From the Office of Governor Jan Brewer-Background followed by actual budget proposal.
CONTINUOUS REVENUE SHORTFALLS since FY 2007 have forced the State to evaluate the best use of its increasingly limited resources. This is especially challenging in light of the tremendous growth in mandatory populations, particularly Medicaid.
As a result of the growth in voter‐protected and federally mandated programs, the remaining core functions of State government have endured unprecedented expenditure reductions.
K‐12 education, Medicaid, the universities and adult corrections now compose over 88% of the State’s General Fund obligations.1 In contrast, in the FY 2007 budget, those areas made up just 80% of total General Fund spending.
Because there is very limited capacity to reduce expenditures in those areas, the other areas of government have taken disproportionately large shares of the enacted budget reductions. Programs that fall within the “other” category include the Department of Public Safety (DPS), child care assistance, Child Protective Services (CPS), Behavioral Health Services, the Arizona State Hospital (ASH), transportation, all elected offices, and the Court system.
In developing a balanced budget for FY 2012, the Executive considered the reductions that were already enacted, including the following.
HEALTH AND WELFARE
AHCCCS. In the three‐and‐a‐half years since the beginning of the budget crisis, the Arizona Health Care Cost Containment System (AHCCCS) has eliminated all State‐only programs, seen its core administration cut by over 20%, and taken painful cuts in many program areas. At the same time, the AHCCCS capitated population has grown by 368,200, or 46%.
Among the cuts were: • a freeze in new membership in the KidsCare program, • elimination of non‐mandatory benefits (including some or‐
gan transplants), • removal of coverage for the parents of KidsCare children, • elimination of dental coverage for long‐term care patients,
and • elimination of the Social Security Disability Income Temporary Medical Coverage program, which provided AHCCCS coverage for the two‐year gap between the time a person was declared disabled and the beginning of their medical insurance under Medicare.
AHCCCS has also stopped paying Medicare Part D co‐ payments for prescription drugs for members who are eligible for both Medicare and AHCCCS.
Hospitals have seen their reimbursement rates frozen for three years, while physicians and other healthcare providers have endured rate cuts of up to 5%. In April 2011, hospitals, physicians and other providers will receive another 5% rate cut.
Hospitals have also seen the elimination of State‐funded Graduate Medical Education subsidies, elimination of the loan program that helped them start medical residency programs, and a reduction in outlier payments for high‐cost individuals.
In its administration, AHCCCS has reduced staffing by 31.5%, or over 400 FTE, and suspended plans for an overdue replacement of a computer system.
Other Agencies and Programs. Outside of AHCCCS, there have been significant cuts to other health and welfare pro‐ grams. Child care assistance for low‐income working (LIW) families has been frozen, and there are more than 8,000 families with young children on the waiting list for this service. The number of LIW clients has been reduced by nearly 18,000 families since the implementation of the waiting list.
In FY 2010, the State reduced the duration of Cash Assistance eligibility from 60 months to 36 months and implemented tighter eligibility standards for households. As a result, nearly 19,000 families have stopped receiving this form of monthly assistance.
Reductions to Children Services have meant that CPS, which was already understaffed, no longer investigates 100% of reported incidents of abuse or neglect.
Individuals who suffered from serious mental illness and did not qualify for Medicaid lost supplemental treatments previously provided by General Fund programs. They now receive prescription drug assistance and crisis services only if they become a danger to themselves or others.
Additionally, State support for community health centers was eliminated, as was funding for several smaller programs such as Summer Youth Employment, Diabetes Prevention and Control, and State support for vaccines. When possible, programs were shifted to a self‐funding arrangement, often resulting in client fees many times higher than those previously subsidized by the General Fund.
EDUCATION
K‐12. Federal Maintenance of Effort (MOE) requirements, which require State formula funding at or above FY 2006 levels, have spared K‐12 education from reductions proportional to those experienced elsewhere in State government.
However, there were still significant reductions, including the elimination of funding for Full Day Kindergarten and the elimination of funding for non‐formula programs such as Adult Education, Chemical Abuse, and Early Childhood. The locally funded Excess Utilities provision was also abolished during this period. To date, many of the reductions to K‐12 have been offset by increased federal stimulus funding, but those additional dollars will no longer be available beginning in FY 2012.
