Sunday, September 27, 2009

Sept 25 2009 District 2 Breakfast with Peggy Neely

I attended my District 2 councilwoman’s monthly breakfast on Friday morning the 25th at the JW Marriott. The JWM is a great host and provides the breakfast at cost for the event. Peggy Nelly is really good at communicating with her district with regular mailings and letters to local papers and also on the local government TV channel. Her monthly breakfast is one of the primary vehicles she uses to reach interested district members on a face to face basis. The following is from notes I took during the breakfast.

The meeting opened with two topics before moving onto her guest speaker Ken Bennett:

GAIN: Peggy encouraged citizens to get involved with “GAIN” Get Arizona Involved in Neighborhoods:

GAIN is Arizona’s answer to the National Night Out held in August but because of the heat Arizona has decided to hold the event in October.

The PVUSD M&O Budget Override vote is coming up on November 3rd. A retired PVUSD administrator spoke of the critical need for renewing the Budget Override which has been regularly renewed since 1988. It means about $35 per $100,000 of a home’s assessed valuation. The override renewal was denied last year and caused a reduction in services provided by the school system through the elimination of 219 staff positions including 190 teachers and counselors … lack of renewal this year would phase out the override completely doubling the cuts made this past year.

As pointed out in the meeting and is an approach my family has used in moving to four different cities with school age kids, including Phoenix is … the First thing we look for is support for the local school system. If it is apparent in any way that the community does not support the school district we don’t even consider buying a home there. For the benefit of the kids and for the benefit of our homeowners it is my opinion that this community should do everything in its power to fund our schools to the maximum allowed by law. Please vote for this override.

Peggy’s guest speaker was Ken Bennett the past President of the Arizona Senate and more recently the Secretary of State replacing Jan Brewer who was called on as governor when Janet Napolitano became Secretary of Homeland Security.

Ken spoke briefly about the responsibilities of the office of Secretary of State which primarily is responsible for conducting statewide elections. His primary focus of discussion was illustrating the funding sources and how the money is spent for the Arizona budget of $33B. We most often hear of the $10.5B general fund but it was very enlightening to hear the full discussion as it puts all discussion of cuts and movement of money in context of the full picture. Ken also discussed how the budget has evolved since 2006 / 2007 when he left as President of the State Senate to this year’s budget.

The General Fund:

The general fund is approximately $10.5B and is the area where AZ legislators have the most influence over spending … although as pointed out later cutting funds that are matched by federal dollars can have a weighted effect. The tax revenue supporting the general fund comes from sales taxes and income taxes. A little over 50% comes from sales taxes so when times are good in home building and car sales we are flush with tax revenue and … we tend to want to spend the surplus. When times are bad we don’t react proactively with cutbacks … and we slash budgets, borrow and sweep funds to make up the shortfall. We have no relatively stable source of tax revenue at the state level such as property tax.

The $10.5B is spent in the following major buckets: $5B for K-12 (1.1M students), $1.5B for higher education, $1B for prisons and courts, $2.5B for Health and Welfare (1.2M people, DES, CPS, Mental Health), and $0.5B to fund about 150 other state agencies.

Federal Receipts:

The federal government contributes another $10.5B to the Arizona budget to cover a couple large mandate areas; $2B for K-12 special needs, $6.5B for Federal Health and Welfare (Medicaid and Access), and $2B for Higher Education (although this number includes tuition). Some of the federal receipts come with strings attached that require matching funds … if the state does not invest then the federal government will not invest.

Local Property Taxes:

Of the local communities in Arizona they contribute an additional $4B for K-12 and $1B for community colleges.

Other AZ State Funds:

Other specific funds are also established to receive funds through tax sources such as the gas tax ($1B) for transportation, alcohol & tobacco ($1B) for healthcare, the lottery ($0.5B) and workers compensation ($0.5B). Outlays also cover education ($0.5B) state administration ($0.5B), environmental ($0.5B), and capital projects ($0.5B).

All the above adds up to about $32-33B with over two thirds of the budget allocated to K-12 education ($11B), Higher education ($5B), and healthcare ($10B).

