PHOENIX — A plan to balance the state budget moved slowly through the Legislature Saturday despite objections from some Republicans who said it spends too much and Democrats who said it spends too little.
The package, which was scheduled for final approval by the Senate, cuts $729 million from the current budget, reducing it to $17.2 billion. That aligns expenses with revenues and avoids violating constitutional provisions that prohibit the state from ending this fiscal year on June 30 with a deficit.
Lawmakers also adopted a $16.1 billion spending plan for the new budget year after cutting $690 million in spending, with many of the provisions getting the minimum votes needed for approval.
All of that became necessary due to a combination of soft sales tax collections tied to the economy; a sharp drop in income taxes related to Arizona‘s move to a flat personal income tax system in 2023; spending versus saving a nearly $2 billion surplus from a year ago; and new spending by allowing all students to obtain vouchers to private and parochial schools.
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The plan increases funding for the state prison system. That includes funds taken from a multi-year opioid settlement worth $1.14 billion, a transfer that Attorney General Kris Mayes maintains is illegal.
There is also some additional cash for K-12 education beyond normal student growth and inflation increases, although some of that could prove temporary.
By contrast, the state’s three universities are losing money, although a last-minute addition brings another $1 million in one-time funding to the teaching academy, addressing one of the concerns of the Arizona Board of Regents.
The final result closes a $729 million gap between revenues and expenses for the current fiscal year, avoiding violating constitutional provisions that require the state not to end the budget year on June 30 with a deficit. That will reduce total spending to $17.2 billion.
Even with a $1.1 billion drop in spending in the next budget year, Rep. Barbara Parker, R-Mesa, said that’s too much. She said education and health care, the two most important budget items, were rife with “inflation and corruption.”
But Rep. Travis Grantham, speaker pro tempore of the House of Representatives, said Republicans who wanted deeper cuts must recognize political reality.
“We have divided government in this state,” he said, since Gov. Katie Hobbs is a Democrat.
“If I could do everything my way, this budget would probably be half this size and most of what is being asked for would not be in it,” Grantham said. The Gilbert Republican chastised his party colleagues who refused to support the plan.
He noted that the Republican Party has a one-vote majority in both the House and Senate. That meant that for every Republican who didn’t vote for the package, his supporters had to find a Democrat who would support it, measures that only helped improve the fiscal outcome.
Democratic Reps. César Aguilar, Lorena Austin, Quanta Cruz and Mariana Sandoval voted Saturday against provisions in Arizona’s new budget deal.
Howard Fischer, Capitol Media Services
Still, he said, Republicans should be proud of the budget. “To me, the fact that we are reducing the size of government is a victory,” Grantham said.
However, gathering the necessary votes led to some last-minute additions to the spending plan.
Those include $1 million to the Pascua Yaqui Tribe for social services and an identical amount to nonprofits in Cochise County for food distribution services for low-income people.
There is also additional money for heat mitigation programs in southern Arizona, cash for senior health promotion and coordination in Santa Cruz County and an allocation of funds to nonprofit organizations that provide counseling and community services in southern Arizona.
And there’s something else Democrats and some Republicans are demanding: Lawmakers agreed to waive the “aggregate spending cap” for schools.
A constitutional amendment voted on in 1980 limits total K-12 spending to what it was then, with annual adjustments for inflation and student growth. Currently, that figure is more than $6.9 billion.
But additional dollars added in recent years have pushed it past that point.
Without a waiver, districts would not be able to spend money they will already receive next school year.
House Minority Leader Lupe Contreras, D-Avondale, who voted against every item in the budget, said all those additions are not enough.
“There’s always more we can do for people,” he said. “I’m not determined this is enough.”
Some of what’s in the final plan is a mix.
For example, the budget eliminates $37 million a year in state aid to schools based on the number of students they have from low-income households. Another extra $29 million also disappears for certain capital needs like books and buses.
But the agreement promises to restore funding for the 2027-2028 school year.
That choice is no accident: That’s when legislative budget analysts say revenues should once again exceed expenses.
The only thing is that the promise is just that, since it does not obligate future legislators to provide the funds.
Contreras made clear that he believes legislative Democrats would have gotten more if they had been involved in the negotiations. Instead, the talks involved Republican House and Senate leaders and the Democratic governor.
Rep. Rachel Jones, R-Tucson, explains Saturday that she will not vote for the budget because she says the process was rushed.
Howard Fischer, Capitol Media Services
“And then they informed us what was happening,” he said.
So is Hobbs to blame for not getting more?
“I’m not going to put all the blame on her,” Contreras said.
One of the ways lawmakers managed to balance the budget was to let go of financial obligations, especially for roads.
For example, more than $9.2 million has been lost for Pinal County to design and landscape the West Pinal Parkway East-West corridor. It is now written into the budget for fiscal year 2027-2028, once again knowing that future legislators are not bound by that decision.
The plan also reduces funding by $27.7 million for a project to widen State Route 24 in Queen Creek.
But there is cash for other projects, including $10 million to design a traffic interchange between Interstate 10 and Cortaro Road in the Tucson area, $8.2 million to work on a highway connecting the Douglas International Port of Entry and Rt. State 80, $35.5 million for an emergency evacuation bridge in Lake Havasu City, and $18 million to improve an intersection at Route 347 and Casa Blanca Road north of Casa Grande.
At least part of the reasons given by some Republicans for voting against the plan was their claim that everything was being rushed.
“I didn’t have time to read the budget, look at it, digest it,” complained Rep. Rachel Jones, R-Tucson. “And I promised my constituents, the people, that I would always do better, that I would never rush, that I would wait until I knew what was in something, especially a budget.”
Other enemies had different concerns.
Rep. David Cook, R-Globe, opposed ending a program that now offers higher education scholarships to the spouses and children of fallen officers.
“These are law enforcement officers who have lost their lives defending the citizens of this state,” he said. He said the budget plan takes away families’ ability “to get their lives together, educate those kids and move forward.”
Rep. Joseph Chaplik, R-Scottsdale, had a different problem.
On the one hand, Republicans rejected Hobbs’ efforts to limit the number of students in a program that gives state dollar vouchers to parents to send their children to private or parochial schools or educate them at home.
Requires the Department of Education to build an online database of allowable expenses for what are formally known as empowerment scholarship accounts. This followed reports of parents using voucher money for everything from ski trips to Lego sets.
“I just feel like this is putting the camel’s nose under the tent,” Chaplik said, opening the door to future restrictions “that I will not tolerate.”
He said if lawmakers wanted to cut spending, they should focus on publicly funded schools “where the fraud and waste are.”
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