State budget plan meets resistance

Efforts to plug the state's current budget deficit hit a snag Monday.

House Speaker Kirk Adams, R-Mesa, said he is still trying to round up the necessary 31 votes for two bills that, together, would borrow $1.2 billion. The cash is needed between now and June 30, the end of the fiscal years, to balance the books.

Adams said some legislators are having a problem with the concept.

"It's a lot of debt,'' he said. "People have genuine concerns about debt.''

One of the measures would put the state $750 million in debt for the next 20 years. That includes a plan to borrow $450 million now, repaying it with proceeds from future ticket sales for the Arizona Lottery.

The other is a slightly more complicated procedure that involves selling off $300 million of state buildings to investors and then leasing them back. At the end of 20 years, the state would again own the buildings -- assuming it kept making those annual lease payments.

Rep. Andy Biggs, R-Gilbert, said it's particularly bad fiscal policy to borrow money just to keep the state operating. He said these are one-time solutions that, once used, can't be used again if the state remains short of cash next budget year.

What it also is, said Biggs, is illegal.

"We have a constitutional limitation on our debt in this state,'' he noted. The figure is $350,000 which dates back to the first days of statehood.''

Legislative leaders disagree with Biggs' assessment. They say there is no constitutional violation because there is no long-term obligation on the state treasury, with the $450 million paid off solely from lottery proceeds and the state legally able to walk away from the sale-leaseback deal at any time.

Biggs was not convinced.

"While it's clever to say that these type of instruments are not debt, the reality is, this is massive debt,'' he said.

The other bill which also awaits action involves short-term borrowing.

It would let the state avoid paying $350 million due in state aid to public schools in April, deferring the payment until sometimes in August. And another $100 million that is supposed to be paid to state universities this spring would instead be provided to the schools in September.

The House did vote Monday for two other budget-related bills. One would essentially extend the life of the Arizona Lottery another 23 years, a necessary move to guarantee to would-be lenders that there will be money coming in to repay the loan.

The other fixes a provision in laws governing income tax for part-year Arizona residents, limiting the size of the standard deduction they can take if they do not itemize on their tax returns.

Both the House and Senate approved measures last week to ask voters whether they're willing to impose a one-cent hike in state sales taxes for the next three years, a move that, if passed, would raise about $1 billion a year.