Universities. Federal MOE requirements also protected higher education from cuts below FY 2006 levels. During this period, State support for the University system shrank by 20%.
In response to State funding cuts, the Board of Regents allowed the universities to increase tuition rates by an equivalent
Families on Cash Assistance
KidsCare Children Member Months
amount to make up for the resulting shortfalls. Even with the tuition increases, however, the universities have reduced staff‐ ing by hundreds of positions, eliminated programs and reduced class offerings.
After reaching peak levels of funding from the General Fund in FY 2008, in excess of $1.1 billion, funding decreased to $890 million for FY 2010 and FY 2011. While State funding has declined, other revenue sources have continued to grow. Projected total revenues, all sources, for FY 2011 are $750 million greater than FY 2008. For FY 2009 and FY 2010, the universities received approximately $225 million in State Fiscal Stabilization Fund monies to offset portions of State funding cuts.
School Construction. The School Facilities Board (SFB), which funds new school construction and building renewal projects, saw its non‐debt service General Fund support re‐ duced from $338 million in FY 2007 to $4.1 million in FY 2011. Of that reduction, $250 million was related to new construction, which experienced natural decline and was replaced with debt. However, the reductions in Building Renewal funding have led school districts to defer critical maintenance projects.
PUBLIC SAFETY
As the core function of state government, the State has prioritized public safety expenditures. However, efficiencies throughout the public safety system have been identified and implemented. The Department of Corrections (DOC) inmate population has grown since FY 2007 while staff has been reduced, leading to an overcrowding of prison complexes. Early in FY 2011, DOC opened 6,000 new beds, enabling all inmates housed out‐of‐state to occupy Arizona correctional facilities and returning $86 million of State spending back to the Arizona economy.
DOC has very limited capacity to reduce expenditures further, due chiefly to safety concerns. However, a few initiatives have produced savings:
• DOC pegged reimbursements for outside medical treatments at AHCCCS rates, saving an estimated $6 million in the first year of implementation. Prior to pegging the DOC medical services rate to AHCCCS rates, the Department was paying up to 310% of AHCCCS rates for inmate health‐care.
• Private prison per‐diem rates were renegotiated, generating a savings.
• DOC has eliminated over 150 FTE administrative positions.
The Department of Public Safety (DPS) has largely been spared cuts because Highway Fund dollars have been diverted from the Department of Transportation to offset General Fund reductions within DPS.
However, there were a few reductions of note. Through attrition and layoffs, DPS has reduced its workforce by 130 FTE positions. As a result, the Crime Lab has been slower to process cases, and certain units (e.g., Aviation) have not been able to respond to as many emergencies as in the past.
Funding for replacement equipment was also reduced, which has resulted in an aging vehicle inventory. Almost half of all highway patrol cars in use will have more than 100,000 miles by the end of FY 2011.
Finally, the Arizona Criminal Justice Commission shifted $4.1 million in General Fund obligations onto higher Court‐derived penalties and fees.
NATURAL RESOURCES AND INFRASTRUCTURE
Over the last two years, the Executive has employed a fee for service strategy for Government oversight of natural re‐ sources. In FY 2007, Arizona’s natural resource programs received approximately $60 million General Fund support. By FY 2011, support had waned to $17.2 million from the General Fund and to $19 million from new, self‐funding sources such as
the Land Trust and Water Resources Funds. The Land Department has sustained a 27% reduction to its
operating budget and, as a result, anti‐trespassing and anti‐ dumping activities were hindered. The Department is now heavily reliant on local law enforcement to protect the nine million acres of State Trust lands. Further, planning and engineering studies for undeveloped land were reduced over this period.
The Department of Water Resources (DWR) has sustained a 40% budget cut since FY 2007 and, as a consequence, its work‐ force was cut in half. DWR has closed four regional offices and plans to conduct fewer water level measurements.
A handful of State Parks have been closed since 2007. Of the parks that remain open, two out of three rely on outside support and are subject to closure if that support disappears.
The Department of Environmental Quality (DEQ), through budget reductions and increased reliance on user fees, has eliminated over $25 million in General Fund obligations.
