The state is on track to be flush with cash when lawmakers arrive at the Capitol in January, and the two leading contenders for that windfall are the chronically underfunded education and incarceration systems.
Legislative budget analysts said Thursday that tax collections are far outpacing projections in the budget that lawmakers adopted in May. Only three months into the current fiscal year, state revenues are 8.6 percent more than anticipated, and the legislative economists predict there will be an extra $650 million when the fiscal year ends.
That surplus is due in large part to better-than-expected revenues in the last half of the previous fiscal year, which ended in June. The budget anticipated revenue growth of 7.8%, but it clocked in at 10.2%.
Not all of that projected $650 million surplus can be spent on permanent programs. Richard Stavneak, the director of the Joint Legislative Budget Committee, estimates only $170 million of the surplus will continue beyond this year. The remaining $475 million is one-time money, and Stavneak said that cash is best spent on one-time expenses instead of ongoing programs.
Joint Legislative Budget Committee staff outlined potential options for spending that one-time money – K-12 education and the Department of Corrections dominated the list.
For instance, lawmakers could continue making money available for repairs at public schools. Although the state used to have a formula to pay for needed repairs, legislators did away with it during the Great Recession.
Funding for education in Arizona has long been at or near the bottom of national rankings, and recession-era cuts haven’t yet been restored.
But Stavneak also noted that the Department of Corrections wants $385 million for projects, including almost $32 million to fix locks and fire systems at the Lewis and Yuma prisons. The Lewis prison in Buckeye was at the center of a scandal this year when local media reported on widespread broken locks on cell doors.
A subsequent report commissioned by Gov. Doug Ducey found that chronic underfunding of the prison system – both for repairs of things like locks and salaries for corrections officers – has left the agency with a morale crisis.
Corrections officials also want another $35.2 million for other locking projects throughout the rest of the system and $115.6 million to upgrade the evaporative cooling systems at nine prisons.