Dear Friends,
Next week, the Legislature will begin its work to fix the current budget (Fiscal Year 2008) to deal with an estimated revenue shortfall of $870 million.
To jumpstart this process, I’ve given to them a detailed plan that will work. It not only erases the shortfall, but also preserves valuable investments in education, cares for children and vulnerable adults, does not raise taxes and does not cut basic state services.
As I’ve spoken with you around the state, you’ve told me how important it is to you to preserve the investments we’ve made in Arizona’s future, particularly in education and economic growth. I trust your wisdom, and it makes good sense to put that wisdom to work.
Earlier this year, it became clear that Arizona’s revenues were coming in below projections, due mostly to the softening of the real estate market. In late July, we began working with state agencies, finding ways to streamline budgets and avoid new spending. That approach has worked well.
The plan I’ve released today incorporates further agency savings, along with bonding for new school construction and use of the state’s savings account to balance the budget.
|
State Agency Budget Savings |
$214,000,000 |
| K-12 Capital Financing |
$393,000,000 |
| Rainy Day Fund |
$263,000,000 |
| |
|
| Total Budget Management Plan |
$870,000,000 |
In nearly every state, state or local governments use long-term financing for new schools. And with the current good market conditions, long-term financing will cost the state less than 5 percent.
Further, back in 1990, the Arizona Legislature created the Budget Stabilization Fund (also known as the Rainy Day Fund) to set aside revenue during good budget years to sustain the state during years when revenue is not as good. The current balance in the Rainy Day Fund is $685 million. We’ll transfer only $263 million, leaving a balance in the fund of $422 million. We have a "rainy day" fund for a reason. It’s raining on our economy right now. We’ll tap our savings account, knowing well that when the economy turns up again, we’ll replenish it.
I hope you’ll support this proposal by letting your state Senators and Representatives know that this is a good plan, and the right way to bring Arizona into balance.
As always, feel free to contact my office at 602-542-1318, or visit our Web site at http://www.azgovernor.gov/ for information and news in state government.
Very truly yours,
Janet Napolitano
Governor
