Analysts expect Brewer's budget to put Arizona $600 million in the red over next three years - Ahwatukee Foothills News: Valley And State

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Analysts expect Brewer's budget to put Arizona $600 million in the red over next three years

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Posted: Thursday, January 23, 2014 7:00 pm

Fearing continued weakness in the economy, legislative budget analysts predicted Thursday that the spending plan crafted by Gov. Jan Brewer will leave the state at least $600 million in the hole within three years.

Richard Stavneak, staff director of the Joint Legislative Budget Committee, said the governor's budget is built on this year's revenues growing by 5.3 percent over what they were last year. He said the panel of economists that prepares the legislative estimates puts that number at 4.3 percent.

But that's just the beginning.

Stavneak said Brewer is presuming a 6.7 percent increase next year in tax collections over even what he said is her inflated current estimate. The legislative budget presumes just a 5.3 percent growth rate.

And that pattern extends into the year after that.

Overall, Brewer thinks that annual revenues by 2017 will top $9.8 billion. Stavneak said the signs his staff and economists are seeing suggest something less than $9.5 billion — less than the state actually collected in 2007.

The result, Stavneak said, is Brewer is building her budget on revenue projections that are $933 million higher over the next three years than his panel of economists thinks is likely or prudent.

Stavneak said this isn't simply a question of being pessimistic.

He acknowledged that Arizona had a strong final quarter of last budget year, with revenues shooting up by 9.3 percent over the same period a year earlier.

But he said that's likely an anomaly, citing much lower growth in prior quarters. More to the point, Stavneak said growth has slowed — significantly — to the point that it was up just 2.7 percent annually for the most recent quarter.

That's also in line with other indicators like employment, which grew just 2 percent last year, adding fewer new jobs than even the year before.

Economist Jim Rounds of Elliott D. Pollack & Co., said the signs he has analyzed predicts “relatively weak growth.” He said lawmakers need to keep that in mind in coming up with spending plans.

“Just be cautious,” he said.

“If you can keep the budget at still some growth — but maybe just constrain some of the larger spending items for another year — I think there'll be a little bit more certainty next year,” Rounds said. “That's the advice we're giving to clients.”

Gubernatorial press aide Andrew Wilder brushed off the more modest revenue projections.

“We're confident in our forecast,” he said.

Stavneak said the difference in revenue projections is only part of potential problems on the horizon.

Brewer is proposing $758 million more in spending over the next three years than what his staff said is necessary just to keep pace with inflation and population growth.

Her budget also is built around her intent to continue raiding gasoline tax and vehicle registration receipts to fund the Department of Public Safety. There is strong sentiment among legislative leaders from both parties to restore the $238 million to its original purpose of building or maintaining roads.

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