Originally Published: January 13, 2013 9:53 p.m.
PHOENIX (AP) - With a fiscal crisis that forced billions of dollars in state government cuts mainly over, the Arizona Legislature enters its 2013 session Monday with a budget surplus but little appetite among majority Republicans to loosen the purse strings.
The state has socked away about $450 million in a rainy day fund and has more than $1 billion in total surplus going into the budget year that begins July 1.
Minority Democrats want to restore school funding to pre-recession levels and expand the state's Medicaid program, but such plans are unlikely to gain traction. The party gained seats in the state House and Senate in November, but likely not enough to force Republicans to negotiate.
Also, with a revenue-generating temporary sales tax set to expire this year and the effects of recently passed business tax breaks yet to come on line, Gov. Jan Brewer and other GOP leaders are pushing for continued frugality.
House Speaker Andy Tobin said in an interview that the current budget restores some funding for schools, Child Protective Services and mental health care programs.
The Republican said more spending increases are planned in the upcoming budget, "but for those of us who were here when this world was about to collapse and we weren't sure if we could make payroll, we're a little skittish."
Tobin added the federal budget deficit adds to his concerns, saying "the feds give us reason to be skittish, because we're watching this $16 trillion debt problem."
He added that he expects Brewer's upcoming budget proposal will be tight.
Politically charged topics that have commanded attention in recent legislative sessions, including immigration and abortion, could take a backseat this time.
Republican Rep. John Kavanagh predicted Friday that "other than the budget, I don't think you're going to see much hot topic stuff."
Brewer plans to release her budget proposal late in the week, laying out a roadmap for spending priorities, which she says are modest.
Some boost in education funding is likely, as is money for school safety. House Democrats are seeking $25 million to bolster campus security in the wake of the shooting rampage at a Connecticut elementary school last month. Brewer, however, is not expected to provide for that much in her upcoming proposal.
She said in an interview Thursday that the state successfully weathered difficult financial times, because "we were very cautious about what we did and how we handled it."
She said that thanks to her fiscal approach "Arizona is a leader in recovery" and that her budget plan will allow the continued "prosperity that Arizona has enjoyed during this very difficult time."
Brewer also plans to push a simplification of the state's sales tax collection system, which she called one of the most complicated in the nation.
The state slashed spending in recent years as the Great Recession decimated tax revenues. State spending peaked at $10.2 billion in the 2007 budget year and fell to a low of $7.9 billion three years later.
The current 2013 budget year that ends June 30 includes spending of $8.6 billion.
Looming over the upcoming budget is whether to expand the Arizona Health Care Cost Containment System, the state's Medicaid plan, to cover people earning as much as 133 percent of the federal poverty level.
Brewer said she will decide "shortly" whether she will ask lawmakers to provide health care for about 300,000 additional low-income people. She faces a deadline next month to decide on the expansion allowed under President Barack Obama's signature federal health care law.
The federal government would pay the vast majority of the costs of the initial expansion, with initial state costs estimated at $135 million a year. The state trimmed its rolls of childless adults covered by the state system during the recession through an enrollment freeze and is under pressure to return them to the program and for Brewer to fund the whole expansion.
"We are already delivering services far and beyond what most states are delivering," Brewer said. "But we have to be realistic, we did remove people from the rolls and we have to take that into consideration. And those are the people that are the most vulnerable."
For Tobin, the House Speaker, expanding Medicaid is a non-starter.
"No, no, it's not sustainable," Tobin said. "First off you have to clearly believe that the federal government is going to have all that money when the time comes. Nobody that I know is really certain that the feds are going to be able to keep those promises."
For Democrats, the Medicaid expansion is a top priority. Party leaders are working to use recent election gains as leverage to push their agenda.
House Minority Leader Chad Campbell said he hopes - "especially based on the election results" - that Republicans would respond to voters in the state and across the county "who continue to call for more moderation and less partisanship."