Arizona budget deficit still problematic

(Crossposted from AZIVN. Of course, it’s not just Arizona that’s having budget problems.)

“When you’re up to your knees in alligators, sometimes it’s difficult to remember your initial objective was to drain the swamp.” That is what has happened over the past few years as Arizona lawmakers have struggled with the budget deficit. While the rush to balance the budget has been understandable, it’s generally been done in a hurried fashion and with little or no long-term planning.

Cuts were mandated, and the individual agencies were tasked with figuring out how to do so. Predictably, this led to cutbacks in service, higher fees, and the perennial ploy of raiding special funds for general use, promising to pay it back sometime, really, we promise.

Such short-term measures generally solve little and instead simply result in the problem being kicked down the road a bit, maybe for the next legislative session to deal with. Ask California how that approach has worked out. Their budget lurches from crisis to crisis. Special funds are raided. Accounting tricks pretend to find more money. Then, the inevitable shortfall in revenue comes and the process starts all over again.

Arizona, however, seems genuinely focused on cutting the deficit by eliminating debt. Financial planners say one of the best ROI you can make is paying off debt, because of all money saved in interest payments for years to come.  This of course means that money normally allocated elsewhere needs to go to debt service, at least until debt gets down to manageable levels. This needs to be done, but does invariably lead to cranky citizens who realize that expected services have been reduced or even eliminated, and that fees (stealth taxes by another name) have gone up. 

Slashing budgets also generally means that those on the bottom rungs of society take the worst hits because, well, they don’t vote much or make political contributions. Do such cuts lead to deranged individuals like Jared Loughner wandering around when they might have gotten help instead?  There will always be unintended consequences of budget cuts. Cutbacks in pre-natal care for pregnant women will almost certainly lead to higher costs at hospitals that treat the mothers and infants. Thus, how much money is really saved? There are no easy answers.

Arizona, like other states, votes on a new budget each year in frenzied legislative sessions, with much back-room dealing and trades, and not a whole lot of transparency either. “Laws are like sausages. It is better not to see them being made,” said Otto von Bismarck. Indeed. One of those sausages was the Arizona legislature’s plan a few years back to sell state buildings then lease them back. This was done to get money to pay short-term bills but at the expense of years of onerous interest payments. I’m sure it seemed like a good idea at the time.

A better approach is to do what businesses routinely do. Make long-term projections and plans for budgets that reach several years into the future. Sure, they may be revised and altered, but at least there is a road map. That’s what the Arizona budget process seems to need.