Arizona's reckoning day closer than expected

The nasty budget shortfall faced by Arizona's state government isn't getting any closer to a reasonable conclusion. With the economy slowing, the state just isn't filling its coffers as fast as expected, but government officials are still cutting checks as if there's no tomorrow. That's a problem, because tomorrow is coming along pretty fast. Reports the Arizona Republic:

The state's worsening revenue shortfall means the general fund will run out of cash it can legally spend earlier than the previous estimate of late May, State Treasurer Dean Martin said Thursday.

Martin said his office is fine-tuning its calculations and expects to project a new no-cash date by next week.

But he said the increased size of the current fiscal year's estimated shortfall - raised to $1.2 billion currently from $970 million most recently - likely moves up the date when there's no cash in the general fund to early May or even late April.

There's plenty of blame to share around among the usual suspects. As Republic columnist Robert Robb points out, "Gov. Janet Napolitano's approach to revenue crunches is to preserve spending as much as possible. Napolitano's preferred budget fixes are debt, draining the rainy day fund, and sweeping reserves in non-general fund accounts."

In A Comparison of State Spending Growth Under Arizona Governors, (PDF) a report Robb prepared for the Goldwater Institute in 2007, he wrote that adjusted spending increased during Napolitano's reign by 54%, well above the average of 40% inflicted on the state by her predecessors.

Using adjusted state general fund spending as the fairer comparison, spending during Napolitano’s term increased 13 percentage points more than personal income growth, compared to predecessors’ average of just over 1 percentage point. Napolitano’s rate of increase was equaled during the term shared by Evan Mecham and Rose Mofford, and was approached during Babbitt’s first term.

State spending growth under Napolitano stands out even more when compared to increases in population and inflation. Even with the adjustments, spending under Napolitano increased 29 percentage points more than population and inflation, compared to just 11 percentage points on average for her predecessors. The closest rival for increased spending was Babbitt’s second term, during which spending increased 17 percentage points faster than population and inflation.

But Napolitano isn't the queen of Arizona. She had plenty of help from state legislators -- Republican state legislators -- who collaborated with the governor to drive spending to booming heights in 2006 and 2007, when state government metastasized to exceed 6.5% (PDF) of the state economy. As always, excessive good-times expenditures can't be maintained when the economy cools down -- like now -- creating the need for quick retrenchment.

To give lawmakers credit, they did pass two budget freeze bills, both of which were promptly vetoed by the governor.

But the problem isn't going away just because Governor Napolitano finds it inconvenient to end the binge.

Americans for Prosperity has called for a firm spending limit of 6.4% of the state economy. That might rein in future rollercoaster rides, limiting spending in good times while softening the landing in bad times.

As the Goldwater Institute report makes clear, the state government has just been spending too much damned money, and now the credit card is maxed out. Like it or not, the state will pay the piper, one way or another.

Arizona on the fiscal brink

Arizona's government seems to have painted its way into a corner with a bucket of red ink. Says the Phoenix Business Journal:

An analysis by the liberal Center for Budget & Policy Priorities shows Arizona with the worst budget deficit in terms of the shortfall's percentage of state spending.

Arizona's estimated $1.7 billion deficit is 16.2 percent of state spending, according to CBPP.

That is higher percentage than California (15.4 percent and a $16 billion deficit) and Nevada (7.8 percent and a $565 million deficit).

The problem, as usual, is that spending has been wildly out of control for the past several years, seriously outstripping growth in population and inflation.

As Tom Jenney, Director of the Arizona Federation of Taxpayers/Americans for Prosperity points out, "Arizona’s budget really got out of control in 2006 and 2007, when the size of state government as a portion of the state economy exceeded 6.5 percent—levels of spending not seen since the early 1990s."

The end result is that Governor Napolitano and her co-conspirators in the state legislature have seriously overcharged Arizona's figurative credit card.

