House Study Cmte on American Recovery and Reinvestment Act

Representative Michele Reagan

Opening Remarks and Introduction of Committee Members

Chairman Lesko welcomed the Members and staff and asked each person to introduce himself or herself.

Overview of Committee Purpose

Jennifer Anderson, Research Analyst, explained that the purpose of this Committee is:

(1) to study the scope of the American Recovery and Reinvestment Act (ARRA) including discretionary programs in K-12 education, higher education, health, transportation, state energy and water projects and benefit programs

(2) to review entitlement-based spending programs including Medicaid, Unemployment Insurance/Social Security, COBRA and health information technology grants

(3) to evaluate the impact of ARRA tax reductions on the state from a policy and fiscal perspective

(4) to submit a report after each meeting of the Committee’s findings and recommendations to the Speaker of the House of Representatives, the chairpersons of the House Appropriations, Ways and Means and Education Committees

Ms. Anderson stated that the Committee may convene monthly but at least once quarterly.

Chairman Lesko added that the purpose is also to obtain a better understanding of the federal money coming into the state and how it will affect the budget. This Committee will identify where the dollars are going and how they are spent.

She stated that there will be a series of meetings, each on different subjects. Today’s presentation by the Joint Legislative Budget Committee (JLBC) will be an overview of ARRA. Chairman Lesko informed the Members that the next meeting will be on January 28, 2010, and the subject will be education with presentations by the Governor’s Office and the Department of Education.

Presentation by Joint Legislative Budget Committee Staff on the American Recovery and Reinvestment Act

Jack Brown, Joint Legislative Budget Committee (JLBC), addressed the Committee to provide an overview of the American Recovery and Reinvestment Act, known also as ARRA, Recovery Act, or federal stimulus package. Mr. Brown stated that he will discuss the major points of the legislation, the requirements it poses on Arizona, how the FY 2010 budget used federal stimulus funds, as well as the impact on the FY 2011 budget.

Mr. Brown directed the Members to the JLBC handout (Attachment 1) which outlines:

· key considerations of ARRA

· “primary” initiatives to provide direct state fiscal relief

o reduced state share of Medicaid cost

o fiscal stabilization funding (overview and allocation)

· federal assistance and the FY 2011 budget

· future federal assistance including “secondary “ assistance

· nationwide tax reductions

Chairman Lesko asked for a definition of “non-supplanting”. Mr. Brown explained that the term means that the state cannot withdraw from the General Fund and replace those monies with federal dollars.

Discussion ensued on the withdrawal of money from the General Fund, the fact that property taxes paid are not included in state education funding, and further clarification of maintenance of effort (MOE) specified by the FY 2006 support level.

Mr. Brown described allocation of funding and explained that unallocated funds are under the control of the Governor’s budget.

He discussed the 2011 budget and described various options for federal assistance:

· backfill from stimulus dollars (ARRA funding)

· use some General Fund dollars

· do not replace funds but still meet MOE

Mr. Brown stated that Arizona is at the FY 2006 level, but that if the funding is backfilled the state would be above the FY 2006 level. Mr. Montenegro commented that Arizona may be funding at 2006 levels, but the schools are not operating at 2006 levels.

Mr. Campbell commented on the impact of rolling back Proposition 204 and asked if any possible penalties could occur; Mr. Brown stated that he was unaware of any at this time.

Mr. Farley asked if Mr. Brown has any information about the fiscal numbers from the Governor’s proposals in her recent State of the State speech.

Richard Stavneak, JLBC Director, explained that the Governor’s numbers will not be available until the end of this week. Chairman Lesko commented that the Committee must wait until a future meeting to evaluate the JLBC analysis of these numbers.

Mr. Brown continued, explaining that there should be no direct budget impact with regard to the secondary assistance. Mr. Stavneak added that there has been no consolidated report from the districts and he is not yet certain if Title 1 Special Education funding is one-time or on-going.

Mr. Brown discussed the 10-year cost of tax reductions nationwide, which totals $281 billion.

Chairman Lesko asked if the recent “Cash for Clunkers” program was part of ARRA; Mr. Brown answered in the negative.

Chairman Lesko reiterated that the next meeting will be on January 28, 2010, and the subject will be education with presentations by the Governor’s Office and the Department of Education.

Without objection, the meeting adjourned at 10:21 a.m.

__________________________________________

Jane Dooley, Committee Secretary

January 19, 2010

(Original minutes, attachments and audio on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov)

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HOUSE STUDY COMMITTEE ON THE
AMERICAN RECOVERY AND REINVESTMENT ACT

January 12, 2010

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Representative Chad Campbell	Representative Steve Montenegro
Representative Steve Farley	Representative Debbie Lesko, Chairman

Members Present

Members Absent