The Budget Machinations from 2007 to 2009:

2007 Fiscal Year ended:

Ongoing Revenue: $9.6B

Ongoing Expenses: $9.6B

Rainy Day fund: $700M

Ending balance: $350M (was originally projected at $550M but reduced by $200 as tax revenue started to drop at the end of the fiscal year)

2008 Fiscal Year started with over a 10% increase in projected spending even though revenues started to drop off due to the recession:

Ongoing Revenue: $10.1B (assumed the 2007 balance would continue as annual revenue)

Ongoing Expenses: $10.6B

Rainy Day fund: $700M

Ending balance: $0M

2008 Fiscal Year ended:

Ongoing Revenue: $8.8B

Ongoing Expenses: $10.5B ($500M rainy day fund, $300M sweeps, $300M K-12 delayed payment – rollover, $100M cuts)

Rainy Day fund: $200M

Ending balance: $0M

2009 Fiscal Year started with a projected tax revenue increase and an increased spending budget. Some expenses are mandated to grow wrt to growth in student population and voter mandates but to raise budget projections in the face of a recession

Ongoing Revenue: $9.1B (reduced to 8.0, then 7.6, then to 7.3)

Ongoing Expenses: $11.1B (reduced to 10.7, then 10)

Rainy Day fund: $200M

Ending balance: $0M

2009 Fiscal Year ended with the state of Arizona having a junk bond rating and ranked 50 out of 50 in credit worthiness among all sates. The city of Phoenix continues to have the highest credit rating but is threatened this coming year as the state may need to sweep funds from the city coffers to cover its budget.

Ongoing Revenue: $7.3B

Ongoing Expenses: $10B ($100M Rainy Day fund, $325M sweeps, $525M borrowed through school district bonding, another $300M K-12 rollover – May & June payments, $100M DPS shift, $400M cuts + selling state assets and borrowing)

Rainy Day fund: $100M

Ending balance: $0

Additional Notes:

In 2006 the state had ongoing expenses of $8.3B … as long as we stay above this 2006 threshold we will be able to receive and use federal stimulus dollars but these are only good for the next two years … by that time we will have to hope that the economy bounces back and/or we have realigned our expenditures to be in alignment with our tax revenue and just as important is to realign our tax base to provide a more stable and predictable stream of funding.

Ken Bennett guestimate related to the costs of illegal immigration for the state of $1B health, $1B education, and $0.5B related to prisons.

Ken was of the opinion that increasing taxes was not the answer. Even if it was put to the voters he did not feel Arizonans would increase their own taxes. He felt we should be making business feel welcome to move to Arizona and solicit those businesses desiring to relocate.

Ken also made a point to note that prior to a ballot initiative that corrected the problem the state has had to absorb two significant unfunded mandates from the voters; 1] all day kindergarten that costs $300M out of general fund, and 2] lower thresholds for income allowing more people to use the state Healthcare Access program. The initial redirection of $75M of tobacco settlement funds has ballooned into $500M coming from the general fund as Access has expanded from 80,000 people in 2000 to 1.2M in 2009.

My Thoughts:

  1. I found Ken Bennett to be quite engaging and offered a layman’s level explanation of how they finances of the state are constructed and how we got from a flush rainy day fund with an annual surplus to a gapping multi-billion dollar deficit within two years.
  2. The presentation was purely from an accounting perspective and did not discuss what kind of state we want … it was about how do we balance the budget
  3. Reconstructing what happened in establishing the initial 2008 and initial fiscal year 2009 fiscal year budgets would prove instructive. By mid-2007 when the 2008 FY budget would have been approved the stock market was at its peak so a bit of hubris could be expected. But by mid 2008 signs were everywhere that the economy was in recession especially here in AZ and yet the budgets were set higher.

Thursday, September 17, 2009

Sept 13 2009 La Jolla ... The Gatorman

Another great swim this year with many swimmers making the trek from Phoenix to La Jolla. Tempe Sun Devil Masters had approximately 25 swimmers plus six (Robert, Janice, Peter, Pat, Rico and Dave) swimmers from SACistan. Dinner at Hennessey's the night before the race was coordinated by our SACistan race volunteer Mike H was very nice and a great opportunity to meet Rico and Trisha's daughter Annie.

