Budget Deficits and the Price of Arizona Government

Following up on my blog post last week, yesterday’s Arizona Republic featured two interesting articles outlining the causes of and various proposals to close Arizona’s $3 billion current year budget deficit (located here and here).

One of the interesting stats for me was that the current price of Arizona government is currently $27 million per day, down from $29 million before the round of budget cuts in January 2009. As Goldwater Institute president Darcy Olsen wrote in an op-ed in the same edition, it could be a lot lower had the state just held spending to the levels seen just a few years ago:

Massages for state employees, tai chi classes and comic books are just three items state government spends your paycheck on. Not all government spending wastes money so visibly, but there is credence to the saying that for every rat you see, there are 50 more you don’t.

The Arizona budget clearly needs a good scrubbing, but how much of the deficit really rests in lawmakers’ hands? Revenues have plunged nationwide. Maybe our deficit is a casualty of the recession. As Tina Turner might say, “What’s spending got to do with it?”

As it turns out, everything. If Arizona simply had sustained state services since 2002, we would be debating what to do with a $3.2 billion balance today. There would be no deficit this year or next.

On a related note, Americans for Prosperity-Arizona released new survey results last week finding that Arizonans aren’t keen on the thought of raising taxes to cover the shortfall produced by the unsustainable spending in recent years:

Gov. Jan Brewer’s proposed billion-dollar-a-year tax increase fared badly in the poll, with 62 percent of respondents in Phoenix opposed, and 64 percent in Glendale. Opposition to tax increases crossed party lines, with 47 percent of self-identified “strong Democrats” in Phoenix opposed, and 52 percent in Glendale.

Respondents also rejected by wide margins a ballot proposition that would allow the state Legislature to make cuts to areas of the state budget that are currently protected from cuts, including parts of K-12 education and state health care programs for the poor.

The least unpopular of the short-term deficit fixes was a proposal to sell state assets, including public lands, and privatize state functions. Fifty-five percent of respondents in Phoenix opposed the proposal, as did 52 percent in Glendale. The only short-term deficit fix that won approval of majorities of respondents was a proposal to allow gaming at horse and dog racing tracks to generate new revenues for the state.

Since there exists only one popular option for addressing the deficit (expanding gaming), to me this poll still effectively reinforces the efficacy of privatization as a primary strategy to right-size Arizona government. It’s going to take much more than new gaming alone to right the ship. Luckily, the legislature has a tremendous opportunity in this regard, with the proposed Council on Efficient Government (SB 1466).

Reason’s Privatization Research and Commentary