While the Department of Transportation (ADOT) does not receive General Fund dollars, significant transfers from its dedicated funds have necessitated dramatic changes. For ex‐ ample, $99.9 million in funding dedicated to local and statewide transportation is transferred annually to DPS to offset cuts within that agency (see the DPS section above). As a result, since FY 2007, 13 of ADOT’s 18 highway rest stops and 12 of 61
Motor Vehicle Division (MVD) offices have been closed. State revenues are insufficient for State participation in highway construction, slowing the maintenance and construction of Arizona thoroughfares.
PERSONNEL
Personnel reductions, attrition and limited hiring during the past three years reduced the State’s active non‐university employee headcount by 5,713, or 12.9%. General Fund personal services expenditures during that time fell by 18.9%.
For FY 2011, State employee salaries were reduced by 2.75%. Also, most employees were required to take six furlough days, bringing their total pay reductions to 5%. Legislative and Judicial staff were exempt from these reductions.
OTHER STATE AGENCIES
In FY 2011, General Fund support for the Office of Tourism was eliminated, effectively reducing the Office’s funding by 50%. In response, the Office eliminated more than a third of is staff and significantly reduced its marketing efforts.
Since FY 2007, the Department of Housing has transferred $69.1 million to the General Fund to help balance the budget. Until FY 2009, the Department received 55% of proceeds from Unclaimed Property at the Department of Revenue for use in providing housing assistance to citizens. In FY 2009 alone, this amount was $28.6 million.
In FY 2010, the Legislature capped the Department’s reve‐ nue from this source to $10.5 million, diverting the rest of the proceeds to the Department of Revenue (to offset General Fund reductions) and directly to the General Fund. These reductions have forced the Department of Housing to reduce staff by 25% and eliminate several programs for homebuyer assistance, homelessness prevention and home repair assistance.
During the past three years, the Department of Administration (DOA) has lost a total of 272 filled FTE positions, or 34% of its staff, largely in General Services and Human Re‐ sources. Custodial services have been privatized and reduced to
a minimum; the repair shop and print shop have been closed; and other services have been consolidated or eliminated in order to maximize scarce resources.
The $20 million Arts Endowment was eliminated, and its fund balance was transferred back to the General Fund.
After the State Library, Archives, and Public Records’ ap‐ propriations and fund balances were reduced by $1.5 million in mid‐FY 2009, the Agency let go approximately 19% of its staff and reduced operating hours in six of its seven divisions. The Polly Rosenbaum Archives Building was closed to regular public access within weeks of its dedication.
The Department of Insurance’s General Fund budget was reduced by nearly $1 million in mid‐FY 2009, forcing the Agen‐ cy to let go 23 of 87 General Fund employees. Remaining staff were furloughed one day a week for 18 weeks.
LOCAL IMPACTS
Several budget measures adopted by the State have impacted local governments in addition to State agencies. In FY 2011, the State eliminated the County Assistance Fund, County Hold Harmless, and Local Transportation Assistance Fund (LTAF) support. Expenditure shifts in sexually violent person programs and Superior Court judges’ salaries have also impacted local governments.
ONE‐TIME SOLUTIONS
The State has also used over $9 billion in fiscal bridges that temporarily offset State expenditures and revenue losses. Following is a partial list of those efforts.
