Story by Christopher Conover

The members of the Arizona Legislature return to Phoenix in a week to begin the annual legislative session. They haven’t had much time off, however. In all, the legislature met in five special sessions last year, each designed to deal with a growing budget deficit and after each special session the hole in the spending plan remained. As of now, the current $10 billion budget is $1.4 billion dollars in the red. In addition to that red ink which lawmakers must deal with they are also facing payments on more than $1 billion in lines of credit the state has taken out in order to keep operating.

In a month, the state must make another school payment. Right now, according to Treasurer Dean Martin, the way that payment will be made is by selling the state capitol. If the money is not in the bank by the end of the month, Arizona could begin issuing IOUs. Treasurer Martin says those IOUs aren’t worth the paper their written on until the state has money in the bank. Martin says if the money doesn’t come through the state will live on a financial day to day basis; checking to see what tax money came in and writing checks against it and when the money runs out IOUs could be sent.

Legislative leaders and the Governor are well aware of the problems. Governor Brewer is expected to propose asking voters to reverse a 2000 vote regarding AHCCCS. Prop 204 allowed Arizona residents making 100% of the federal poverty level to receive Medicaid. The change would take that level back to 34%, cutting out about 350 thousand Arizona residents thereby saving the state billions. Lawmakers have already authorized state agencies to cut employee pay be 5%. Some in the Legislature say cutting isn’t enough. A bi-partisan group of lawmakers say it is time to look at bringing in more money. In the meantime, lawsuits are now threatened if the state doesn’t bring the financial books into order since the Arizona Constitution says the budget must be balanced.