Phoenix, AZ – Governor Janet Napolitano wants to borrow an unprecedented $1.3 billion to balance this year's budget and the next, so she can avoid making sharp cuts in spending.
It's called securitizing. The state borrows money to spend now
and pledges future revenues from a tobacco settlement and lottery
ticket sales to repay the debt. But, it also means that $135
million Arizona was counting on each year for the next 15 to 20
years will have to be paid out in principal and interest. Jim
Apperson, chief of the governor's budget office, rejected the
suggestion that borrowing against the state's anticipated future
earnings to pay for current spending amounts to little more than
a payday loan.
Apperson said, "This is one way that a lot of states are looking at right now in
very, very difficult times. Did the governor like to do this?
Absolutely not. This is a plan as to how this state can meet its
fiscal difficulties without raising taxes."
Napolitano's plan does reinstate the state property tax, but
Apperson said that's not a tax increase because it was always
understood the 2006 suspension was only temporary. However, even with the
borrowing and some other budget maneuvers, there will still be some
cuts, notably to state universities. They would have to pare
expenses by $50 million this year on top of the original $50
million reduction in the budget, with yet another $50 million in
cuts next year.