Morrison Memo: Key features of AZ's new budget

Morrison Memo No. 12

The Arizona Legislature has completed and passed a budget plan for FY 2011 that also plugs the remaining budget hole for the current year. The package was signed by Gov. Jan Brewer on Thursday.

The budget includes cuts in excess of $1 billion. These cuts will occur regardless of the outcome of the 1-cent sales tax proposal on the May ballot. If that referendum fails, a contingency budget would reduce state funding by an additional $862 million in FY11, with the majority of the cuts affecting K-12 education.

Key reductions included in the budget plan:

• $385 million general-fund reduction to AHCCCS, the state’s Medicaid provider. However, the state plans to use tobacco settlement and potential federal stimulus funding to to extend coverage for low-income Arizonans at least through the end of the calendar year and possibly through the fiscal year, which ends June 30, 2011.
• $18 million reduction to AHCCCS to eliminate the KidsCare insurance program for low-income children. This will result in over 47,000 children losing coverage.
• $27 million cut to the Department of Economic Security, realized through reducing the number of months a low-income family can qualify for cash assistance to 36 months, down from 60 months.
• $218 million cut to the Department of Education, resulting in the elimination of full-day kindergarten.
• $45 million reduction achieved through an across-the-board pay cut of 5% for all state employees.

Additionally, the Legislature will ask voters to weigh in on sweeping all funding from First Things First, the state agency created by initiative to address early care and education, as well as funding for Growing Smarter, for a total infusion of nearly $449 million.

The House and Senate were able to pass a total of 14 of the 15 bills drafted. The revenue measure was the one bill that was not successful. HB2013 would have repealed a tax credit provided to retailers that would have generated $19 million. It passed the House, however, the Senate could not garner the required two-thirds super majority.