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Arizona so broke it may sell off its House, Senate

Capitol For Sale[Source: National Post, Ontario, Canada] — Has Arnold Schwarzenegger heard of this?  Arizona’s financial condition is so desperate the state is considering selling off its legislative structures, including its Senate and House buildings, for US$735 million.

The Arizona Republic reports: “Dozens of other state properties also may be sold as the state government faces its worst financial crisis in a generation, if not ever.  The plan isn’t to liquidate state assets, though.  Instead, officials hope to sell the properties and then lease them back over several years before assuming ownership again.  The complex financial transaction would allow government services to continue without interruption while giving the state a fast infusion of as much as $735 million, according to Capitol projections.”

Arizona is looking at a budget deficit of about $3.4 billion, in a state with a population of 6.5 million.

The financial crisis doesn’t reflect well on the Republicans, who have dominated both houses of government for 15 years.  The selloff reportedly could include the House and Senate buildings, the Phoenix and Tucson headquarters of the Arizona Department of Public Safety, the State Hospital and the state fairgrounds, and some prison facilities.  But the copper-domed Capitol building, built in 1901, is apparently excluded.  [Note: Read the full article at Arizona so broke it may sell off its House, Senate]

How the arts fared in Arizona’s budget crisis

[Source: Robert C. Booker, Executive Director, Arizona Commission on the Arts] —  After a legislative session that began and ended amidst much uncertainty, the bill containing the Arizona Commission on the Arts budget was signed into law by Governor Jan Brewer on July 1, 2009.

Some of the Arts Commission’s funding streams are interest-bearing (ArtShare Endowment) and fee-based (Arts Trust Fund); thus staff will need a few days to sort out precisely how the legislative reductions will affect the total fiscal year 2010 arts budget.  This much is certain: as a result of legislative reductions and the market downturn, the Arts Commission’s overall budget will be reduced by approximately 42% for fiscal year 2010.

Some of the key arts-related items from the enacted fiscal year 2010 budget follow:

  • The Arts Commission’s general fund appropriation was reduced by 54% from fiscal year 2009.
  • The enacted general fund appropriation – now $956,100 – is sufficient to match Arizona’s annual federal arts allotment as administered by the National Endowment for the Arts.
  • The ArtShare Endowment principal – $20 million at full funding and built over the course of 12 years – has been cut in half from fiscal year 2009.  The endowment corpus now stands at $10 million. Interest payments on the remaining endowment principal continue to underperform.
  • The Arts Trust Fund was not reduced, though decreased receipt of Arizona’s small business filing fees means the fund will pay out less in fiscal year 2010.
  • The Arts Commission has now sustained losses equivalent to twice the sum of its annual budget.  At the beginning of fiscal year 2009, the Arts Commission had an annual budget of $5.8 million.  Over the year, the agency sustained losses of nearly $12 million as the state attempted to close its growing budget gap.

As the legislative session wore on, it became clear that the best possible funding scenario would see the arts budget reduced by at least 39%.  Within the budget proposals debated and passed during the Arizona State Legislature’s session, the state arts budget would have sustained reductions ranging from 39% to 80%.  (This does not include the budget proposal offered by Legislative Democrats, which cut the arts appropriation by less than 5%. This budget was never brought to committee by legislative leadership.)

Given Arizona’s massive budget shortfall and volatile political climate, and though it is distressing to say, a 42% reduction is considered a legislative success.  Several elected officials from both parties, as well as Governor Brewer and members of her budget team, understood the importance of a general fund appropriation and the ArtShare Endowment, and fought mightily against indomitable odds to achieve the best possible outcome for the arts.  Thankfully those individuals were able to fend off deeper cuts to the Arts Commission.

As these officials were fighting for the arts, statewide arts advocates were passionately giving voice to the value of public funding for the arts in their communities.  Parents, youth, volunteers, patrons, arts leaders, educators and artists stepped forward to tell personal stories about the educational, economic and cultural impact of the arts in Arizona.  In all, hundreds of calls were placed and thousands of messages were sent to elected officials in support of the arts during the legislative session.

Because several parts of Arizona’s fiscal year 2010 budget were vetoed by Governor Brewer and the Legislature’s proposed package did not close the state’s budget gap, and because economists project increasing revenue shortfalls over the next several fiscal years, we remain concerned about midyear and ongoing budget reductions.  Together we must remain vigilant in support of the statewide arts industry.

