Arizona Republic
November 20, 2005


Arizonans can identify with the quip from singer Sophie Tucker: "I've been rich and I've been poor. Believe me, honey, rich is better."

Just two years ago, the state budget was deep in the red. Now revenues are pouring in, with a projected surplus of $750 million for fiscal 2006.

Not surprisingly, everyone has ideas about what to do with Arizona's sudden wealth.

Not to be party poopers, but the guiding principle should be prudence.

Much of the money is a short-term windfall from capital-gains taxes on real estate investments, sales taxes from booming construction and sales tax from an auto-buying binge.

As an Arizona Republic editorial stated earlier this year, we should be extremely cautious about making any new long-term spending commitments.

Likewise, it would be foolhardy to use a temporary burst of revenue as a reason for big cuts in the tax base. Otherwise, the slightest downturn could trigger a budget crisis, while the state's booming population continued to require substantial investment in everything from schools to highways.

Indeed, Arizona still needs to do some financial catch-up, and this bonanza will help. Some of the top items on the to-do list should be:

* Boost the "rainy day" fund, which currently has $164.7 million.

* Clear up accounting gimmicks, like "rolling over" education funding into the next fiscal year.

* Make the final $99 million payment in the Ladewig case, refunding tax money that was incorrectly collected.

* Restore some of the money that was swept out of dedicated funds -- financing everything from highway construction to worker retraining to pollution cleanup -- into general state coffers.

* Give state workers a real pay raise. Last year's 1.7 percent increase simply made up for higher employee contributions to the state retirement plan. Low pay contributes to high turnover, which is inefficient and expensive, costing Arizona an estimated $50 million a year.

* Meet a court order to adequately fund language instruction for students who need to learn English. This is a political sore point: Gov. Janet Napolitano vetoed that line of the fiscal 2006 budget as inadequate, fueling the wrath of legislative leaders who say she reneged on their budget deal. But it can't be ignored.

* Continue to expand all-day kindergarten.

* Finish funding the new state archives building, lawmakers budgeted half of the $30 million last year, and take care of some of the deferred maintenance work on state buildings.

Arizona should use these flush times to get its financial house in order, prepare for lean years and make investments with long-term payoffs.

Editorials represent the opinion of the newspaper, whose Editorial Board consists of: Robert J. Dickey, John Zidich, Patricia Biggs, Phil Boas, Ward Bushee, Richard de Uriarte, Jennifer Dokes, Joanna  Hensley, Cindy Hernandez, Kathleen Ingley, Doug MacEachern, Gary Nelson, Joel Nilsson, Dan Nowicki, Robert Robb, Paul Schatt, Linda  Valdez, Ken Western and Steve Benson. Edition: Final Chaser
Section: Opinions
Page: V4