Imagine if nearly half your state services vanished—poof! Over the course of three years, you witness the disappearance of the basics: fewer highway patrol cars responding to emergencies; no more rest areas for weary drivers; parks with locks on the gates; children without day care; families with no access to health care; even new businesses unable to file for incorporation.

Envisioning an alternate universe is not a fanciful exercise. As a result of the worst budget crisis in our history, this is a very possible emerging reality in the state of Arizona.

Many of the services funded by state agencies are contracted out to providers, many of which are nonprofit organizations. And for many of these nonprofits, state funds are core to the survival of their missions. The fates of state-funded nonprofits, therefore, are wrapped up in the travails of state-budget policy making.

The organizations most in peril are those providing health and human services.


Fiscal Health Checkup

Budget Deficit per Capita . . . . . . . . . . . $462Unemployment rate, Dec. ’09 . . . . . . . . 9.1%

ARRA per Capita . . . . . . . . . . . . . . . . . $437

Recently, Governor Jan Brewer required all state agencies to submit plans to trim another 15 percent of their budgets for the remainder of the 2010 fiscal year, which ends on June 30, 2010. That’s a 15 percent cut of the total budget, and we’re only two-thirds into the year. That’s an effective 23 percent cut for the remainder of the year. Worse, this reduction comes on top of reductions already made in the winter of 2009 as the economic crisis unfolded. According to Protecting Arizona’s Family Coalition, more than 300,000 people in Arizona have suffered losses or reductions in services because of cuts that have already been made.

The Department of Economic Security, which is the primary state agency funding nonprofits in human services, already experienced a 31 percent decrease in general funds. The additional proposed reductions will decrease the department’s state funding by 42 percent, slashing it to 2004 levels. In two years, that’s a decline from $808 million to $471 million. Keep in mind that this is in a state that, until the economic engine stopped running last year, was the fast-est growing in the nation. High growth also means high demand for services. And with the onset of recession, Arizona leads the nation in percentage of jobs lost. Yes, its joblessness rate is even higher than that in Michigan; need is sky-rocketing.

Health services have been particularly hard hit. If the proposed cuts are enacted, 47,000 children will lose their KidsCare health coverage. Hospitals have already reported budget problems from cuts made last year. This latest round will have devastating consequences on their bottom lines. And we will all feel the effect of those costs with higher hospitalization charges and higher insurance premiums.

This says nothing about the future, when federal stimulus funds will not be able to plug part of the giant hole in our state budget. In 2011 and 2012, another 20 percent of state funding will have to be cut to fill the void. In the next round, some experts predict that public schools—still protected from severe cuts this year—will see reductions to core support, and teachers will be laid off en masse.

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Out of Balance

So far, there has been no political will to raise taxes to close the gap created by the budget shortfall. Governor Brewer’s plan called for a three-year 1 cent temporary sales tax hike to mitigate cuts to basic services. Our legislators are not even willing to send this proposal to voters. Key lawmakers have crushed every attempt to ask voters to raise the funds to support basic services provided by state government.

Politicians have been willing to let state agencies raise fees. So the Arizona Department of Health Services has proposed outrageous increases to licensing fees for child-care centers, raising them as much as 8,800 percent. That is not a typo; that is a comma, not a decimal point. They would have become the highest child-care licensing fees in the nation. Normal.dotm 0 0 1 26 150 NINA 1 1 184 12.0 0 false 18 pt 18 pt 0 0 false false false Fortunately, the voices of nonprofits were heard and the department reduced the maximum fee from the original proposal. However, they are still significantly higher than last year.

Struggling nonprofit child-care centers cannot afford to absorb these fees. And they certainly cannot consider passing them along to the parents they serve. If these fees are approved, we expect to see the closure of many child-care providers and more jobs lost. And, as reported by Children’s Action Alliance, “Without safe childcare, parents who are lucky enough to have a job today may have to reduce their work hours or quit” their jobs to stay home with children if these parents have no affordable alternative care outside the home.

This is the state of affairs in Arizona today. It is extremely challenging. But even as I witness these alarming events, I have hope.

At the Alliance of Arizona Nonprofits, we are inspired by the resilience and spirit of our nonprofit leaders. I have spoken to many executives and board members who remain committed to finding creative ways to endure this financial firestorm. They collaborating and exploring new ways of doing business to sustain their missions. Also, the need for advocacy could not be more clearly defined than it is in 2010. Hundreds of families rallied at the state capitol last month to oppose the child-care fee hike, and nonprofits organized that protest.

The Arizona state budget crisis is not over. But if we as nonprofits have a strong voice and use that voice for the people we serve, we can prevail.

PATRICK McWHORTOR is the president and CEO of the Arizona Alliance of Nonprofits.