PHOENIX - Tuesday's defeat of Propositions 301 and 302 knocked a $450 million hole in the state budget and has the outgoing Senate president calling for a special session, and soon, to plug it.
Bob Burns, R-Peoria, said other problems already had the state more than $400 million in the red. The unwillingness of voters to let lawmakers take control of two other funds just added to the problems.
Burns said time is running out.
"At some point, I'm afraid we run out of cash and start issuing warrants," he said, essentially IOUs to those the state owes money.
"The people are going to be up in arms about it," he said.
By wide margins, voters rejected:
• Proposition 302 to kill the First Things First early childhood development program and let lawmakers use $325 million in unspent funds the program is holding, along with future proceeds from the 80-cent-a-pack tax on cigarettes that now funds it.
• Proposition 301, which would have taken the last of money voters mandated be set aside to preserve open space, about $124 million.
Lawmakers built the $9.1 billion spending plan on the assumption both would pass.
Incoming Senate President Russell Pearce, R-Mesa, prefers to wait until January, when he is in charge, to deal with the problem.
From his perspective, the solution is to just keep cutting expenses until they match revenues. That makes state aid to education and health care - the biggest items in the budget - the prime targets.
Pearce acknowledged trimming the Arizona Health Care Cost Containment System, the state's Medicaid program, would put the state out of compliance with the new federal health-care law. It says states that reduce eligibility lose all of their federal health aid.
But Pearce said he's ready to tell the feds what they can do with their $7 billion.
"If we're saving (state) money, the fact we lose some federal money means nothing," he said. "If you can't afford Dillard's, even though they're having a great sale, you can't afford Dillard's."
Pearce said he is unconcerned that the loss of all federal dollars will leave Arizona unable to fund what's left of its AHCCCS program.
"Church, community, family's got to provide," he said.
Gov. Jan Brewer, who would have to call lawmakers, some of whom were defeated Tuesday, back to the Capitol, said it is premature to make that decision. "We're working on our budget; we can discuss that in the next couple of weeks."
Brewer also wants to trim AHCCCS, but not in a way that would endanger federal funding.
She said the new Congress may give states some flexibility to alter their own programs.
In the interim, the governor is hoping First Things First, now that it survived at the polls, will agree to lend some money to the state.
Steve Lynn, Early Childhood Education and Health Board director, said it is "possible" the board will consider a new request.
One issue, he said, is find a way to ensure it truly is a loan. "We have an obligation to make sure that the money is paid back, on whatever schedule is agreed to," he said.