You may have read with interest the many news stories about a $750 million dollar "surplus" in our state coffers. I was very interested in this, as well. To that end, I spent a good deal of time this summer exploring our budget history and the various "techniques" (read: gimmicks) used by prior legislative bodies before my time. Dismayed is not a strong enough word to describe how our Budget Reform Working Group felt when we went through page after page of accounting tricks previously used to create what you all would believe to be a balanced budget.
As you know, a balanced budget is required in Arizona, and state debt cannot exceed $350,000 by our constitutional law. News flash, folks... We have routinely ignored both through a series of accounting tricks and the creation of new words to describe what would, by anyone's estimation, be considered "debt" in a real household. I believe it is time we get real with how we handle your money down at the capitol, and anything left that we don't absolutely need should be yours to keep. I would like to reduce your personal income taxes and let you decide what to do with the money you earn, if it is truly above what is needed to provide basic government services.
You may wonder what this has to do with the surplus. Fair enough. Let's look specifically at one gimmick used last year that helped to create an appearance of a surplus. Ever heard of a "fund sweep?" This is a process by where you pay a fee for a specific purpose, to support a specific function of government, but in order to make our books look better we have to transfer or "sweep" the fees paid by you all into the general fund. Essentially, this is legal but probably not all that ethical in the long run. This practice leaves the agency or fund low, sometimes triggering fee increases to you all but always leaving the fund in a predicament of how to continue to offer the services you paid for with your fees. Ever heard of the State Highway Fund? Probably not. But, you have probably driven on roads in the state that are built and maintained with money in this fund that is partially funded through the Vehicle License Tax fund, which was robbed of $118,000,000.00 last year. That's right... The state took $118 million designated for roads, put it in the state's coffers and then announces it has a "surplus" of revenues. If you live in an area that needs road improvement, this should really hit home with you.
When we sweep funds to create a better bottom line in the general fund, we have essentially tricked the system into looking like we have a surplus when the tax revenues roll in beyond our expectations. However, we still need to pay back the "sweep" in order to hold these agencies and funds (and by extension, the taxpayers who utilize those services) harmless in the long run. I am about to disclose some raw data that may seem shocking, so turn away if government deception is nauseating to you... Our total fund sweeps, starting in 2002 through last year totaled $545,817,600.00.
Then, there are other gimmicks like the use of "Contracts of Purchase" which would be considered something like a mortgage in your real world. In government world? They are nothing more than a paper agreement and therefore we conveniently don't call them "debt"... even though they are committing future revenues to pay for goodies we just couldn't wait for. I heard a number the other day about this outstanding debt-that-we-can't-legally-call-debt and it was in the hundreds of millions (far beyond the afore-mentioned $350 thousand limit set in our constitution). So, if we are honest about that surplus, we would have to immediately reduce it by the amount we "borrowed" from around the state and by these outstanding amounts, right?
You see, the "surplus" is not extra money above what it costs to maintain your state government at current levels. Rather, it is the amount of tax revenue that came in above what we had expected when we created the budget. By use of various methods of debt (the governor likes to just skip payments or "take holidays" from them, which sounds so much nicer), we make our budget look balanced. Simply not paying your bills and then having money left over when you get your next paycheck would never be considered a "surplus" in your home, would it? No. And I don't believe you can look at our state budgeting process any differently, if you are to be intellectually honest.
True, it's not that much fun at home to get a bonus then have to spend it on credit card bills. We kind of feel the same down at the capitol. But, that is called being responsible adults. Bummer.
