Ducey releases ‘balanced, fiscally conservative’ budget

Governor Doug Ducey (R-AZ) last Friday released his budget proposal for fiscal year 2020.

Describing his plan as “fiscally conservative,” Ducey calls for an increase in the Arizona Rainy Day Fund, putting half of the $1.1 billion baseline cash balance towards savings and the other half towards executive initiatives.

Since Nov. 2018, Arizona has seen a five-month year-over-year job growth rate that exceeds three percent.  

However, while Arizona’s general fund is exceeding the baseline budget, financial experts believe Arizona is not saving enough money, hence the focus on boosting the rainy day fund.

According to Moody’s, Arizona should save between 10 and 15 percent of its funds. Currently, Arizona is saving just over five percent, but is expected to reach the proper amount after the increased saving in the budget.

“Over the last four years, Arizona has gone from a $1 billion deficit to a $1 billion surplus, but we aren’t going on a spending spree. We are going to live within our means and prepare for the future,” Ducey said. “I look forward to working with all legislators to pass this budget and put Arizona on even stronger financial footing now and into the future.”

On top of securing Arizona’s fiscal future, Ducey prioritizes his spending areas as government that works, education, health and welfare, natural resources, and public safety.

Government that Works:

Regaining Ownership of the State Capitol

In 2010, Arizona sold several state buildings to help generate revenue during the Great Recession, netting $1.4 billion in new revenue.

According to the budget, “$950 million remains outstanding, but with a healthy economy, a budget surplus and improved creditworthiness, Arizona is refinancing the remaining debt to both lower interest costs and regain ownership of the building.”

The government will be regaining ownership of multiple buildings such as the Executive Tower, State Legislature, School of the Deaf and Blind (Tucson Campus), Arizona State Fair Grounds, the Library and Archives, and the Supreme Court.

It is estimated that this will save the general fund $109 million.

I-17 Expansion

A project that is underway, the governor plans to put more money towards I-17 expansion between Anthem and Black Canyon City.

The existing budget from FY 2019 will be put towards building northbound and southbound lanes from Sunset Point to Black Canyon City and adding a third lane for seven southbound miles from Black Canyon City.

In FY 2020 Ducey plans to invest $40 million in the expansion. Increasing it to $45 million in FY 2021 and 2022.

According to the budget, “the plan will reduce congestion and traffic backups, improving safety during peak traffic times.”

Increasing Produce Capacity at Mariposa Port

Nogales, Arizona was the biggest port for fresh imports until the mid-2000s, when it was replaced by Texas ports that had facilities to process berries and other temperature-sensitive fruits.

Ducey plans to put $700,000 toward construction of a cold inspection facility at the Mariposa Port of Entry in Nogales, with local partners contributing an additional $300,000.

According to the budget, the “estimated annual impact from increased imports [is] an increase of $27- $30 million in gross state product and an addition $3.7- $4.1 million in state and local tax revenues.”

Education:

$637M in New K-12 Investments

The governor will put $637 million towards K-12 education and it will be broken down as:

• 1M Charter Schools
• 4M Other Targeted Investments
• 10M CTE Incentive Program
• 16M School Safety
• 28M Building Renewal Grants
• 60M Results Based Funding
• 68M Additional Assistance
• 138M New School Construction
• 147M Enrollment Growth, Inflation Other Technical Adjustments
• 165M Teacher Pay 20×2020

$104M in New Higher Education Investments

The budget puts $104 million towards new higher education investments, including:

• 6M MCCCD Health Care Specialty Expansion
• 20M Pima Aviation Center Expansion
• 21M Teachers Academy
• 27M* General Operating Expenditures and Capital Improvements
• 30M Health Insurance Trust Fund

*“This figure represents the net increase over the FY 2019 funding of $8M for a total investment of $35M in FY2020”  

CTE Incentives

According to the budget, “this [career technical education] initiative is intended to address current and future needs of Arizona’s workforce by supporting schools that offer high quality and relevant career and technical education programming.”

Ducey wants to put $10 million towards strengthening CTE by providing a $1,000 incentive payment to schools for every high school graduate who earned an approved industry certification. The only stipulation is that the money must go back towards the CTE program.

The Arizona Commerce Authority preliminarily identified the top areas with critical needs and those are manufacturing, business and financial services, health care, and construction.

Health and Welfare:

In Ducey’s budget, he plans to put money towards:

• KidsCare: Protecting Health Care for Low-Income Children ($2M in FY20 and $9M in FY21)
• Raise Child Care Subsidies for Working Families ($56M increase)
• Serving Arizona’s Seniors ($5M to reduce Home & Community-Based Services waitlist, $6M for Adult Protective Services caseload growth),
• Expecting Mothers: Improving Pregnancy Outcomes ($1M to establish new prenatal care telemedicine grants), and
• Suicide Prevention for Veterans ($1M to support Veterans Service Be Connected Program)

Natural Resources:

Securing Arizona’s Water Future

Ducey plans to put $30 million towards the Drought Contingency Plan (DCP) plus $5 million for the current fiscal year for agriculture infrastructure projects.

“DCP’s goal is to reduce the chance of Lake Mead reaching critical elevation levels that would lead to severe reductions in water deliveries to Arizona water users. These investments are in addition to the $6 million for conservation efforts appropriated between FY 2018 and FY 2020,” the budget said.

Public Safety:

Continued Commitment to a Real Second Chance

In 2017, the governor implemented pre-released workforce services for inmates to reduce recidivism to increase safety in communities.

As of Dec. 13, 2018, more than 2,000 inmates have completed a workforce service and in FY 2020 the governor will be adding a prison coding program.

To view the entire budget, click here.