Brewer Signs 2012 Budget, touts Medicaid Reforms

Arizona’s $8.3 billion budget for the next fiscal year is now law.

April 8, 2012 – Story by Mary Jo Pitzl / The Arizona Republic

Gov. Jan Brewer on Thursday announced that she had signed the budget package late Wednesday, calling the plan “a milestone on the road to recovery.”
In late 2008, Arizona’s budget tumbled into red ink along with the overall economy, and throughout her tenure, the Republican governor has been battling budget deficits.
The fiscal year that begins July 1 is projected to end with a modest $5 million surplus. Brewer and GOP legislative leaders believe they’ll be able to keep the budget in balance throughout the coming year, instead of seeing it slip almost immediately into deficit, because they have balanced it structurally. That means they have matched state spending to the revenue the state is expected to generate in the next year.

To do that, they cut programs by $1.1 billion and reduced some of the gimmicks used to balance past budgets. However, the plan also relies on shifting costs to local governments and continuing to defer $1.3 billion in payments to various state programs.

There are no tax increases and no new borrowing, although debt remains from previous years of borrowing.

Brewer said the budget represents a state government that is “cost-effective, efficient and fiscally stable.”

Critics, though, have likened it to a “tea party” budget, with its reliance on spending cuts, especially to human- and social-service programs. The reductions equal the amount cut over the previous two years.

Many of those cuts make permanent changes to state law, meaning the programs they support will not return when state coffers are again flush with cash.

Andrei Cherny, chairman of the Arizona Democratic Party, labeled the budget a product of “the Russell Pearce Republicans.” Pearce, R-Mesa, has called the state Senate, over which he presides, the “tea-party Senate.”

The budget’s main appropriations bill takes effect immediately; the 12 policy-related bills in the package will become law 90 days after the Legislature adjourns its session. Adjournment is expected later this month.

Nearly half of the budget reductions come from the state’s health-care program for low-income Arizonans.

“This budget recognizes the need to comprehensively reform our state Medicaid program,” Brewer wrote in a signing statement sent to Pearce and House Speaker Kirk Adams, R-Mesa.

She proposes to freeze enrollment in the Arizona Health Care Cost Containment System, require co-pays from patients, and cut reimbursement rates for doctors, hospitals and other health-care providers. The budget cuts $500 million from AHCCCS, although many of the savings are contingent on federal approval of a reform package Brewer submitted to Washington, D.C., last week.

Her signing letter made no reference to the transplant program, which was cut in October. Brewer spokesman Matthew Benson said Thursday that, with the budget now signed into law, that coverage is reinstated. That should put 96 people who need bone-marrow and lung transplants, among others, back under state coverage for now.

Democrats have questioned whether the budget truly restores funding.

Brewer said the budget, rife with “difficult choices,” struck a balance between the need to make state spending line up with state revenue and Arizona’s obligation to education, public safety and vulnerable citizens.

She said she did her best to protect K-12 education, the main beneficiary of the temporary 1-cent-per-dollar sales-tax hike she promoted last year.

“The adopted state budget keeps that promise, limiting K-12 cuts to roughly 2 percent of total education funding from all sources,” she wrote.

Legislative analysts said the cuts equal 3.6 percent of state general-fund spending on education, the only pot of money over which lawmakers have control.

Brewer said she protected base funding for Arizona’s public-school system from deeper cuts that lawmakers wanted by aiming reductions at specific programs, such as eliminating vocational-education programs for high-school freshmen.

Critics have charged the governor with reneging on her promise to protect education, even though they acknowledge Brewer’s proposals were less harmful than those of legislative Republicans.

The Arizona Education Network, a Tucson-based group of education advocates, said Brewer and the Legislature “have violated the public’s trust with these deep cuts.”

In addition to about $150 million in cuts to K-12, the budget reduces university funding by $198 million and takes $70 million from the community-college system.

Cherny, of the Democratic Party, said that the budget decimates Arizona education and that Democrats will remind voters of that in next year’s elections.

The budget also cuts $50 million from the Department of Economic Security, which provides the state’s safety-net programs, and $53 million from the Department of Health Services.

The budget reduces funds that have kept the state’s parks system on life support; advocates say the cuts mean some parks will have to close.

Brewer and lawmakers turned their focus to provisions of the budget they say will make fundamental changes in how government operates, mostly by erasing a structural deficit. That kind of fiscal stability, they said, will boost business and investor confidence in Arizona and help speed economic recovery.