The Rough Water Swim earned it's title this year with swells running 10-12 feet but I made it to the 3 mile race turn around point in my best time to date but the swim back from the pier took about 1/3 longer than the way over. Against the swells and chop and at times it seemed like I was hardly moving. The final 200 yards I had to stop and watch how the waves were breaking onto the beach to get the timing right and to be able to not get swept into the rocks ... but land on some soft sand :-) Now I may have had a seed planted in my head from Rico the night before telling me about an 11 foot shark that lived in the cove ... but not to worry as he was a bottom feeder ... right. BUT, when I was moving to the right side of the cove to line up with the waves I looked down and I don't think I was hallucinating I saw a shark bigger than me ... and I looked twice to make sure ... about 10 feet below me. I kept telling myself "he is a bottom feeder" but I still tried to swim faster and after some brief leg cramps made it onto the beach. Happy Swimming!

Update ... After I wrote the above I stepped out to buy a pair of sneakers at New Balance ... I know TMI ... but as I'm checking out at the register a song comes over the speaker ... the one about "Lola" if you are old enough to remember the 1970 song by Ray Davies. It reminded me on Sunday that when the waves spit me out on the beach and I staggered to the finish line I was welcomed by a line of women passing out food bars and water and the first one was holding out her arms to hug me and as I got closer I realized she was bigger than me ... had chin stubble ... and gave me a hug that took the wind out of me ... sigh ... this is California.

Sept 12 2009: Parent to Parent talk

This past weekend I went to La Jolla to meet up with some old swim friends and compete ... OK ... "old" as in age and "compete" as in participate ... in the "Gatorman" a three mile open water swim. On the plane ride over I sat next to a Vietnamese woman and we started talking about kids and school ... her kids and mine are about the same age. Both my kids have graduated from ASU hers from U of A ... her family story was remarkably similar to some of the students at ASU that the ASUPA has awarded scholarships to that came from immigrant backgrounds. Both her students received scholarships at U of A ... worked hard and are succeeding in the USA because a little help was provided up front. Her story was of decades of incredible perseverance, sacrifice for her children and pride in her adopted country. Her children are on the path to be doctors graduating at the tops of their respective classes. I love stories like this :-)

Monday, September 07, 2009

Sept 7 2009: Hiking on the Mogollon Rim

Fran suggested we go hiking on Labor Day ... I said "great" ... where do you want to go? She found an article in the Arizona Republic that suggested a five mile hike around a beautiful lake on the Mogollon Rim Recreation Area. After 10 years living in Arizona I am still not sure how to pronounce Mogollon but I think it sounds like "Mugyon" ... The lake we went to is part of the Apache and Sitgreaves National Foreast in east central Arizona ... spanning about 2,000,000 acres. The Mogollon Rim is part of the defining features in Arizona demarcating the lower part of the state from the high desert and mountainous regions.

It was a great drive up taking under two hours as we were able to maintain a good pace up Route 87 to Payson and then east of Payson on Route 260. about 35 miles east of Payson we turned on Forest Road 300 and then followed the paved road to Woods Canyon Lake. There we paid our $5 entry fee and followed the perimeter of the lake for about two hours. It is so pretty up there and the air was so cool and full of pine fragrance ... sure made me wish I was camping there for the week ... in an RV :-) After a nice walk ... we both wanted to walk further but hunger was taking over so we had a nice lunch of Elk burger at a Rt 260 roadside restaurant called "Bugles" recommended by the park attendant.

Something buried in the deepest recesses of my memory was trying to warn me not to go traveling on a holiday ... but I could not quite hear the warnings. 24 years ago we spent four days on Cape Cod for 4th of July weekend ... and I swore I would never ever deal with that kind of traffic again ... but I forgot. Coming from the lake on Route 260 into Payson was a very painful two hour drive ... made more painful by the behavior of some of the drivers ... most people were nice but I remembered a few and especially the tic who went out of his way to block me from merging in bumper to bumper traffic 12 miles out from Payson ... him driving a yellow Hummer did not help.

Anyway, awesome trip, except for the return part ... next time we pick our travel days better.

More on Mogollon Rim:

The Apache and Sitgreaves National Forest Web Site: