like me) who were in attendance. Adam Armer, the 1st Vice Chairman of LD22 made a few announcements, and a gentleman whose name I did not catch got up to discuss Gilbert's Constitution Week.

For those not aware previously, Constitution Day is on September 17th each year, and commemorates the signing of the Constitution of the United States of America on 9/17/1787. Annually now, Gilbert hosts a bevy of Constitution Week activities, including a Patriotic presentation called "The Price of Freedom" this year on Friday 9/18 at Mesquite High School's auditorium, featuring stories from WWII veterans and a prelude from Senator John McCain. On 9/19 (Saturday) there is a fair also held at Mesquite HS for $2.00 per person with booths, games, music, a fireworks show, and historical characters like Ben Franklin. I attended a version of this for the 4th of July about 3 years ago, and it was definitely well-worth attending. Check out http://www.constitutionweekusa.com/ for more information on the event.

Once announcements were out of the way, the special guest speaker for the evening got up to give a presentation on the budget: Arizona Secretary of State Ken Bennett. While currently not among his official duties as SOS, his former position as a lawmaker and President of the State Senate back in 2006, and his involvement with the records-keeping of the current Legislature makes him uniquely suited to speak on the issue and break it down.

His discussion focused on how the Arizona state budget is made, where money is spent, and how we came to be in this really big deficit in 2009 from the modest surplus of 2006. Without redoing his speech (which can be found at the Secretary of State's website HERE), the following explains how the state budget is structured:

1. General Fund: the portion of the state budget that the legislature gets to divvy up among programs for each fiscal year. This primary mode of spending accounts for about $10.5 billion per year (in 2009).

• 1/2 of the GF comes from sales taxes, 1/2 from income taxes
• Property taxes got directly to local government entities, not the legislature's GF
• $5 billion per year goes to K-12 education, $1 billion each to higher ed and prisons/court systems, $2.5 billion to Health and Welfare (AHCCCS, CPS, ADES, etc), and $500 million to everything else.

2. Other Funds: funds appropriated by the legislature that comes from other fees or taxes (like on alcohol or tobacco). About $1 billion of this goes to transportation, $1 billion to health/welfare, and $500 million to higher education, and $3 billion to education.

3. Federal and Non-Appropriated Monies: money given to Arizona from the federal government directly to agencies, bypassing the legislature.

• $6.5 billion goes to health and welfare
• $2 billion goes to each K-12 and higher education
• $1 billion goes to capital projects
• $500 million goes to each state lottery & workers compensation, environmental agencies, Dept. of Administration, and others.

This means the state budget is made up of about $32 billion. $11 billion goes to K-12 education, $5 billion to higher education, $10 billion to Health and Welfare, and $5-6 billion to all other projects. The real shocking part of the discussion come from trying to interpret how Arizona fell into such a big hole. Here's the gist:

1. In 2007, lawmakers projected $9.8 billion of raised revenue and $9.6 billion of state expenses through the General Fund. They ACTUALLY collected $9.6 billion revenue with that amount of expenses. There was also about $1 billion in state reserves from the Rainy Day Fund and cash on hand.
2. In 2008, projected revenue was $10.1 billion, with $10.6 billion in expenses, but the state really only collected $8.8 billion and spent $10.5 billion (a nearly $2 billion deficit). This was due to the recession. To compensate, the state took $500 million of the Rainy Day Fund for the difference, conducted "sweeps" of excess money from other state budget areas amounting to $300 million, made $100 million in cuts, and "rolled over" about $300 million on K-12 education payments to the next fiscal year. This made it LOOK like the state was only in a $200 million deficit, when in reality it was behind about $1.2 billion. Confused yet?
3. Okay, so the state was down quite a bit. Someone in 2009 decided the recession was over, and proposed revenue collection projections of $9.1 billion with $11.1 billion in spending. In reality the state collected a mere $7.3 billion and spent $10 billion. Again, the state took money from the Rainy Day Fund, borrowed over $500 million on credit, did another $300 million K-12 rollover, and made $400 million in cuts. What was the final score? A nearly $3 billion deficit problem for the state for Fiscal Year 2010. Confusing, yes, but true? Unfortunately, yes.

After a good long explanation involving charts and Kleenex boxes (simulating the billions of dollars being spent), SOS Bennett proposed a potential solution: living on 96% of our current spending. WHAT?! Yes. You see, there is a provision that for Arizona to receive federal money, our level of spending can't dip below that of 2006. In 2006, we spent $8.3 billion. That's roughly 96% of our current spending level as of right now. Then, we get revenue back up via one of two ways: either a temporary tax increase to raise $1 billion proposed by Governor Brewer, which only solves 1/3 of the deficit problem; or by finding ways to attract more businesses and companies into the state through spending cuts, tax incentives, and other means. I'm no tax lawyer, so I'm not always sure what the details are involved with something like that, but it's got to be better than raising taxes to get a few quick bucks which aren't going to completely solve the problem.

After the presentation, SOS Bennett took a few questions, and I wrote down some of the better ones. First, what's the deal with selling off the State Capitol buildings? The legislature's quick-fix, one-time-only plan to raise revenue is to sell off the House and Senate buildings, and then lease them back over a period of several years. On one hand, it does provide roughly $700 million right now, but on the other, it puts the state into what Rep. Biggs called a "$70 million debt service to raise one-time money for 2010." I haven't liked the idea from the get-go.

Another question: what can we do as individuals? Well, for one thing, being careful at the ballot box is a start. Many of the initiatives passed that require money to be spent somewhere end up being deemed "voter protected" and spending cuts usually pass those types of laws by when it comes time to audit finances. SOS Bennett mentioned that roughly 1/3 of the budget now has these "voter protections" on it, and it ends up being both numerically and politically dicey when it comes time to try to effect cuts in the budget.

A final question: Where does the money for K-12 schools go? Educators or administrators? SOS Bennett didn't really give numbers for this one, except to say that he found it odd that K-12 education gets roughly $10,000 per student per year, and that at a class size on average of 25 students, that's about $250,000 per class per year. The average teacher salary in Arizona is only $44,000 per year, so that leaves $206,000 being spend somewhere else for each classroom. And being a substitute teacher myself, and having my mom be a fifth grade teacher, I can say with conviction that I'll be damned if $206,000 is going into her classroom or those of the classes I've taught.

Okay, since this post is now the length of some airport tarmacs, I'll quickly summarize the remainder of the meeting: Mayor Lewis gave a City of Gilbert update, reiterating Constitution Week and reminding people about the Citizens' Budget Committee; Mesa Councilman Somers talked about airport fees info and about the balanced Mesa city budget; and Rep. Biggs discussed briefly the negotiations process with Governor Brewer on the state budget and some of the frustrations going on there right now.

All told, it was a very interesting meeting. I'd never heard in such detail how the state budget is put together, let alone how the deficit came to be in such a bad shape. Of course, it was good seeing my Gilbert friends again, and seeing Ken Bennett again - the last time was at a dinner up in Flagstaff while I was a member of the College Republicans. He's a good guy.

I'll try in the future to be more proactive about getting information on the LD meetings up earlier so others who are interested in the topics for discussion can also attend.