In fiscal year 2009, though the Arts Commission’s actual operating cash budget was reduced by over 33% in legislative reductions and interest/fee losses within the year, the agency was able to fulfill all fiscal year 2009 grant commitments.  This was accomplished by careful fiscal planning and deep cuts to programs, operations and personnel – reducing agency staff by 23% over the past two fiscal years.

That said, an additional 42% reduction will no doubt have a significant impact on administration, operations, grants, programs and services.  We pledge to continue reducing internal costs so as to mitigate losses to agency grant-making, though with only 14% of the agency budget applied to personnel and with many fixed operational costs (such as rent and other state contracts), the agency will not accomplish a balanced budget without percentage cuts to grants and programs.

Arts Commission staff is diligently working with the now-final budget numbers to calculate fiscal year 2010 grant awards.  We apologize for the inconvenience, but because the state arts budget was not finalized until July 1, 2009, grant award announcements will not be available until July 15, or thereabouts.

Your tireless work is of great value to the Arizona Commission on the Arts staff and board.  Know that we never forget our charge, to provide statewide access to and support your work in the arts – and with your help, we continue to imagine an Arizona where everyone can participate in and experience the arts wherever they live.

Growth may stall for UA medical school in downtown Phoenix

UA medical school, downtown Phoenix (Photo: Arizona Daily Star)

[Source: Ken Alltucker, Arizona Republic] — The University of Arizona wants to rapidly expand its medical school in downtown Phoenix to ensure a steady supply of medical workers for the state and an economic punch for the center city.  But university officials say the school’s growth is in jeopardy because of the state’s budget troubles and lawmakers’ reluctance to release $400 million in state Lottery funds to expand the campus.  The money would pay for two new buildings — an education building and a research building — that would house students, faculty, and scientists and anchor the biomedical campus.

University officials say the campus is simply running out of space and cannot match the state’s need for more doctors and medical professionals.  “We are making do, barely, with the space we have,” said William Crist, UA’s vice president for health affairs. “Without this medical center continuing to grow, we don’t have the capacity to train medical professionals in Arizona.”

University of Arizona and Phoenix city officials are pressing state lawmakers and Gov. Jan Brewer to provide the money they say is critical to the future health of the downtown medical school.  They worry that prospective medical school students may search elsewhere if the Phoenix school cannot grow and offer the types of services that students expect. “They are bright people (students), they are going to look around,” said Stuart Flynn, dean of the UA College of Medicine-Phoenix in partnership with Arizona State University. “Once students begin figuring this out, that is when we will not be able to get the highest-caliber students.” [Note: To read the full article, click here.]

Arizona State Fairgrounds could be sold in budget fix

[Source: Mike Sunnucks, Phoenix Business Journal] — The state could sell off the Arizona State Fairgrounds and other assets and take on more debt instead of raising taxes to help solve a $3 billion budget deficit. Arizona Rep. John Kavanagh, R-Fountain Hills, said Thursday the Arizona House of Representatives was working on an alternative to the budget plan proposed by Gov. Jan Brewer in an effort to shore up the deficit.  Brewer wants a statewide referendum asking voters to raise sales taxes by 1 cent.  Arizona currently has 5.6 percent state sales tax.

Kavanagh said the House budget plan would not have tax increases but instead could raise state debt limits and would look to sell off some assets.  That could include the state fairgrounds at Grand and 19th avenues and McDowell Road in west Phoenix.  He said the city of Phoenix has some land along Buckeye Road that could accommodate a new fairgrounds.  The state also could sell off an airport near the Grand Canyon and privatize more state prisons and corrections facilities.  The state needs to raise more revenue in order to avoid drastic cuts to a slew of programs and services, including universities and K-12 schools.  [Note: To read the full article, click here.]

On Jan. 29, state legislators want to hear from public about proposed budget cuts

[Source: Children’s Action Alliance] — The Arizona State Legislature Senate and House Democratic Caucuses are hosting public hearings on the state budget.  Lawmakers are facing tough decisions this legislative session, with a $1.6 billion budget deficit for FY09 and a projected $3 billion budget deficit for FY10.  Downtown Phoenix residents are urged to voice their opinions.

  • Date: January 29, 2009
  • Time: 6:30 to 8:30 p.m.
  • Place: Grace Lutheran Church, 1124 N. 3rd St., Phoenix

For more information, contact Cynthia Aragon, Community and Constituent Liaison, House of Representatives, 602-926-3591