PHOENIX - Gov. Jan Brewer said Friday that Arizona no longer needs its 1-cent sales-tax surcharge even though state spending, while below 2009 levels, still exceeds ongoing revenues.
"Today we can say that the Arizona comeback has arrived," Brewer said at a press conference to celebrate Friday's being the last day for the levy. She said the temporary tax, coupled with spending cuts and borrowing, did what it was meant to do: Get Arizona over a fiscal hump.
"It worked," she said.
"Today we have a balanced budget and a cash carry-forward," Brewer continued. She also said the state again has money in its "rainy-day" fund, and said she has presented a balanced budget for the coming year to lawmakers.
But that $8.9 billion budget Brewer presented to lawmakers for the new fiscal year that begins July 1 is not backed by a matching amount of income.
With the loss of nearly $1 billion from the temporary sales tax, The governor predicts Arizona will collect $8.4 billion. Even after eliminating one-time expenses from the calculations, the ongoing cost of keeping the state operating next year is $445 million more.
Brewer is making up the difference largely with $725 million she expects to be left over from this year - much of that thanks to the $950 million the now-expired sales-tax surcharge brought in.
Brewer conceded that method of patching over the "structural deficit" cannot continue forever.
Her own budget projections for two years out figure the cash carry-forward will dwindle to $123 million. But press aide Matthew Benson said the economy is "healing itself," and Brewer is expecting a sharp increase in tax collections by that point.
But the governor, who opposed an unsuccessful bid last year to make the 1-cent surcharge permanent, brushed aside a question of how she can say the state has a balanced budget.
"There's always technicalities," Brewer said. "But all the zeros all fall in line."
However, any balance relies on the continuation of cuts, sometimes to levels below what state law calls for, which the state can't restore now that the tax hike revenue has ended.
For example, the Arizona Education Association figures if legislators followed the school funding formula in the law, state aid to schools would be about $240 million more than it is now. The big difference, according to AEA President Andrew Morrill, is the failure to provide dollars for things like books and computers.
Benson said the budget approved last month by the Senate, which is close to what Brewer proposed, adds $145 million to current school spending levels. But $82 million of that is simply to comply with a court order that lawmakers obey a 2000 voter-approved measure to adjust state aid each year due to inflation.
He said, though, K-12 education was not the only place lawmakers were forced to cut funding during the recession. And he said no area of government has been returned to prerecession levels.
"Nor should they be," he said, saying the current funding levels represent a new normal.
"The state came through that, reorganized, rebased its budget and we move forward from that point," Benson said. "We're adding back funding where it makes the most sense."
Brewer's position that school funding need not be restored to prerecession levels was backed by Glenn Hamer, president of the Arizona Chamber of Commerce and Industry, a political ally of Brewer's on key issues.
"We're using dollars far more effectively," he said.
"It's a mistake to say that spending equals achievement in education," Hamer continued. "If that were the case, Newark, New Jersey, would be an Ivy League diploma mill."