Arizona Repeals Children's Health Insurance: Taking "Penny Wise, Pound Foolish" to a New Level

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Arizona's budget-balancing techniques have bordered on the comical in recent months. Lawmakers have enacted legislation that would help balance the current year's budget by selling off state buildings, including the state capitol — and then immediately leasing them back, providing a one-shot revenue boost for this year, and then actually worsening the state's budget deficit in every ensuing year as the state pays a variety of new landlords. As a "Daily Show" interview displayed horrifically, state lawmakers simply had no answer to the question "what happens next year?"

Well, now they do. On Thursday, Governor Jan Brewer signed into law a bill that repeals the state's Children's Health Insurance Program (CHIP), making them the first state in the nation to take this drastic, short-sighted step. The most obvious implication is that the state will make a dent in its multi-billion dollar deficit for the fiscal year starting in July — but this move will result in a variety of added costs to the state, ranging from the loss of hundreds of millions in federal matching funds to higher state and local spending on emergency room costs and an assortment of higher safety net spending for uninsured families pushed over the limit by extraordinary medical expenses.

Shockingly, the state's fiscal problems will get even worse if voters fail to approve a May referendum that would temporarily increase the sales tax rate. As CTJ has noted in the past, Arizona has a variety of more progressive and sustainable tax reform options available, but the supermajority requirement for Arizona tax increases has made this sort of reform practically impossible. Unfortunately, the deck is not stacked equally for tax and spending changes. When lawmakers dream up spending cuts so myopic they attract derision from late-night talk show hosts, those cuts can be enacted with a simple majority. The Arizona Children's Action Alliance has more on the impact of the latest spending cuts on families with children.

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