Gov. Ducey this afternoon released his FY 2017 Executive Budget, a $9.5 billion proposal.
The document is just a starting point, building on the Governor’s State of the State address, but things are headed in the right direction. Last year’s budget was a tight one, so we’re encouraged to see a positive trajectory in this year’s proposal. (For more on the State of the State, here’s my post-speech reaction.)
Taxes
The tax relief we’ve advocated so strongly for will continue to be implemented without pause. The budget anticipates a $173 million structural balance at the end of FY 17, so there is room for discussion in negotiations with the Legislature for potential additional tax relief.
Education
Gov. Ducey fleshed out some of the ideas he mentioned in his State of the State address on college and career readiness.
Passage of Proposition 123 remains a linchpin for the overall K-12 funding picture. Pursuant to last fall’s negotiated settlement, the budget proposal sets aside the $224 million in funding in the current fiscal year for schools, pending passage of the measure in May. This is in addition to the $74 million already appropriated last legislative session to deliver the full $298 million negotiated for the current school year’s payment on the inflation settlement. $172 million of this money will come from the State Land Trust and $52.4 million from the General Fund.
In Career and Technical Education, the budget proposes a $30 million grant program for JTEDs over a three year period “that produce high school graduates trained for career and technical education jobs in demand by Arizona business and industry.” (page 11 in the budget summary.) The Chamber is advocating for a full restoration of last year’s $30 million reduction, as the Governor notes in his executive budget, these programs have a 97 percent graduation rate.
Further to the Governor’s comments in the State of the State address on college readiness, his budget recommends a $6 million pilot program to incent schools to offer rigorous college prep programs. As the budget states, “Students who participate in college preparation programs such as Advanced Placement (AP), International Baccalaureate (IB) and the Advanced International Certificate of Education (commonly known as the “Cambridge program”) are more likely than the general student population to attend college. For these students, their high school diploma means more than high school graduation; it means they may have one to two years of college under their belts. That makes the thought of college more achievable and more affordable. However, Arizona ranks 32nd in the nation in AP performance, with only 26% of the state’s students taking an exam. Only 22 schools statewide offer the IB program.” (page 12)
Other highlights:
- $24 million for the expansion of quality schools. The proposal calls for a Credit Enhancement Fund to support school financing and refinancing for capital needs. The funds, which were carried forward from last year’s Achievement District idea, allows high performing schools to leverage the fund to improve their credit ratings and to save on debt payments “by guaranteeing the payment of principal and interest for capital projects.”(page 12)
- $100,000 for an Executive Leadership Academy to help train school principals.
- $15 million supplemental appropriation this fiscal year for building renewal, and $15 million for building renewal in the next FY.
- Continuation of K-3 reading program funding.
- $500k for Teach for America.
On the university front, the Governor highlighted the sometimes literally out-of-this world work of our universities in his State of the State. We are pleased that the arrow is pointing in the right direction with additional university funding at $8 million.
Other priorities
Funding for the Arizona Office of Tourism remains stable at $7 million from the General Fund.
The Dept. of Water Resources comes in just shy of $13 million, but note that in his State of the State, the Governor said he was granting ADWR the ability to hire additional staff.
On transportation, the Chamber is advocating to keep the Highway User Revenue Fund whole. Today’s proposal suggests a fund sweep, but in the attached presentation from the Joint Legislative Budget Committee, note that on slide 6, the possibility of supplementing HURF with one-time revenues is raised. Expect further discussion as negotiations progress.
Again, we’re just getting started. There is still a long way to go until the Executive and Legislative branches arrive at a final deal to fund state government operations, but we are encouraged by where things are headed. We will soon convene our Fiscal Task Force so we can help shape the final product and communicate our spending priorities.
