By
The Associated Press
PHOENIX - Gov. Jane Hull warned legislators yesterday the state may need to cut the current fiscal year's budget because tax collections are less than expected.
Hull's warning came as she again asked lawmakers to delay approving the next two-year budget for another two to three weeks until more revenue figures are available. Due to income-tax filing deadlines, April is a major revenue month for the state.
Legislative leaders unveiled their revised $14.8 billion two-year budget last week and have been hoping to have it approved by the end of this week.
Lawmakers already have reduced their planned spending in the next two-year budget by approximately $600 million to reflect her shrinking revenue projections.
The current budget projects the state will have $100 million left over after spending $6.4 billion during the fiscal year that ends June 30. But Hull now projects a year-ending deficit of $11 million to $88 million - a difference of $111 million to $188 million.
"That's the one that everyone needs to understand," Hull said. "We believe we may have to contain the 2001 budget."
The Arizona Constitution prohibits a budget deficit, so Hull and lawmakers would have to reduce spending or increase revenue to make ends meet.
Hull declined to say how lawmakers should change the current budget to avoid a deficit but she said possibilities include shifting money among unspecified funds and resorting to new revenue-bond borrowing to pay for building new schools.
"The most preferred option is to wait three weeks. Let's get some information," said Hull budget director Tom Betlach.
Betlach said income tax withholding is growing less than expected while income tax refunds have increased.
"The bottom line is we are seeing a trend that is causing us to have some serious concerns with regards to revenue forecasts for the next three months, much less trying to forecast out the next year or two years in terms of trying to put this budget together," Betlach said.
Betlach's legislative counterpart, Richard Stavneak, said the state likely will still end the fiscal year with a $100 million surplus and that Hull's view is too pessimistic.
"They have substantially lowered their growth just on the last month of data," Stavneak said. "There is not a consensus that the economy is going down. There is a variety of economic opinion."
Stavneak said that leaves the issue squarely in the lap of policy-makers who must decide how much faith they have in the underlying strength of the nation's economy.
The leaders scheduled budget briefings for rank-and-file members late yesterday, but several lawmakers expressed indifference and impatience with Hull's new message.
"As far as I'm concerned, nothing's changed too much," said Senate Democratic Leader Jack Brown, D-St. Johns.
"We've pulled a lot out of the budget already," said Rep. Jim Carruthers, R-Yuma. "There's still some flexibility left (but) I'm not sure the economy is going to go that much farther south - hopefully."
Sen. Scott Bundgaard, R-Phoenix, said lawmakers "can't wait and wait and wait until we have the correct figures."
"Hanging around for three weeks just creates more mischief," Bundgaard said.