Temporary Solutions
FY 2008
FY 2009
FY 2010
FY 2011
Total
K-12 & University Rollover
$602,600.0
$100,000.0
$450,000.0
$1,152,600.0
BSF Sweep
$560,036.5
$150,000.0
$710,036.5
Fund Transfers
$290,186.0
$813,135.2
$358,815.4
$151,834.1
$1,613,970.7
DPS use of HURF and SHF
$42,000.0
$106,001.0
$99,882.0
$99,882.0
$347,765.0
Midnight Reversion
$50,000.0
$50,000.0
SFB NC Recapture/DS Holiday
$344,000.0
$60,000.0
$404,000.0
SFB New Construction
$237,000.0
$237,000.0
DES & AHCCCS Rollovers
$25,000.0
$159,900.0
$184,900.0
Federal Stimulus
$642,100.0
$1,418,400.0
$659,600.0
$2,720,100.0
K-12 Local Fund Balances
$184,000.0
$184,000.0
Sale Leaseback
$1,035,419.3
$1,035,419.3
Lottery Bonds
$450,000.0
$450,000.0
Total
The Executive Budget
FY 2011 and FY 2012 Status and Recommendation
Topics
• The Deficit
• The Economy/Revenues
• The Budget − Principles
− Plan − BudgetReform
The Deficit FY 2011 ‐ $763.6 M
Major Components: One‐Time Impacts
Prop. 301 & 302
Medicaid Supplementals Ongoing Impacts
Revenue Loss K‐12 Shortfall
$509.0 M $19.0 M
$108.0 M $103.0 M
Office of Governor Janice K. Brewer
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The Deficit
FY 2012 ‐ $1.15 billion
Revenue Changes
Base Revenue Growth Loss of One‐Time Revenues FY 2011 Ending Balance Adjustment Total Revenue Change
Expenditure Changes
Federal Funding Cliff Medicaid Population Growth School Facilities Board Debt 27th Payroll Education Growth Other Agency Adjustments Education Property Tax Change Total Expenditure Change
490.0 M (494.7) M (35.3) M (39.9) M
(805.6) M (152.9) M (96.6) M (81.0) M (55.8) M 14.2 M 70.5 M (1,107.1) M
(1,147.1) M
Shortfall
The Economy/Revenues
Projecting slow steady improvement
Personal Income: Employment: S&P Growth:
3.9% average growth 1.8% average growth 7.0% average growth
Office of Governor Janice K. Brewer
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The Economy/Revenues
Revenue Forecast
• Develop optimistic, baseline, and pessimistic. • Assume below baseline for both FY 2011 and FY 2012
FY 2011 – 3.0% above FY 2010 actual FY 2012 – 7.3% above FY 2011 projected
Both numbers exclude the impact from revenue sharing
Office of Governor Janice K. Brewer
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The Budget: Principles
• Attack structural deficit with permanent reforms
• Use temporary steps as necessary
• Public safety is the core function of State Government
• Education funding is key to long‐term success • Reductions should be strategic
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The Budget: Summary
FY 11 Solutions
Fund Transfers 8%
Permanent Budget Reductions Federal Funds
One‐Time Rollover Loan Rollover Fund Transfers
Total
$107.2 M $101.2 M
$330.0 M $245.0 M $66.0 M
$849.4 M
Federal Funds 12%
Rollover 28%
Budget Reductions 12%
Rollover Loan 40%
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The Budget: Summary FY 2011 Budget Reductions
DES DOC DJC DHS Total
$91.0 M $10.0 M $3.6 M $2.6 M
$107.2 M
In addition to these reductions, the Executive has identified $55 million to offset supplemental needs at DHS and AHCCCS
Office of Governor Janice K. Brewer
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The Budget: Summary FY 12 Solutions
Budget Reductions Rollover Local Gov’t Impacts Fund Transfers Total
$1,077.5 M $115.4 M $52.4 M $85.7 M
$1,331.0 M
Budget Reductions 81%
Rollover 9%
Fund Transfers 6%
Local Govʹt 4%
Office of Governor Janice K. Brewer
The Plan
• Medicaid • Public Safety • Education • Universities • Community Colleges • DES
Office of Governor Janice K. Brewer
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The Plan: Medicaid Since FY 2007:
• Medicaid capitated populations have grown 46 percent leading to the current population of 1.2 million members
• General Fund support for Medicaid has grown almost 65 percent
• The percent of the General Fund dedicated to Medicaid has grown from 17 percent to 29 percent
Office of Governor Janice K. Brewer
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The Plan: Medicaid Proposition 204 Rollback:
• In 2000, voters expanded Medicaid coverage to all residents at or below 100 percent of the federal poverty limit
• FY 2012 General Fund support for the expansion population is estimated to be $810 million
Office of Governor Janice K. Brewer
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The Plan: Medicaid
Federal Health Care Reform limits states ability to change Medicaid eligibility levels. However, the Centers for Medicare and Medicaid Services (CMS) has the authority to waive that requirement.
The Executive recommends the Legislature provide the authority to seek a waiver as described. The Executive cannot apply for the waiver without specific authority.