Arizona actually has a spending limit of sorts, capped at 7.41% of state personal income. As the current situation demonstrates, however, our spending-mad representatives are perfectly capable of making plenty of mischief well before running afoul of that limit. Jenney's organization and the state GOP both support HCR 2038, legislation that would lower the spending cap to 6.4% of state personal income, a limit that would have actually made a difference in recent years (although it should be noted that Republican lawmakers were part of the spending problem). The cap could be lifted by a two-thirds vote -- a potentially dangerous provision, but probably a politically necessary one to satisfy the folks who believe the world will come to an end if the government isn't wallowing in stolen cash.

As it is, Arizona's government faces either massive budget cuts of the sort that make politicians squeal, or massive tax hikes bound to make taxpayers shriek. That may well provide further impetus for the growing movement to roll back property taxes (I signed the petition last month), if only to save some of our wallets' contents from the beast's maw.

It's better to limit spending now and avoid even nastier fights in the future.

Note: Thanks to AFT/AFP for the graph.

Your money, pissed down the drain

Congress and the White House conspired to rob you blind, and have now agreed to spend $555 billion of your pocket pickings to prop up the government institutions that done the deed. That government will use the cash to abuse you for another year, throw you a few low-quality trinkets to replace the decent-quality options you can longer afford after meeting the tax bill -- and then it will expect you to thank politicians for what they've done.

What? You don't feel grateful?

Congress almost grows a pair

The U.S. Senate is squabbling over competing measures to fund the bloody morass in Iraq. House Democrats have already passed a measure that provides $50 billion in "emergency" funding for the war, but which sets a timetable for bringing troops home. The Senate is ... well ... not exactly rushing to follow suit. A similar proposal failed to muster enough support to advance in the upper chamber, although a rival Republican measure to give the president carte blanche also went down to defeat.

The Democrats won Congress largely on the strength of their promise to curb the Bush administration's military adventures. The great power of Congress is the power of the purse -- the president may want to go mucking around overseas, but Congress can cut off the funding for such crusades to keep the White House under control. That's why it was a pleasure to see the House -- however belatedly -- follow through on the promises that Democrats made last year.

But now it's anybody's guess whether Congress will finally address the big issue that determined last year's mid-term election, and which still dominates headlines.

Democrats still have the option of simply refusing to provide any funds for the Iraq fiasco -- if they have the nerve to keep their word.

I'm not holding my breath.

Horrible, horrible sobriety

There's a crisis brewing in my household. It seems that my wife and I have already blown our budget for the month. Between paying off our recent vacation, prepping our house for sale and eating out just a bit too much, we've sent our entertainment and household expenses soaring. I mean, really soaring. Wow.

Fortunately, our grocery expenditures are far below budget so far, and we're well -stocked on most items. So we have room to make up the red ink. Specifically, we've decided not to spend any more money on anything except absolute necessities this month, and that includes the grocery budget. We'll eat what's in the pantry and the refrigerator, and that's that.

But here's the crisis: My wine purchases are included in the grocery budget, and I have exactly three and a half bottles of red and one of white to get me through the next two weeks. I usually drink half a bottle each evening. That puts me on short rations.

Oh the sacrifices we make for fiscal responsibility.

No peace, more spending

Tell me please, what value was there in tossing the Republicans out of the congressional majority and handing the Democrats control if donkey party leaders are going to use their new position of power to roll over on the war in Iraq?

Of course, that's not all they did; they also managed to trade away any hope for a timetable on ending the war for billions of dollars in spending on their pet programs.

Hooray for the new boss; same as the old boss.

And so much for the promises of fiscal discipline and anti-war passion the new crop of Democrats offered up during the last election cycle.

I'm at a loss for a suggestion as to where the majority of Americans who oppose the war in Iraq should turn to get us out of that mess. Even worse, people who oppose the war in Iraq and think the federal government is spending money like a drunken sailor are completely out of luck.

At this point, the main differences between the two major parties seems to be their disagreement over how to manage a war that most Americans don't want to be involved in at all, and their choice of which programs are most deserving of excessive amounts of the taxpayers' money.

Well, there's also still the hope that Democrats might be a tad better on civil liberties, but I'm not holding my breath on that one.