March 19, 2016
Providing more funding for education was one of the main concerns discussed at the Arizona House Appropriations final stop for the budget conversation tour which occurred in Yuma on Saturday.
Representative Justin Olson, Chairman of the Arizona House of Representatives Appropriations Committee, hosted the town hall-style forum held at Yuma City Hall Saturday morning. The goal of the forum was for the public to learn about budget proposals and offer the public a chance to voice their input on what they would like to see from the Arizona State Legislature as well as their budget recommendations. Topics covered by Olson included a recent history of the state’s budget and the current budget proposals.
When giving his presentation on the budget, Olson explained how the state began to see significant financial hardship beginning in 2009 with a decline in sales tax collections. "A significant portion of the state’s revenues are sales tax. In 2008 we saw a 3.5 percent drop in sales collections, followed by a 13.7 percent reduction in sales tax collections in 2009. The sales tax reductions significantly impacted the revenues that the state was collecting."
"It wasn’t just sales tax that was impacted significantly from The Great Recession," Olson added, explaining that individual income tax reductions were impacted as well as corporate income tax.
"This is the accumulating effect of those declines in tax collections," Olson said. "In that early decade we saw significant increases in our ongoing expenditures and significant increases in our ongoing revenues. When we are analyzing whether we have a balanced budget we’re particularly concerned with our ongoing revenues and our ongoing expenses, and we call that our structural balance. The operating fund of the state went negative for the first time in 2009 since the 1930s, since The Great Depression."
"What this means is the state collects all of its tax revenues and it all goes into the state treasurer’s operating fund balance," Olson explained. "The state treasurer manages those funds and invests those funds. There’s usually a significant balance in the operating fund. In 2009 all of that cash balance was expended and it actually went negative."
To address this issue, Olson said spending reductions were implemented. "One quarter of the solutions of closing those deficits were permanent spending reductions." Other actions taken to close the deficits, according to Olson, ranged from federal assistance to the Rainy Day Fund.
"Last year a 2.2 percent reduction (was passed) in state spending overall," Olson said, noting that the state is now on a path to be at a structural balance in the coming fiscal year 2017.
"I share this with you not to say that we are spending at the right level today," Olson said. "I recognize when you give a significant increase in spending and then you have to reduce that spending that creates challenges and creates hardships. My perspective going forward is that it’s important to me that as a state that we do grow our state budget at a rate that is sustainable."
After Olson spoke, Democratic Representative Charlene Fernandez voiced her concern at the forum that not enough was being spent on education. "What I see is we are sitting on one billion dollars and the way I see that is we have $625 million dollars in cash on hand and we have about 460 million dollars in the Rainy Day Fund. With that $625 million that we just heard we had cash on hand and the $460 million in a Rainy Day Fund, that adds (up) to one billion dollars."
Fernandez said that she felt that the reason the state has not recovered from The Great Recession is due to tax credits. "There have been too many tax cuts and too many tax credits for corporations that don’t even want them. They come back and tell us that we need to be investing in our schools, be investing in Arizona and putting people back to work. So why haven’t we recovered from that Great Recession? I think it’s because of the tax credits."
It was also noted by Fernandez that not enough money is being spent on each student. "Per pupil spending has continued to decline and yes, we have Prop 123...and yes, it is critical to our schools that we get that money into our schools, but it’s not new money. The democratic philosophy is that we want to inject new money into our schools. This was just a baby step toward getting our schools funded the way they should be."
Fernandez also speculated that the shortage of teachers in Arizona schools is due to their pay. "There is not a teacher shortage in Arizona, there’s a shortage of teachers that want to go in the field. There has never before been so many certificate teachers in this state. Why aren’t they going into their field of study? We are wondering about that, we think it may be teacher pay."
Democratic Representative Lisa Otondo, who was another speaker at the forum, echoed Fernadez's concerns on teacher pay in her speech. "Let me tell you right now that two teachers with a family of three are barely surviving in Yuma. They have difficulty purchasing a home, and they have difficulties sending their kids to college."
Otondo also said that increased tuition creates a barrier for those pursuing higher education due to fear of incurring debt to pay for school. "I am sorry, but the Governor’s budget only put $8 million toward universities in Arizona and it needs be one hundred (million). We are not asking for an increase in taxes, we are asking to reevaluate the priorities of this state. We do spend more money on incarceration and less on education; this is problematic."
The full forum was recorded and can be viewed at azleg.gov when available.