Because of the anticipated timeline to receive a waiver, the Executive recommends the change in eligibility be effective on October 1, 2011.
The Plan: Medicaid Prop 204:
• The Executive recommends limiting Prop. 204 costs to dedicated tobacco settlement and tobacco tax revenues
• To achieve these savings, the Executive recommends eliminating coverage for childless adults and spend‐downs as well as capping TANF parents at a level that can be sustained by tobacco funds
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The Plan: Medicaid
The Plan: Medicaid
AHCCCS All TXIX Capitation Member Months Actuals and Forecasts
1,400,000 1,200,000 1,000,000
800,000 600,000 400,000 200,000
Actuals
With Prop 204 Rollback
Executive Baseline
The Plan: Medicaid
FY 2012 General Fund savings are estimated at $541.5 million
• The State will lose approximately $1.1billion in federal match
• An estimated 280,000 Arizonans will lose coverage(250,000 childless adults and spend‐downs as well as 30,000 parents)
• The Executive recommendation continues coverage for an estimated 30,000 aged, blind or disabled persons and 90,000 parents
FY 2013 General Fund savings are estimated at almost $1.0 billion
The Plan: Medicaid
The Executive recommends two steps to mitigate the impact of the change in eligibility:
1. Create a $151.0 million uncompenstated care pool ($50.0 million GF, $101.0 million matching funds) for Arizona healthcare providers. These funds will be available to reimburse healthcare providers for continuing care for the most seriously ill.
2. Provide $10.3 million to DHS to fund prescription drug coverage for the estimated 5,200 SMIs who will lose Medicaid eligibility.
The Plan: Medicaid Other Issues
• The Executive has announced a 5 percent provider rate cut that will be implemented April 1, 2011 – FY 2012 savings of $89.0 million.
• Capitation rate growth will be held flat
• Move Children’s Rehabilitative Services to AHCCCS
The Plan: Medicaid FY 2011 Supplementals
DHS Required Supplemental: $41.6 M
Savings: Excess RHBA profits: $30.0 M April 1 provider cut: $2.6 M Other savings: $3.3 M
Supplemental Recommendation: $5.7 M
The Plan: Medicaid
FY 2011 Supplementals
AHCCCS
Required Supplemental: (includes retiring rollover)
Savings: Estimated drug rebate:
April 1 provider cut: Admin Adjustments:
$118.6 M
$10.0 M $14.8 M $56.1 M
Supplemental Recommendation: $37.7 M
The Plan: Public Safety Department of Public Safety
• Transfer Capitol Police to DPS • Expansion of DNA Testing Program
− Test everyone sentenced to jail or prison • Redirect Certain Grants to Equipment Fund
− From State Aid for Public Defenders
$1.0 M $2.4 M
$2.2 M
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The Plan: Public Safety Department of Corrections
FY 2011 $10.0 million in one‐time savings
Start‐up costs
$2.0 M $8.0 M
Bed savings FY 2012
CO staffing First year of a three‐year plan to add
$8.4 M Office of Governor Janice K. Brewer
306 new COs
The Plan: Public Safety Department of Corrections (cont.)
FY 2012 Capital Budget
‐ DOC’s 10 complexes comprise over 8.5 million square feet.
‐ Building renewal needs total an estimated $150.0 million
Executive Proposes: Building Renewal/Preventative Maintenance Fund
ACI Fund: Telephone & Commissary Proceeds:
1% Inmate Banking Fee: Inmate Visitor Application Fee: Corrections Fund
Estimated Continuing Appropriation of $5.2 M Office of Governor Janice K. Brewer
$1.0 M $1.0 M
$0.3 M $2.3 M $0.6 M
25
The Plan: Public Safety Department of Corrections (cont.)
Executive also proposes a one‐time bonding program to address most critical needs.
$50 million bond funded from General Fund portion of lottery proceeds.
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The Plan: Public Safety Department of Juvenile Corrections
Current population is down approximately 12 percent.
The Executive recommends a budget reduction consistent with this loss of population.
Department of Emergency and Military Affairs
Eliminate State funding for Project Challenge Office of Governor Janice K. Brewer
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The Plan: K‐12 Education FY 2011 Supplemental
Estimated shortfall of $103.1 million
Executive recommends recognizing Education Jobs funds in the formula.
