Purpose

An emergency measure that makes statutory and session law changes necessary to reconcile an anticipated FY 2001-2002 state general fund revenue shortfall.

Background

The FY 2001-2002 state general fund budget, as enacted during the Forty-fifth Legislature, First Regular Session, assumed an ending balance of $103 million in FY 2000-2001 and approximately $6.99 billion in base revenues for FY 2001-2002. Due to declining revenues in the ensuing months, the Forty-fifth Legislature convened the Second Special Session during the Fall of 2001 and enacted a revised FY 2001-2002 budget to reconcile an estimated $675 million shortfall.

Subsequent to the Second Special Session, the Joint Legislative Budget Committee and Office of Strategic Planning and Budgeting have revised their revenue forecasts as well as the need for supplemental appropriations to address caseload growth in Title XIX and the Department of Education populations. At this point, a minimum shortfall of approximately $160 million has been identified in the FY 2001-2002 state general fund budget as revised by the Second Special Session.

The strike everything amendment to S.B. 1061 makes statutory and session law changes necessary to reconcile the minimum anticipated FY 2001-2002 shortfall.

Provisions

State Emergency Services

1. Beginning with a date of service on or after March 1, 2002, eliminates reimbursement of inpatient and outpatient hospital claims by the Arizona Health Care Cost Containment System (AHCCCS) for persons eligible for the state emergency services (SES) program.

2. Reduces, by approximately $5.1 million for FY 2001-2002, the state general fund support for the SES program. Eliminates state general fund support for the program for FY 2002-2003.

3. Increases, by approximately $5.1 million for FY 2001-2002, the disproportionate share hospital (DSH) payments for private qualifying hospitals, including a $1.8 million state general fund appropriation. Eliminates the FY 2002-2003 state general fund appropriation and total expenditure authorization for DSH payments.

Arts Endowment Fund

4. Eliminates the remaining $500,000 FY 2001-2002 transaction privilege tax distribution to the arts endowment fund.

5. Increases, by $500,000, the FY 2008-2009 distribution to the arts endowment fund.

New Programs

6. Eliminates the finger imaging program administered by AHCCCS.

7. Eliminates the remaining $500,000 FY 2001-2002 appropriation from the state general fund to the Department of Commerce for military airport land use planning.

8. Eliminates the remaining $750,000 FY 2001-2002 appropriation from the state general fund to the Department of Commerce for implementation of initiatives associated with the Arizona partnership for the new economy.

AHCCCS

9. Transfers, for FY 2001-2002, $10 million from the health education account of the tobacco tax and health care fund to the medically needy account.

10. Increases, by $10 million for FY 2001-2002, the amount that AHCCCS shall withdraw from the medically needy account of the tobacco tax and health care fund for the Title XIX acute care state match.

11. Eliminates the remaining $123,400 FY 2001-2002 state general fund appropriation to AHCCCS for expanded coverage under the long-term care program for persons with disabilities (Freedom to Work).

Micellaneous

12. Increases, from 75 to 86 percent, the percentage required to be reimbursed by local jurisdictions to the Department of Health Services for inpatient competency restoration treatment that has been paid by the State for FY 2001-2002.

13. Requires the highway user revenue fund to reimburse to the state general fund $20 million in FY 2001-2002 for highway patrol expenses incurred in FY 2000-2001.

14. Increases, from $21 million to $31 million, the FY 2001-2002 state general fund distribution from multistate lottery games. (This includes a state general fund revenue increase of $3.45 million from the Second Special Session transfer and allows for an additional deposit to the state general fund of up to $6.55 million.)

15. Makes technical and conforming changes.

16. Becomes effective on signature of the Governor.

BM/DJ/jas