Breeding a deficit
Earmarked funding creates drag on state's budget

Dec. 11, 2002

Last Thursday, The Arizona Republic published a letter from Alan Filipski of Tempe questioning payments the state has been making to Arizona horse and dog breeders for nearly 40 years. The letter was in response to an article that noted the payments were late in coming, which upset breeders. Mr. Filipski wondered why they should be made at all. So did a lot of other readers, as it happens.

Dear Mr. Filipski:

We are in receipt of your letter regarding the annual payments made by the state to Arizona breeders of racing dogs and horses. And, honestly, we are as curious as you are.

In a nutshell, the news article in question, "State late in paying breeders," Nov. 28, related how our government is late in making its annual payments to Arizona breeders whose dogs and horses have won races.

In your letter you asked why the state is making these payments to private businesses, especially at a time of the severest budget constraints on record. Interesting question.

The fact is, Mr. Filipski, the state is awash in both big and little funds awarding all sorts of cash incentives to various favored industries. In legislative-ese, the process is known as earmarked funding, money set aside for special purposes that drains cash away from the general fund.

It seems getting your industry earmarked is just a question of how good your lobbyist is. The racing industry has had great lobbyists over the years. The breeders-award fund is just one of several sops to the racing industry. There's also the stallion fund. And the county fairs racing betterment fund. And the agricultural consulting and training fund. And yadda yadda yadda.

As to the breeders fund: the state has been awarding cash prizes since 1964 to breeders whose Arizona-bred horses and dogs win races. The awards kitty has been increasing regularly to its current $800,000, which by law is the maximum the state can dole out.

Ah, but the state felt generous last year. The state Racing Department doled out $850,000 in prizes in 2001, a fact state Racing Director Wade Turner blames on confusion generated by a dearth of staff, particularly accountants. Perhaps he needs better lobbyists to create a state accountancy award fund for him.

The fact is, Mr. Filipski, the breeders-award fund is just one tiny part of the budgeting nightmare the Legislature needs to start sorting out.

It may not precisely constitute a loophole. But combined with the hundreds of other "awards" and "incentives" that by statute drain state finances every year, it represents a great example of why Arizona government has gone into the red.

We hope that helps, Mr. Filipski.