Arizona lawmakers pass bipartisan $16.1 billion budget, fix $1.4 billion deficit

Jun 16, 2024, 9:00 AM | Updated: 10:28 am

Bipartisan state budget of $16 billion passes in Arizona Legislature...

Arizona lawmakers approved a new state budget that closes its $1.4 billion deficit. (Arizona Senate Democrats photo)

(Arizona Senate Democrats photo)

PHOENIX — The Arizona Legislature passed a controversial bipartisan state budget on Saturday evening.

Lawmakers worked late into the night to discuss how they would close the $1.4 billion deficit.

The new $16.1 billion budget fixes the shortfall by slashing spending on higher education and various state agencies.

Gov. Katie Hobbs, a Democrat, teamed up with two GOP leaders to negotiate the 16-bill package: Senate President Warren Petersen House Speaker Ben Toma.

“Arizonans can rest assured that their state has a balanced budget,” Hobbs said in a Saturday statement. “I’m thankful for members of the legislature who came together, compromised, and passed this bipartisan agreement.”

The budget retrenchment marks an extraordinary turnabout from just a year ago, when Hobbs and lawmakers projected a massive surplus and secured overwhelming support for the budget by letting lawmakers dole out money to their own priorities pet projects.

But it soon became clear the state was taking in far less money than expected. Much of the reduced spending in the current budget proposal comes from delaying or eliminating some of the expenditures approved last year.

How will the new bipartisan state budget impact Arizona?

Nearly all state agencies will take a lump-sum cut, most of them 3.45%, though public safety agencies including the state police and prison system are spared.

On top of that, lawmakers cut funding for new school construction and a pot of money that districts use to pay for nonsalary items like textbooks and computers. Legislators paused planned state building renovations, including fixes for unreliable air conditioners at state prisons.

planned $333 million deposit into a savings account for future water infrastructure was canceled. So were several highway projects, including pavement improvements, widening of Interstate 10 through Buckeye and an overpass at a major bottleneck on State Route 347 between Phoenix and Maricopa.

On top of the 3.45% cut all state agencies are facing, universities also will lose funding they use to make it more affordable for people to train to be teachers or primary care physicians. Lawmakers also cut funding for the Arizona Promise program, which provides scholarships for low-income students.

In all, the budget cuts about $600 million from the current fiscal year, which ends June 30, and the next.

What caused Arizona’s budget shortfall?

The budget shortfall is due mostly to plummeting revenues from a massive tax cut that took full effect last year, a decline in sales tax expenses as consumers face higher prices and skyrocketing costs from a school voucher program expansion. Hobbs has called repeatedly to reign in the voucher program but the idea is a nonstarter with the GOP legislative majority. The budget compromise includes only a small cut of $2.5 million to the program.

Despite a shortfall surpassing $1 billion, the state was spared the tax increases and deeply disruptive budget cuts that were required during the Great Recession. Lawmakers then slashed into virtually everything the state pays for, including K-12 and higher education, and resorted to extraordinary accounting gimmicks including mortgaging the House, Senate and Supreme Court buildings.

This time around, tax collections are projected to grow faster than expenses, so the budget is not out of balance over the long term. And the state now has hundreds of millions of dollars to sweep out of special funds.

Rep. Lupe Contreras, a Democrat from Avondale who serves as the House’s minority leader, said he doesn’t put all the blame on Hobbs for leaving out Democratic legislative leaders from negotiations. Republicans who run both chambers of the Legislature are to blame, too, Contreras said.

“Why weren’t we there and having that conversation from jump?” Contreras said.

What’s the controversy surrounding the bipartisan state budget?

A snag for the Republican-controlled Legislature in moving the budget was a plan to use millions of dollars from a settlement over the nation’s opioid epidemic to help balance the state’s budget.

The multistate settlement will provide Arizona and its communities with $1.1 billion over 18 years.

The budget includes using $115 million in settlement dollars to shore up funding in the budget year that ends on July 1 and the following year for the Arizona Department of Corrections, Rehabilitation and Reentry.

Additionally, lawmakers want to shift another $40 million in each of the next two budget years toward the state’s prison system.

Democratic Attorney General Kris Mayes said in a statement that Hobbs and Republican legislative leaders put the state’s settlement dollars at risk and that she warned them that doing so is unlawful.

“This is an egregious grab,” Mayes said. “I will do everything in my power to protect these opioid settlement funds for all Arizonans.”

Legislative session ends on a high note

Arizona Sen. Ken Bennett celebrated the end of the 56th legislative session by singing a parody of Gordon Lightfoot’s famous song “The Wreck of the Edmund Fitzgerald.”

His version included cheeky references to the highs and lows of state politics, including the state Supreme Court upholding an 1864 abortion ban in April.

Some of Bennett’s lyrics included, “The Supreme Court came up with a novel idea / Let’s go back to the mid-19th century / While the AG is plotting for a couple of our guys / To end up in the state penitentiary.”

The two last lines referenced  a grand jury’s indictment of 11 Arizonan GOP lawmakers accused of trying to overturn Trump’s Arizona election loss to President Joe Biden.

In Arizona, Kelli Ward, Tyler Bowyer, Nancy Cottle, Jake Hoffman, Anthony Kern, Jim Lamon, Robert Montgomery, Samuel Moorhead, Lorraine Pellegrino, Gregory Safsten and Michael Ward falsely claimed they were “duly elected and qualified electors” on Dec. 14, 2020. They’re now facing charges of conspiracy, fraud and forgery.

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Arizona lawmakers pass bipartisan $16.1 billion budget, fix $1.4 billion deficit