Provides $1.8 million for the for‐profit charters that are not eligible for federal funds. The Executive also recognizes additional charters may not be eligible. Which charters cannot accept the funds, if any, is currently unclear.
The Federal Government distributed approximately $206 million in Education Jobs funds. The Executive proposal would count approximately $101 million. The balance would still be available to enhance K‐12 budgets in FY 2011 and
FY 2012.
The Plan: K‐12 Education FY 2011 Supplemental – Remaining Payments
Pmt# 7 8 9 10 11 12
Scheduled Current Pmt Date Payment
February 1, 2011 $239.7 March 1, 2011 $0.0 April 1, 2011 $41.8 May 2, 2011 $295.7 June 1, 2011 $245.6 June 30, 2011 $245.3
Proposed Payment
$239.7 $0.0 $41.8 $295.7 $144.5 $0.4
Description Full Payment
Payment Deferral Deferral Full Payment Education Jobs Deferral
The Plan: K‐12 Education
FY 2011
K‐12 State Support Level $3,491.2 M Federal Support $146.0 M
The Executive proposes providing growth from the State support level, but not backfilling federal support.
The Plan: K‐12 Education K‐12 Formula Growth
K‐12 Student Growth
1% Enrollment Growth: 0.9 Percent Inflation:
(on transportation only) Property Valuation/QTR Changes
Total Growth
1,200.0 $3.8 M 1,000.0 800.0 600.0 400.0 200.0 0.0
$49.1 M
$2.8 M $55.7 M
FY 2008
FY 2009 Districts
FY 2010 Charters
FY 2011
FY 2012
The Plan: K‐12 Education
To Reset the K‐12 Formula to State support levels, the Executive recommends the following reductions:
Additional state aid adjustment Capital outlay and additional assistance reductions Online instruction capital funding Career ladder 5‐year phase out
$61.9 M $66.5 M $11.6 M
$5.6 M
Office of Governor Janice K. Brewer
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The Plan: K‐12 Education On‐Line Education
Current law provides 95 percent of the operating cost and 100 percent of the capital and transportation costs provided for students in bricks and mortar classrooms.
The Executive recommends eliminating capital and transportation funding for AOI students including School Facilities Board funding.
The Plan: K‐12 Education P‐20 Council
• The Executive recommends placing the P‐20 council in statute. • Would manage and promote outcomes across systems
Data Systems
• Provide funding for longitudinal data system and SAIS replacement
• The Executive recommends a per pupil fee for K‐12, Community College, and University students to fund the development of the system
• Fee would be less than 0.4 percent of total state support
• Governor’s Office is conducting a review of existing systems right now − Will have report in February
The Plan: K‐12 Education School Facilities Board
Building Renewal • Approximately 120 million square feet of academic space • No funding for building renewal formula
Recommendation
• Increase Building Renewal Grant fund to $10 M
• Focus on Preventative Maintenance by providing additional training and support to school districts
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The Plan: Universities Universities
The Executive recommends reducing University General Fund support by $170 million (that includes the reduction from the pay reduction)
Approximately 20% of current support (excluding capital)
The Plan: Community Colleges FY 2011 Community Colleges Operating Funds
Tuition: Property Taxes: GF Support: Total
$358.9 M $618.8 M $132.4 M
$1,110.1 M
The Plan: Community Colleges
The Executive recommends maintaining total operating revenues for the Community Colleges at FY 2011 estimates.
To achieve this, the Executive recommends reducing General Fund support for Community Colleges by $72.9 million.
This is approximately 6.2 percent of projected FY 2012 operating funds.
