Politically Perilous Budget Cuts in Arizona (and Elsewhere?)

This is going to a horrible year for state budgets, with stimulus money drying up and tax revenue remaining depressed. Even if some states raise ...
by | January 18, 2010

This is going to a horrible year for state budgets, with stimulus money drying up and tax revenue remaining depressed. Even if some states raise taxes, they'll still be making exceedingly painful budget cuts.

At least that's what experts keep saying. So, I've been wondering on what standard to judge whether a budget cut is painful -- and how to judge whether cuts are significant enough that they come with serious political ramifications.

One basic standard, I think, is that if governments stop doing things, people notice. For example, people in Virginia noticed when the state shutdown many of their highway rest stops. It became a political issue -- even though rest stops are pretty far down the list of essential government services.

That's one reason why state lawmakers' emphasis last year was on broad-based cuts -- not eliminating entire programs. If you remove 5% of every agency's budget, for example, the departments start by leaving vacant positions unfilled. That sort of thing presumably affects government's performance in the long run, but it doesn't impact citizens as immediately or as obviously as the disappearance of a program.

The same goes for furloughs or pay cuts for state workers. After the cuts, maybe the line at the DMV is a bit longer or the business permitting process is a bit slower, but it takes an unusually discerning citizen to connect those things to the budget situation and the decisions of state lawmakers.

When experts predict painful budget cuts, part of what they mean, I think, is that these sorts of vague, general cuts won't be enough to balance the budget. Governments will have to stop doing some of the things they're doing and governors and legislators will have to face the political consequences.

A good place to see this happening is Arizona, a state that looks on with envy at California's budget situation (ok, maybe that's an exaggeration). Gov. Jan Brewer's budget would remove health insurance from hundreds of thousands of people, as the Arizona Republic noted in an editorial:

Arizonans got a glass of cold water in the face Friday. Gov. Jan Brewer released her budget, and it was a shocking splash of fiscal reality.

The cuts were brutal, from booting 310,500 people out of AHCCCS, Arizona's Medicaid agency, to eliminating the Department of Juvenile Corrections (counties would get the offenders). Brewer's budget had an excruciating level of financial pain.

Policymakers also are talking about eviscertaing the state's park system, as the Associated Press notes:

Arizona is on the verge of permanently closing more than half of its state parks to ease its budget woes - the most drastic such proposal in the nation and one that could mean shutting down some iconic Old West locations.

In other circumstances, you might wonder whether Brewer and other Arizona lawmakers are engaged in bluster. When they're proposing tax increases, governors tend to offer "doomsday" budgets -- ones that present possible cuts in the most draconian possible light, so as to make the case for more revenue.

In Arizona, though, Brewer's budget with these dramatic cuts already includes revenue from a proposed tax increase that might or might not happen. These cuts don't reflect what might happen if the tax increase doesn't pass. They reflect what will happen (or what the governor thinks should happen) if it does pass. Otherwise, the cuts would have to be even more severe.

In other words, we're not talking about bluster, but rather a genuine reassessment of the size and scope of state government -- one that citizens are sure to notice.

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