By Howard Fischer
and Bob Christie
Capitol Media Services
PHOENIX -- Less than four months into the budget year, Arizona already has spending more money for vouchers for students to attend private and parochial schools at state expense than was anticipated through June.
New figures from legislative staffers show there are currently about 68,000 students getting the vouchers which start at $7,300 a year. More to the point, the state budget was built on the assumption that the vouchers would cost $625 million.
But the report shows that the state already is obligated to provide $665 million.
Gov. Katie Hobbs said all this is a result of the Republican-controlled Legislature not heeding her warning in January that the universal voucher law approved last year was not sustainable and needed to be pared back. Lawmakers refused.
Now, she said Wednesday, it will be up to GOP leaders to figure out how to balance the budget.
Senate President Warren Petersen said concerns about expenses are overblown.
He said while voucher expenses are up, the number of taxpayers contributing to scholarship tuition organizations to help kids go to private and parochial schools -- and getting a dollar-for-dollar state tax credit -- is down.
``So it's still a wash as far as expenses go,'' the Gilbert Republican told Capitol Media Services.
What is an issue, though, is that tax collections are not meeting estimates.
That legislative staff report predicts that, without any changes, the state will end this fiscal year $400 million in the red. And the deficit for the new budget year beginning July 1 is pegged at $450 million.
Petersen does not dispute the figures. But he has his own explanation for the gap, one he said has nothing to do with vouchers: It's at least partly the fault of the Biden administration because higher interest rates have cut into the sales of cars and the sales tax revenues they produce.
And what of the fact that it is the Federal Reserve Board that hiked borrowing rates in an effort to curb inflation?
``Biden appoints the Fed,'' he responded.
``That is the most hilarious answer I've ever heard,'' Hobbs responded, calling it ``a deflection from the unsustainable growth we're having in the program that they refuse to try to rein in. And she said that, no matter what else, Arizona has had a record number of new jobs created.
``We have the highest wage growth in the country,'' the governor said. ``We're doing well economically, even when adjusting for inflation.''
Petersen also said the state shares in the blame with ``red tape on building homes'' that also reduces tax revenues.
But the legislative report says the actual big cause of the decline is the cuts in state income tax rates -- structured to provide the largest percentage benefits to the most wealthy -- also approved by the Republican-controlled Legislature. Collections are down by more than 27% from the prior year, bringing in $243 million less in the first three months of the current budget year
And on top of that, lawmakers this year agreed to a one-time income-tax rebate totaling $259.8 million, a cut that even the governor's press aide acknowledged she approved ``to get her budget passed.''
Petersen and House Speaker Ben Toma, R-Peoria, aren't the only Republicans brushing aside the governor's concern.
Republican Tom Horne, the state schools chief and a big supporter of vouchers -- officially known as ``empowerment scholarship accounts'' -- said the governor's calculations are wrong.
The reason, he said, is it fails to take into account that public schools spend about $13,000 a year per student, far more than the cost of providing a voucher. What that means, Horne said, is that overall spending on public schools actually is $72 million below budget.
But Horne press aide acknowledged that $13,000 figure includes federal aid to public schools, something that does not affect the state budget.
All that leaves the question of what, if anything, lawmakers intend to do -- regardless of voucher costs -- to bring expenses into line with revenues.