Budget Update: Spending "Freeze"

Despite slow progress on bi-partisan budget negotiations, Republicans in the House and Senate moved forward this week on a "freeze" of some funds and state agency budgets. The freeze is intended to prevent additional spending, so when a budget agreement is reached there will be enough funds and appropriations to cut in order to address the FY08 budget deficit. Democrats in both chambers strongly objected to the proposal and claimed it distracted legislators from an "actual" budget solution.

The proposal would freeze approximately $323 million in fund sweeps and $212 million in FY08 appropriations. It does not address the full FY08 deficit, which is projected to be over $1.25 billion; additional options are expected to be contained in a negotiated budget agreement. The proposal does not include $615 million that was previously proposed from the state's rainy day fund. Some Republicans had objected to the idea of sweeping all the resources from the rainy day fund in FY08, when many project budget downturns for the next several years.

The House and Senate both approved the proposal (HB 2857) on a party-line vote; there has been no signal that Governor Napolitano supports the proposed freeze, but the bill will likely be sent to her desk early next week.