AZ due $4B from US, with complexities
Capitol Media Services
Feb. 23, 2009


By Howard Fischer

Tucson, Arizona | Published:

Arizona is in line for more than $4 billion from the just-signed federal stimulus package.

But lawmakers and the governor aren't sure if they can afford to take all of it: Much of that money has strings attached.
An analysis of the law by Richard Stavneak, staff director of the Joint Legislative Budget Committee, also revealed that $185 million of the money headed Arizona's way is being given to Gov. Jan Brewer to spend pretty much any way she wants. That annoyed Sen. Russell Pearce, R-Mesa, who said members of Congress should know that the legislative branch of government not the executive branch sets funding priorities.
More than $1 billion of Arizona's share consists of "stabilization" funds. One issue is how quickly to spend it.
Stavneak told lawmakers that the money is supposed to last for two budget years. He said, though, that federal law lets each state decide how much to spend now and how much, if any, to save for later.
Of that total, $832 million is specifically earmarked for aid to education, including K-12 schools, community colleges and state-run universities.
Stavneak said that money is designed to help states deal with funding cuts. And he said the law allows lawmakers to make up for the cuts in state aid they just enacted.
He warned, though, that the law contains a "maintenance of effort" provision: States cannot reduce their own education funding below what they spent in 2006.
Stavneak said that doesn't appear to be a problem in K-12 funding. Even with $133 million in cuts just made, it still is $433 million above that 2006 level.
But the $150 million in cuts to higher education made last month now leaves funding there just $70 million above those 2006 levels. That leaves little room for further cuts to community colleges and universities this coming budget year without risking the loss of those federal dollars.
Another $185 million is coming to Arizona for general help. But lawmakers won't get to touch that: Stavneak said that money, like all federal grants, goes to the governor.
Pearce said that makes no sense.
"We're working the budget every day," he said of the Legislature. "If you don't plug the holes (in the budget) right, you do damage."
Pearce said he presumes the Republican governor will work closely with the Legislature, also in GOP hands, to decide how best to use those dollars.
Gubernatorial press aide Paul Senseman said Brewer will consult with lawmakers. But he said she won't give them the final say.
That still leaves the question of what the state can and cannot afford to take.
Aside from limits in cuts to education, the stimulus package contains strings attached to another $1.5 billion Arizona would get in what Stavneak called "secondary" relief.
For example, the state could get nearly $51 million to help provide day-care services for children. But the Department of Economic Security, faced with cutting its budget by $98 million, took $24 million out of that program, funds that would have to be restored if Arizona wants that additional money.
Pearce said he's not sure it's worth increasing state spending, even with a 2-for-1 match of federal cash.
Another $39.4 million in grants for law enforcement or courts can come to Arizona only if the money doesn't replace previously made cuts in state funding.
There's also $522 million available in highway dollars, but only if the state Department of Transportation does not cut back on what it already was planning to spend.
Senseman said Brewer wants to accept as much in federal money as the state can get, if for no other reason than it gets back money that Arizonans sent to Washington in the first place.
"However, we've got to account for those and make sure it doesn't exacerbate the already massive budget deficit," he said. Senseman said Brewer is "still evaluating" which funds to take.