Arizona passed its bipartisan $16.1 billion budget for the next fiscal year, effectively closing the $1.4 billion deficit the state was facing.
After weeks of negotiations between Gov. Katie Hobbs (D-AZ) and Republican lawmakers, with some Democratic lawmakers expressing frustration they were not heavily involved in the negotiations, the first-term governor hashed out a budget to address the looming deficit.
“We put together a bipartisan budget,” Senate President Warren Petersen told the Arizona Republic. “It doesn’t have anything super liberal in it, nothing uber-Republican.”
“This is a product of a divided government and some compromise — and sometimes if you can’t find something good in this budget, you will not find anything good in any budget,” Republican state Rep. Travis Grantham said.
Last year, Hobbs and Arizona legislators projected a surplus and secured support for many “pet projects” to let lawmakers lay out their priorities.
The state, however, began bringing in less money than expected, partially due to a massive tax cut under then-Gov. Doug Ducey (R-AZ) that took effect last year. The state also experienced a decline in sales tax revenue.
Arizona’s school voucher program also expanded and costs to fund it skyrocketed, prompting Hobbs to repeatedly call for the voucher program to rein in spending. The GOP’s slim majority in both chambers of Arizona’s legislature, however, would not have taken cuts to the voucher program lightly and the budget only includes a small cut of $2.5 million to the $900 million program.
In order to close the budget gap, most state agencies will take a lump-sum cut, mostly of 3.45%. State police and prisons will not have their programs cut.
The state’s higher education institutes will also lose funding they use to make school more affordable for those seeking degrees in education or to become primary care physicians. Funding for Arizona Promise, a program to give scholarships to low-income students, was also cut.
The state planned for a $333 million deposit to be put into a savings account for future water infrastructure, but that was also cut from the budget. Several highway projects including paving and widening projects in the Phoenix area were also cut.
In total, the budget cut about $600 million from the current fiscal year, which ends June 30, in order to pass the $16.1 billion budget for next year.
Arizona will not have to increase taxes to address the shortfall, as the state did during the Great Recession. Tax collections are projected to grow faster than expenses, so the budget should be balanced over time.
“Arizonans can rest assured that their state has a balanced budget. I’m thankful for members of the legislature who came together, compromised, and passed this bipartisan agreement,” Hobbs said in a statement.
Some Democrats loathed Hobbs’s efforts to negotiate mainly with Petersen and Republican House Speaker Ben Toma, but said all of the blame could not be placed solely on the governor and that Republicans were also to blame for not giving them a seat at the table.
“Why weren’t we there and having that conversation from jump?” Arizona House Minority leader Lupe Contreras said. “That’s what should have been done.”
“I have served under Republican administrations and now Democratic administrations, and we will never see a perfect budget,” said Democratic state Rep. Alma Hernandez, who voted in favor of the budget.
Arizona’s Democratic Attorney General Kris Mayes took issue with one element of the budget and has threatened to sue Hobbs’s administration. As approved in the budget and seen as a win for Republicans, $115 million from a $1.1 billion settlement over the country’s opioid epidemic will be used for the Department of Corrections, Rehabilitation and Reentry. It’s a move Mayes believes is illegal.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“Opioid settlement dollars are meant to save lives and support communities dealing with the ongoing fentanyl crisis, not to backfill a massive budget deficit created by irresponsible GOP fiscal policies,” Mayes said.
“This is an egregious grab,” she said. “I will do everything in my power to protect these opioid settlement funds for all Arizonans.”