AZ Week: State Surplus, Spend or Save?

Republican Gov. Jan Brewer and fellow Republicans in the Arizona Legislature are heading for a clash over what to do with the state's new-found surplus.

Brewer wants to spend some of it on education, prisons and a short list of other services. GOP legislative leaders want to hang onto as much of the money as possible to be prepared for the possibility of precarious finances in the next two to three years.

"Revenues have started to rebound in the state, thank goodness," said John Arnold, director of the Governor's Office of Strategic Planning and Budgeting. "We went through a very difficult time where we lost over 30 percent of the total revenues for the state general fund."

Estimates of the surplus range from $330 million to more than $600 million for this fiscal year alone, with more expected in 2012-13.

Arnold, commenting in an interview for Friday's Arizona Week, said for that reason, the state should add to its spending for education and prisons.

"The budget that the Legislature passed ignored all of the key priorities of the governor," he said.

Arizona Senate President Steve Pierce, also in an Arizona Week interview, acknowledged that revenues are rising, but he said not at the rate the governor's office projects. Thus, Pierce said, saving and not more spending is the prudent approach for now.

"We would like to be cautious in the money we spend now and hold some over for next year," Pierce said. " ... We don't want to spend it right now or commit it. We want to hold it until next year."

The difference over revenues is miniscule, Arnold said.

"I don't see us having a big fight over where revenues are," he said. "It's really more how do we address the current needs of state government?"

That would include Brewer's proposals for spending $100 million to maintain school buildings, $100 million for classroom equipment such as computers and $50 million for the early reading requirements implemented last year. Also on Brewer's list are $50 million for added maximum-security prison beds, $39 million for behavioral health and $7 million for tourism promotion.

Pierce said because the state faces expected high costs for the federal health care program in two years and the loss of up to $1 billion at expiration of the 1-cent education sales tax, much of the surplus should be saved now.

He acknowledged that the state needs to add spending to education, prisons and other areas, but it should do so next year or beyond, when there is a clearer picture of finances.

Negotiations between the governor's office and the Legislature are expected to begin soon to work out details.

But first, said state Sen. Paula Aboud, D-Tucson, Brewer will push for passage of her state personnel reform package. Because it's an item atop the governor's agenda, she will leverage budget talks and signing to get it done, Aboud said in an Arizona Week interview.

Reporter Michael Chihak further explores the state budget tonight on Arizona Week. Watch here.