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Strike Two

Critics complain the new GOP budget plan is still unbalanced.

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If the GOP leadership was hoping to win over critics with its new budget proposal, the conservative Republicans were downright delusional.

The $6.2 billion proposal, up from the $6.1 billion plan unveiled in January, was getting hammered from all directions within hours of its release on April 22.

The new budget, which spends $500 million less than the $6.7 billion budget put forward by Gov. Janet Napolitano, beefs up spending on K-12 education by about $68 million over the current year, boosts spending on the Department of Corrections by $23.6 million and increases healthcare spending by $111 million.

But it hits other areas hard: Universities would get $16 million less than they received this year; community colleges would get $4.3 million less. The judiciary would face cuts of $6.7 million, with probation costs foisted onto counties. The Arizona Commission on the Arts would get zero dollars from the state general fund, although it would receive $1.8 million from the lottery-funded Heritage Fund.

Although Napolitano spokeswoman Pati Urias declined to comment on the budget proposal, others from across the political spectrum were taking shots at it last week.

"This budget still slashes services for children and hard-working families," said Elizabeth Hudgins of the Children's Action Alliance.

Hudgins complained that the budget knocks 13,000 to 14,000 children out of childcare, cuts services for abused and neglected kids, trims healthcare for the working poor and eliminates a $9.5 million block grant for preschool, all-day kindergarten and K-3 programs.

Environmentalists bemoaned a $10 million raid on the state's Heritage Fund, especially since lawmakers recently took $10 million to balance the current fiscal year. Sierra Club lobbyist Sandy Bahr griped that the proposal also takes $5 million from a water-quality fund, $12 million from an air-quality fund and $10 million from the State Lake Improvement Fund, as well as zeroing out a water protection program.

"In looking at the fund transfers, it appears that environmental programs were hit disproportionately," said Bahr.

The business community complained about the cuts in university funding, as well as the $4.2 million trimmed in a merger of the state Department of Commerce and Office of Tourism, which were both slated for elimination in the original GOP proposal.

"While we're happy that legislators come to their senses and didn't throw out the baby with the bath water, we still think it needs to be funded at a higher level," said John Dougherty, legislative lobbyist for the Tucson Metro Chamber of Commerce. "They are the engine that drives the state's economy."

A potential major sticking point: a proposed raid on the State Compensation Fund, which allows Arizona companies to purchase workmen's compensation insurance. The fund, which has swelled to more than $1.5 billion since being established in 1920s, has grown increasingly attractive to lawmakers looking to balance the budget. The GOP proposal calls for the state comp fund to purchase $250 million in state assets.

Comp fund officials are balking at writing a quarter-billion-dollar check to the state.

"The figure currently being reported for the 2004 budget does not appear to be in the financial best interest of SCF and our policyholders and their injured workers," said Amalia Lopez, spokeswoman for the compensation fund.

Compensation fund officials and the business community are lobbying to pass House Bill 2195, a striker designed to "provide the necessary, long-term protection" for the state compensation fund, according to Lopez. The bill has stalled in the Senate.

While comp fund officials remain diplomatic, others close to the issue say the board may tie up the budget proposal in court if lawmakers continue efforts to grab $250 million without passing HB 2195.

"They're about a pubic hair's width from their budget going down the toilet," said one source close to the negotiations.


THE REAL TRICK FOR the GOP leadership will be keeping the rank-and-file Republicans in line. Cracks are already appearing in the caucus, according to Republican state Rep. Marian McClure, who represents Tucson's eastside, Green Valley and Sierra Vista.

McClure calls the GOP budget proposal a disaster for the state.

"If anything like this passed, it would throw the state into a recession and I don't know when we would ever recover," says McClure.

McClure predicts leadership won't find the votes to pass their budget, with anywhere between 15 and 18 Republican House members meeting with state officials this week to boost agency funding.

"You make something too draconian and you start to lose support," says McClure.

McClure estimates that moderate Republicans will work with Democrats to eventually propose a budget somewhere between the GOP leadership's $6.2 billion and Napolitano's $6.7 billion.

"With the sheer enormity of the cuts we're facing, nothing is going to look too pretty," McClure says. "But we don't have to balance it on the backs of the elderly, children and healthcare."

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