/ Modified sep 18, 2013 5:37 p.m.

Brewer: State Finished Last Year With Big Cash Balance

Preliminary report on 2012-13 fiscal year shows budget at $895M in black; state deficit will be gone early.

(VIDEO: AZPM)

State government finished the 2012-13 fiscal year with $895 million more than it spent, the governor's office announced Monday.

Gov. Jan Brewer issued a press release saying that will allow the state to erase its structural deficit by the end of the current fiscal year next summer, two years earlier than previous projections.

Brewer took credit for the positive news, saying her "sound fiscal leadership" brought it about through an improving economy, conservative spending and enactment of her Medicaid expansion plan.

The preliminary report of an $895 million ending balance compares with a projected $304 million ending balance in the legislatively passed budget in June.

That budget projected a deficit of $446 million at the end of the 2013-14 fiscal year and $208 million at the end of the next fiscal year. Under that scenario, it would take until June 2016 for the state to erase its structural deficit.

But the addition of expanded federal Medicaid funding and growing tax revenues are erasing the deficit sooner.

"With that plan in place, current projections show Arizona will no longer be operating under a structural deficit after (fiscal year) 2014," the press release said.

“This remarkable cash carry forward is a stark contrast to Arizona’s position just a few short years ago when we faced one of the largest budget deficits in the country and a sign of our steadily growing economic comeback,” Brewer was quoted as saying.

Brewer's Medicaid plan, with its infusion of federal dollars to cover 90 percent of the costs, was adopted after a contentious legislative session, in which four Republican senators and eight GOP House members joined the solid Democratic bloc for approval. In doing so, they rolled over the wishes of Republican leadership in both chambers.

The fight for Medicaid expansion isn't over. Last week, Republicans and the Goldwater Institute sued the governor, saying enactment of the expansion is unconstitutional because it includes what they call a tax increase - an assessment on hospitals to cover the state's 10 percent match - that requires a two-thirds majority in both Houses.

Brewer and Democrats have called it a fee, not a tax.

Anticipating a big carryover, or what Democrats have called a surplus, some legislators who favor Medicaid expansion have said that if the plan is declared unconstitutional, they could vote to cover the costs for the state match out of the state's general fund.

The $895 million preliminary ending balance added to the state's $454 million rainy day fund gives the state a total cash balance of $1.35 billion, the governor's press release said.

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