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1:23 AM Sun, Feb. 17th
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Editorial: State's rainy-day fund could dry up

Earlier this month, the Arizona Legislature opened for business with millions of dollars in the bank.

We are talking about the $450 million the Legislature previously set aside in a rainy-day fund, according to the Associated Press. In addition, the state could have another $676 million for the next fiscal year, for a total of about $1.126 billion.

That's nice, very nice - compared to two and three years ago. An extra $450 million or $676 million is not pocket change. For most Arizonans, it's a sum beyond imagining. But don't break out the bubbly yet. That amount is just a morsel when it comes to the voracious appetite of government.

Ahead on Arizona lawmakers' radar screens are many issues, including but not limited to education, water resources, and sales tax revenues. Some are up, others are stagnant, and the rest are down or struggling.

"Our biggest issue is still jobs and the economy and keeping the budget balanced until we're out of this black hole we're in, and that's going to be a challenge," said Rep. Karen Fann, R-Prescott.

The first problem is that the state's temporary one-cent sales tax - approved in 2010 for a three-year run - ends in May.

Secondly, these savings and the corresponding expenses show the challenges facing lawmakers - the need for careful prioritization, and the necessity of reining in government to preserve fiscal sanity. Otherwise, the old rule is true: Government spending will increase to match or exceed available revenue.

Arizona is not alone. Indiana has a $500 million budget surplus and $2 billion in reserves. Iowa has an $800 million surplus, Florida has more than $400 million, and Michigan has an extra $1 billion.

But despite the extra money, reports that states "say that much of their surpluses will cover sweeping cuts anticipated in federal funding later and increases in Medicaid costs."

Finally, yes, don't forget Medicaid, which is gobbling up an increasing share of state funds nationally. Some states, such as Texas and Louisiana, have rejected federal aid for the Medicaid expansion under Obamacare. And, if they do not - as is the case with Arizona - they face a three-year sunset, like with the sales tax.

That's right, the federal government will help with Medicaid, but after three years we're on our own. Washington would pay the entire cost of the Medicaid expansion for the first three years, gradually phasing down to 90 percent of the cost after that.

Budget surplus? Rainy-day fund? Slow economic recovery? We don't care what you call it, just don't put your umbrellas or your thinking caps away just yet.


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