Arizona's Future Made Possible By A Balanced Budget
This past year has proved tumultuous in so many ways for Arizona: the battle between the federal government and Arizona over legal immigration, a historic recall, and the terrible shooting of US Representative Gabby Giffords, yet the constant issue that has troubled Arizonans is the condition of our economy. Unlike some of the other issues, the economic discussion cannot be restricted to Arizona, because what happens virtually anywhere in the world has the potential to affect us here.
Consider our most glaring concern, the varying fortune of real estate, which we now know was both fueled and devastated by reckless financial policies at the federal level, transnational banks, global hedge funds, and more.
The combination of these misfortunes has continued to fuel a less than optimistic view of Arizona's economic future. Our ability to effectively manage and support the states essential services, including schools, hospitals and important social programs, will be directly effected by our ability to maintain and grow a healthy economy.
I am here to tell you that while we are far from out of the woods, from my perch in the state legislature, I do not concur with the pessimists. I believe that Arizona is turning the corner on the economy, and thus on the future.
My reasoning begins with the legislature's commitment to reining in the sort of unsustainable spending that dominated our past and created the situation in which we now find ourselves, and structuring a truly balanced budget. The 2011 budget was the first balanced budget in Arizona since 2007, a budget that doesn't rely on gimmicks so often favored by politicians seeking to avoid unpleasant choices, like rollovers, where the debt or obligation is just "rolled over" into the next year or years. The legislature began last January facing a $1.51 billion budget shortfall, a ruinous deficit, and identified $1.1 billion in cuts, ending the session four months later with a balanced budget. It was not easy, nor always comfortable, but it was necessary to get our financial house in order and lay the groundwork for a sound plan moving forward.
And yes, there are many positive indicators that Arizona's economy is on the right path. Most dramatically among them, we added 45,800 new jobs this year. As a result of increasing revenues, the state now has an estimated carry-over balance of $500 million. Additionally, Standard & Poor's recently changed its credit outlook for Arizona from negative to stable, based on what it viewed as Arizona's improving fiscal outlook, immediately making us a more attractive venue for investment.
Of course, it would be foolish to claim Arizona is out of the woods just yet. Some of the recovery from FY 2011 is due to the previous year constituting the absolute bottom of the recession, with revenues the lowest since 2004, making it that much easier to post gains from such a depressed starting position. In all likelihood, we will have to deal with another shortfall in 2014 due to the expiration of the one-cent sales tax that accounts for roughly $800 million annually. Those two factors alone means we need to show restraint by not spending the current projected surplus, and instead form a rainy day fund in preparation of the loss in revenue from the expiration of the one-cent tax. And let us not forget -- not that we ever could -- that Arizona has an estimated outstanding general fund debt of $3.8 billion, which will cost us roughly $293 million in debt servicing in 2012 -- yet another reason to show fiscal restraint.
With the new legislative session just around the corner, it is imperative that we in government work together to continue the effort to make Arizona both more efficient and more financially responsible. As the Chair of the House-Sub-Appropriations Committee on Multi-Year Budgeting, I have labored for months with my colleagues analyzing our budget in an effort to prepare an effective, long-term plan for the state, emphasizing our commitment to core government functions like education and healthcare through sensible measures utilizing attainable goals. Never again can we allow expenditures to get so out of hand that we are plunged into unmanageable debt, imperiling everything that the people of Arizona have worked so long and hard to build.
Forever an attractive destination for people from other states and even other countries, Arizona is poised on the brink of a potentially great tomorrow. Our legislative body has the dedication, commitment, and the courage to make the kind of decisions that will propel Arizona's economy forward. Government must work as a lever to make that tomorrow all the more possible, instead of acting as an impediment to the dreams and creativity of the people.