Arizona bureaucrats spin spooky tales just in time for Halloween

By Byron Schlomach, Ph.D. | November 4, 2009

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byron schlomachTimed perfectly for Halloween, Governor Brewer asked state agencies for proposals to reduce government spending in order to close the state's $2 billion budget deficit. The results have been predictably spooky scenarios painted by each agency.

While the Department of Economic Security correctly notes it has already trimmed its budget by 12 percent, they forget to mention the dramatic spending spikes the agency experienced earlier this decade. AHCCCS, the state’s Medicaid agency, has seen its spending increase 14 percent just since 2006. The agency's blood-curdling solution is to kill KidsCare, a program whose spending pales in comparison to the AHCCCS expansions that occurred this decade.

In order to get federal stimulus money, the state says it is hamstrung by "maintenance of effort" requirements. But other states around the country are driving a stake through the heart of those rules and trimming budgets anyway.

The news media has repeated the scary stories from the Department of Corrections about what would happen should the state be forced to release some incarcerated felons to save money. These stories imply that hoards of murderers would wander our neighborhoods when in reality many felonies are non-violent, like check kiters and people who miss child support payments.

Like vampires some policymakers are exploiting the budget deficit as a chance to suck out more of our economy’s life blood for the sake of government programs. But the source of economic growth and prosperity is the private economy, not government. The government zombie already consumes 40 percent of the nation’s gross domestic product. Taking an extra pound of flesh out of the private sector could kill our economy, which is barely limping along.

Cures can be painful and a little scary, and curbing the state’s spending habit is certainly no exception. The budget reductions needed to bring spending in balance with revenues might sound ghoulish, but they are necessary and achievable.

For example, the state started financing all-day kindergarten in 2006, just as the recession began. We couldn’t afford it then, and we can’t afford it now. Its elimination might save $250 million per year. Universities must also reduce spending. Despite their howls in the night, a $200 million cut would take them back roughly to their 2006 funding level.

Health and welfare agencies, especially AHCCCS, could reduce their budgets by $500 million and still be funded at the same level as 2007. Another $150 million could be saved by moving all state employees to high-deductible health insurance policies; that figure even allows for contributions to employees’ health savings accounts to help meet the higher deductibles.

A similar amount could be cut by reducing other agencies’ appropriations or even eliminating some unnecessary or outdated agencies altogether. Another win-win would be to decline the new Morrison Institute suggestion to tack a new fee onto license plates to fund state parks, and let private companies pay the state to manage them instead. Instead of costing taxpayers money, they could make money for the state.

We can’t give in to fright. We need to be clear-eyed and clear-headed about the state's finances. The real horror story would be to continue to treat this budget deficit as something that will correct itself. That will leave Arizona in an increasingly scary economic position and hurt our chances for future job creation and economic recovery.