Some GOP lawmakers are threatening to torpedo the budget being pushed by their own leaders if $400 million in planned spending is not cut across the board.
Rep. David Livingston, R-Peoria, said about two dozen of the 36 House Republicans back his plan for a truly "balanced'' budget. He said all the various plans that have been presented so far have a "structural deficit'' because each proposes to spend more this coming fiscal year than the state will collect in taxes.
House Speaker Andy Tobin conceded the point. But he said that was by design.
Tobin said lawmakers knew that the nearly $1 billion a year generated by the temporary one-cent sales tax would dry up when it expired at the end of last month. He said that's why legislative leaders set the funds aside to carry the state forward for another couple of years until the economy is back on its feet.
Even Rep. John Kavanagh, R-Fountain Hills, who has used his position as chair of the Appropriations Committee to slash funding, said the kind of across-the-board cuts Livingston wants would create problems.
"Some agencies, especially smaller ones, even 5 percent (cut) is devastating on them,'' he said.
And Tobin said what Livingston wants would cut state aid to education by $189 million.
"Clearly, we don't have the votes for that,'' he said.
Livingston, however, said he believes he and allies can block final action on a budget. That puts him at odds not only with his own House leadership but also the $8.8 billion spending plan already approved by the Senate and Gov. Jan Brewer's $8.9 billion budget.
And that raises the possibility there will be no budget in place, as required by law, when the new fiscal year begins July 1.
Central to the debate is what is a "balanced budget.''
Estimates are state revenues this coming year will be only about $8.4 billion. But both Brewer and legislative leaders are counting on more than $725 million being left over when the current fiscal year ends June 30.
Tobin said having that cushion is precisely why GOP leaders rejected Democrat efforts to increase funding for various programs this year. He said everyone knew the economy -- and the tax collections that go with it -- was not recovering fast enough to make up for the loss of that penny tax.
He puts the available cash at closer to $800 million, counting not only the carry-forward from last year but transfer of money from other funds.
"The idea was for us to be helping to bring things back'' to where they were before the recession. That includes more money for not just K-12 education but also community colleges and universities.
"We didn't want to hurt our schools any more,'' Tobin said.
Livingston acknowledged the proposed budget for most state agencies is actually less than they were getting five years ago. But he said that's irrelevant, saying it's not responsible to use the leftover cash from last year to maintain an $8.8 billion spending plan this year, even if the state specifically saved the money to have it available.
And since it is too close to the new fiscal year to "pick the budget apart,'' Livingston wants to generate the $400 million with a 5 percent across-the-board spending cut.
The outcome of the fight could end up linked to the governor's plan to expand Medicaid.
That cleared the Senate last month only after the 13 Democrats there combined with five Republicans. Part of the deal by GOP supporters of expansion was their support of some Democrat spending priorities.
A similar scenario is shaping up in the House, where Rep. Heather Carter, R-Cave Creek, is working with the 24 Democrats in the 60-member chamber to provide the margin of support.
Livingston, however, said he thinks that coalition can be blown apart if Medicaid comes up for a separate vote on its own, prior to the rest of the budget. He said if that gets defeated, then Republicans are free to slash spending without having to worry about Democrat concerns.
Kavanagh said, though, that Livingston is mistaken if he thinks that will pave the way for $400 million in cuts.
"Economically we could probably cut $20 million to $30 million from state agencies, other than education,'' he said.
"Politically, we're lucky if we get the House budget approved, as opposed to the Senate budget which has more spending,'' Kavanagh continued. "Politically, the best conservatives are going to do is the House budget.''
Tobin said Livingston and supporters are ignoring other realities.
One is that the state Court of Appeals has ruled it was illegal for lawmakers to refuse to adjust state aid to public schools every year to account for inflation. That adds $82 million to the budget.
And Tobin said just the growth in the number of children in school will automatically add another $41 million in education funds.
He also said previously approved tax cuts start to kick in now -- and will reduce revenues by $80 million a year by 2016 unless they prove successful at spurring additional economic activity.