The Plan: Economic Security
The Executive funds both growth and replaces ARRA funds
Growth: ARRA Backfill: Technical changes:
$22.7 M $82.5 M $(3.0) M
The Executive recommends the following reductions:
Prop. 302 Failure ‐ absorbed in additional savings from reductions in
cash assistance, provider rate cuts, other operational savings Reallocate TANF to offset GF obligations Leverage Community Resources to draw down additional TANF Maintain Child Care Waiting List
Reallocate Social Services Block Grant to offset GF obligations Total
The net impact on DES is an increase of $11.1 million
$40.0 M
$20.0 M $15.0 M $10.0 M
$6.0 M $91.0 M
The Plan: DES
The Executive also transfers $30 million from the Long‐Term Care system fund in both FY 2011 and FY 2012
• Continuation of the 10% provider rate reduction has generated excess fund balance through FY 2012
• Future capitation rates will be adjusted to reduce the excess fund balance
• Maintains sufficient fund balance for unexpected contingencies
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The Plan: General Government
The Executive Recommends:
• Changing the HITF deposit to per payroll costs; this change will provide approximately $12.0 million in savings
• Reinvesting the HITF savings and additional savings from the pay reduction to eliminate the furlough program (both the last day in FY 2011 and the full program in FY 2012)
• Reinvesting $8.7 million of retiring debt service payments into the Department of Administration building system
• Align Convention Center debt service with schedule ($15.0 million)
The Plan: General Government Agency Consolidations
The Executive recommends the following:
• the Department of Mines and Mineral Resources with the Arizona Geological Survey
• the Departments of Racing with Gaming
• the Government Information Technology Agency (GITA) with ADOA
• the State Forester with DEMA • the Biomedical Research Commission with DHS
The Budget: Summary
Budget Reductions
Medicaid Reform Universities DES Provider Rate Reduction K‐12
Community Colleges Convention Center Payment DJC Other Total
$541.5 $170.0 $91.0 $89.0 $83.7 $72.9 $15.0 $7.2 $7.2 $1,077.5
The Budget: Local Government Cities
Support Water Resources Move SHF shift to HURF
Counties
Move SHF shift to HURF
Charge 50% of SVP cost Shift grants to DPS Continue cash payment
$6.2 M $12.6 M
$7.8 M
$2.7 M
$2.2 M $21.0 M
The Budget: Rollovers FY 2011
Retire Medicaid rollover $97.3 M
New K‐12 rollover $245.0 M
Because of the Enhanced FMAP, if the State eliminates the Medicaid rollover, the Federal Government will pay the enhanced rates on the June payment, saving the State approximately $18 million.
FY 2012
Re‐establish the Medicaid rollover $115.4 M
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The Budget: Debt
FY 2011
First Things First Rollover Loan ‐ $330 million
To limit interest costs to the State and impacts on First Things First programs, this loan will be taken out on June 30 and repaid July 1.
FY 2012
$50 million lottery backed bond for Corrections building renewal
The Budget: Reform Repaying Debt through a Spending Limit
• Based on 10‐year average revenue growth
• Negative growth years limited to ‐2 percent
• Excess funds dedicated to: 1. Debt reduction 2. Rollover reduction 3. Budget Stabilization Fund deposits 4. One‐time capital projects
5. Tax rebates • Projected to provide $1.9 billion by FY 2020 to retire debt
The Budget: Reform
The Budget: Reform Executive Authority to Reduce Appropriations
In over 20 other states, the Executive has some form of authority to reduce appropriations. The Governor should have authority under certain conditions to modify appropriations – including voter approved programs.
Line Item Reduction
Governors in an estimated 12 other states have authority to line item reduce appropriations without resorting to a complete veto.
Budget Stabilization Fund
The Executive recommends increasing the BSF to 15 percent of GF revenues and Constitutionally separate it from the General Fund.
Summary Budget Recommendations
Arizona General Fund Ongoing Expenditures and Revenues FY 2002-FY 2013
11,000.0
10,000.0
9,000.0
sn 8,000.0 oilim ni$ 7,000.0
6,000.0
5,000.0
4,000.0
FY 2002
FY 2003
FY 2004 FY 2005 FY 2006 FY 2007 Spending w/ ARRA and rollover
FY 2008 Exp w/ Solutions
FY 2010 Rev w/Solutions
FY 2012 Est.
FY 2013 Est.
FY 2009
FY 2011 Est.
Office of Governor Janice K. Brewer
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Summary Budget Recommendations
FY 2012 – GF expenditures $8.9 billion
FY 2012 – Including Rollovers $9.0 billion
Both are between FY 2006 ($8.8 billion) and FY 2007 expenditure levels ($10.2 billion)
