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Debt capitals

"Debt capitals" Continued...

Economist Byron Schlomach of the Goldwater Institute concurs with Martin's assessment that the governor's office is playing fast and loose with the term cut. As an example, he cites so-called reductions in public safety spending that were really a shift in funding sources. "What really happened is that we used gas tax money to pay for that instead of money from the general fund. Is that really a cut?" he asks. Schlomach also contends that the state's recent selling off of state-owned properties to investors-a move California is now looking to emulate-was merely a way to get around borrowing restrictions in the state constitution and not any kind of long-term solution.

The new budget has some real reductions in public service, but Martin says many of these were chosen more to push a tax increase than to address spending. In particular, he says it wasn't necessary to eliminate KidsCare, a program that provided health insurance for 37,000 children from low-income families. He claims the governor's office strategically chose emotionally charged cuts with the aim of making a media splash that would scare voters into approving a 1 percent sales tax hike. "The legislature pushed for a 10 percent across the board reduction in all departments," says Martin, "but the governor's office said, 'No, we will veto that.' They wanted specifically those cuts to health care and public safety identified [to the voters]." A better solution, Martin argues, would be to institute small co-pays for prescriptions and doctor's visits for everyone receiving free state health coverage. (Brewer could not be reached for comment).

However, there is one thing Brewer, Martin, and the Goldwater Institute agree on: One of the biggest obstacles Arizona (and by extension every cash-strapped state) faces in solving budget problems is the federal government.

Though the federal healthcare bill was not signed until after Arizona's 2010-2011 budget was finalized, the new regulations it imposes will strip the state of federal healthcare funding if it attempts to carry out the Medicaid cuts outlined in the new budget. This requirement, known as "maintenance of effort," has prompted Brewer to push for Arizona to join other states in bringing a lawsuit against the federal healthcare overhaul. Martin says that the new federal legislation may make many of the state-level debates on how to cover the shortfall moot: "The healthcare mandate blows a billion-dollar hole in our budget."

Similar federal regulations are in place to deprive states of matching funds if they try to cut spending on education. The fact that the two areas covered by maintenance of effort-education and healthcare spending-also happen to be every state budget's biggest expenditures puts states even more squarely between rocks and hard places. But soon, Schlomach warns, it may not matter what the administration mandates: "Quite frankly, we're at a point where we can't afford to spend enough to get the federal money." -Megan Basham


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