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Jason Donofrio,
Arizona PIRG

Arizona Bond Rating Downgraded in Part Due to Budget Gimmicks

FOR IMMEDIATE RELEASE

The rating agency Moody’s Investors Service recently downgraded Arizona’s bond rating.  A major factor in the rating downgrade was Arizona’s reliance on band-aid solutions to deep budget problems.  The Arizona Public Interest Research Group (Arizona PIRG) has been calling on lawmakers to implement common-sense solutions for addressing our budget woes, rather than relying on short-term fixes. 

“The bond agency recognized Arizona’s reliance on gimmicks to balance our budget and downgraded our bond rating as a result,” said Serena Unrein, Public Interest Advocate for Arizona PIRG.  Some budget gimmicks used this year included selling the State Capitol and the Arizona Supreme Court for short term cash payments and leasing them back at higher cost over coming decades.  “The worst part about the rating downgrade is that like the sale-leaseback deals, this will cost Arizona’s taxpayers much more money in the future,” added Unrein.

The Arizona legislature is likely to face some serious decisions for how to fix its budget problems when it reconvenes in January.  Analysts estimate that as the new fiscal year began on July 1st, the state already faced a budget deficit of $368 million to $1.3 billion dollars. 

“This rating downgrade signals that the game is up and Arizona needs to get serious about dealing with long-term budget problems,” stated Unrein. “Increased transparency is necessary so contracts, tax subsidies, and spending items can be scrutinized and we can figure out what’s really worth the bang for our buck.”

Arizona PIRG urges lawmakers to make sure that any current or future tax expenditures and subsidies are thoroughly examined and accountability mechanisms are put in place to ensure that the state benefits from these lost revenues and outlays.

Additionally, since the ability to see how government uses the public purse is fundamental to democracy and efficiency, Arizona PIRG calls on our state government to prioritize launching the financial transparency website (currently scheduled for launch in January 2011) as soon as possible.  To ensure it is as useful to taxpayers as possible, the website should follow the guidelines that Arizona PIRG detailed in its Transparency 2.0 report, which include making the website comprehensive, one-stop, and one-click searchable. 

“Budget transparency checks corruption, bolsters public confidence in government, and promotes fiscal responsibility,” said Unrein.  “The budget transparency website needs to be a priority for the State of Arizona as it gets its financial affairs back in order.”

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