'CAUTIOUSLY OPTIMISTIC' FOR AZ TOURISM REBOUND

posted by Michael Chihak

Arizona's desert tourism season is approaching its peak. The gem shows are under way in Tucson, the Phoenix Open Golf Tournament is this week, and spring training is just around the corner.

Restaurants are jammed, and lots of out-of-state vehicles are populating parking lots all over Phoenix and Tucson as snowbirds flee the cold confines of the East and Midwest for the more favorable climes of the desert.

Sherry Henry, executive director of the Arizona Office of Tourism, says the industry is "cautiously optimistic" that it will be a good season. Certainly, she said, it should exceed last year and perhaps even 2008, which were both down years because of the recession.

The tourism industry employed 172,000 Arizonans at its peak in 2006, state tourism statistics showed. That fell to 157,200 in 2009, the lowest total since the last recession, in 2002. Arizona tourism spending was a record $19.1 billion in 2007, according to figures supplied by the Arizona Office of Tourism from a study done by Dean Runyan Associates. It fell off to $18.5 billion in 2008 and to $16.6 billion in 2009. Figures for 2010 are as yet unavailable.

Henry and other officials from the industry will speak about its prospects on Friday's Arizona Week airing at 8:30 p.m. MST on KUAT-TV. Journalists who cover the industry will offer commentary and analysis on how this important part of the state's economy is doing.

MUNICIPALITIES: 'GETTING BETTER, BUT STILL A STRUGGLE'

posted by Michael Chihak

Representatives of the state's cities and towns are worried about what comes next in the struggle to keep their budgets balanced.

That's after a two-year stretch in which they cut local budgets by an average of 30 percent, including layoffs of hundreds of municipal workers, elimination or consolidation of services and delays in ongoing projects.

"Things are slowly getting better, but it's still a struggle," Ken Strobeck said. He is executive director of the League of Arizona Cities and Towns, which represents all 91 municipalities in the state.

Strobeck and Avondale Mayor Marie Lopez Rogers, who is an officer in the state league and in the National League of Cities, discussed their fiscal issues in an interview in Avondale today.

Rogers said in Avondale, the budget went through the same 30 percent cut that most others saw, and yet there remains a $4 million deficit for the next fiscal year. Other municipalities are in similar straits.

She and Strobeck said they are worried about what will happen if the state does not get a waiver on its Medicaid payments, something that would toss a $542 million budget deficiency back into the laps of the governor and the Legislature.

Gov. Jan Brewer said the waiver request to the federal government this week, and there is no word on when a decision will be made. She and legislative leaders say it is absolutely necessary to balance the state's budget.

But it is not a sure thing, with many states facing similar budget-balancing scenarios and the same mandates from the federal government to provide services such as health care for the poor.

If the state doesn't get the waiver, Strobeck and Rogers said, they fear that everything will be on the table for cutting. That would include $800 million that the state now collects in revenues from income taxes, sales taxes and fees to be passed along to the cities and towns.

The complete interview with Rogers and Strobeck will be posted on this site later this week, and the Arizona Week broadcast of excerpts, plus journalists' commentary and analysis, will be available on the site Friday and on KUAT-TV 6 at 8:30 p.m. MST Friday.

QUESTIONS FOR STATE MUNICIPALITIES ABOUT THEIR FINANCES

posted by Michael Chihak

Friday's edition of Arizona Week on KUAT-TV, Channel 6, will focus on how Arizona's cities and towns are doing financially in the face of slow recovery from the recession.

Up for interviews are Avondale Mayor Marie Lopez Rogers, whose city of nearly 80,000 residents is a western suburb of Phoenix, and Ken Strobeck, who is executive director of the League of Arizona Cities and Towns, based in Phoenix and representing the state's 91 incorporated municipalities.

Among questions for Rogers and Strobeck:

• Please give an update on how the state's municipalities are doing financially.

• Have cities and towns gone through their rainy day funds the way the state did, or do they have something in reserve?

• The state passes along to the cities and towns about $800 million a year in income tax, sales tax and other tax and fee revenues. Do you expect that to continue in the coming fiscal year?

• Cities and towns are, in fact, are in line for some cuts, a little under $20 million total, from the state Department of Water Resources and the Highway User Revenue Fund. What impact will they have on municipalities?

• Governor Brewer and the Legislature are counting on a federal waiver on the state Medicaid program to balance the budget. At more than a half-billion dollars, it’s the biggest single chunk of savings. Are the state's municipalities worried about what happens if the state doesn’t get the waiver?

• Some Arizona cities, Phoenix notably, are using federal grant money to shore up their budgets. Are others doing likewise, and is that wise given the budget cutting mood in Washington and the possibility that such grants won't be renewed?

NO STATE BUDGET "PLAN B" SHOULD KEEP LOCAL GOVTS ON THEIR TOES

posted by Michael Chihak

Arizona Gov. Jan Brewer and state legislative leaders are counting so much on a federal Medicaid waiver to cut nearly $542 million from next fiscal year's budget that they have no existing fallback.

That's despite some legislators' warnings that a "Plan B" needs to be discussed and worked up. Additionally, as Arizona Week journalist commentator Luige del Puerto of the Arizona Capitol Times said on last week's program, Arizona is not in an exceptional position when it comes to asking for a federal waiver. Many states are in similar straits, and if the feds grant Arizona a waiver, it sets the precedent for others, del Puerto said.

All of that means a federal waiver isn't a sure thing, and if it doesn't come through, the budget axing will have to become more of a budget slashing, running almost randomly through the state's spending plan. And it likely will occur with little time to spare, because the timing on a federal waiver decision isn't at all known.

A sure target would be the $800 million in revenue that the state collects and then passes along to municipal governments. Half of it is from the state income tax, the other half a mixture of vehicle license fees and sales tax revenue.

Municipalities are counting on that money coming through for the 2011-12 fiscal year.

If the Medicaid waiver doesn't come through, all bets are off.

AZ CITIES, TOWNS HOPING FOR MINIMAL STATE BUDGET IMPACT

posted by Michael Chihak

Arizona Week will explore how the state's cities and towns are doing in the current economic downturn. Municipalities in the state have seen their budgets cut by an average of 30 percent in the last two years, the head of their state association says.

But the good news is that they think this year's state budgeting process won't add in a great way to cities' and towns' woes.

"At this point, given the comments that state legislative leaders have made saying they will use the governor's budget as their starting point, we think we should be OK," Ken Strobeck said. He is executive director of the League of Arizona Cities and Towns, which represents and lobbies on behalf of 91 municipalities.

Strobeck pointed out that fiscally healthy cities and towns are key drivers in the state's economic recovery. "The way the state budget is going to come back in any meaningful way will have to involve activity at the local economic level," he said.

Eighty-five percent of Arizona's population lives in incorporated cities and towns, and 90 percent of state revenues come from economic activities in cities and towns, he said.

Strobeck said Gov. Jan Brewer's budget proposal includes two ideas that could cost cities and towns a total of about $20 million in the 2011-12 fiscal year. One is in fees for the state Department of Water Resources and the other a switch of transportation money.

"We felt like $20 million was a small amount to us as a contribution to the state's budget problems if other parts of our state-shared revenue is left intact," Strobeck said.

The cities and towns are getting about $800 million this fiscal year in shared revenues from the state, a little more than half from distribution of state income tax revenues and the rest a combination of sales tax revenues and vehicle license fees.

GOV. JAN BREWER'S $541 MILLION GAMBLE

posted by Michael Chihak

Gov. Jan Brewer is seeking to balance the 2011-12 state budget by tightening the eligibility rules for the state's health-care program for the poor, called AHCCCS. In most states, it is Medicaid, funded largely by the federal government.

Reduced eligibility would save the state $541 million next fiscal year, Brewer says, whole dropping 280,000 adults from state-supported health care. Where they will go for health care, what the effects will be on hospital emergency rooms and other facilities and what the overall economic effects will be are questions yet to be answered.

But one thing is known, having come clear in an interview for Friday's Arizona Week broadcast: if Arizona gets federal approval to cut $541 million, it stands to lose more than $1 billion in federal matching money. So the reduction is much larger than it looks on the face of Brewer's budget. That was brought forth by Kristin Borns, senior policy analyst at the Morrison Institute for Public Policy at Arizona State University.

Some have suggested that if Arizona doesn't get the federal waiver, it should consider dropping its participation in Medicaid altogether, hearkening back to a time decades ago when the state declined to participate in the beginning days of the program.

If the state were to drop its participation, it would risk the loss of $7 billion in federal matching money for health care for the poor, leaving them, the state's hospitals and many small businesses in dire straits.