While Arizona’s GOP lawmakers inch toward sending a budget proposal to Gov. Katie Hobbs in the next two weeks, there’s at least one fairly large elephant in the room — and it’s taking the form of a $300 million hole in Arizona’s annual budget, all of which was earmarked for K-12 education.

That hole opened up last July with the expiration of Proposition 123 — a 2016 voter-approved measure to take $300 million from the State Land Trust every year to meet a post-recession shortfall in funding for public schools.

Republicans plugged it with money from the state’s general fund last year, and it looks like they’re going to propose the same thing this time.

While Hobbs started the session with hopes for renewing the Prop 123 funding — which business leaders like Arizona Chamber of Commerce President and CEO Danny Seiden supported — Republicans haven’t been able to come to an agreement among themselves.

Budget guru and Republican Sen. John Kavanagh told us that renewing Prop 123 is “pretty much off the table this year,” adding that a few thorny questions were preventing the caucus from deciding.

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“We can’t get this agreement — should there be protections for ESA (vouchers) or should it be clean? — and we’re not going to put $300 million in the budget that might not pass by the voters,” Kavanagh said. “We just don’t have enough consensus to move forward.”

Previously, Republican Sen. JD Mesnard told the Arizona Mirror that Republicans were wary of counting on renewing Prop 123 — which passed by a razor-thin margin in 2016.

And some of the party’s right-wing members — like Freedom Caucus Chair and Sen. Jake Hoffman — are apparently against it for reasons of political calculus.

With Republicans unwilling and unable to move on Prop 123 this late in the session, that makes it effectively dead in the water, much to the governor and Democrats’ chagrin. On March 20, Hobbs paused budget negotiations with Republicans after they said a Prop 123 extension effort wasn’t going to happen.

Then, Hobbs imposed a moratorium on April 13 for any bills passed by the Legislature, promising to veto them until Republicans sent her a budget proposal of their own.

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“Unfortunately, the legislative majority has done nothing but say ‘no’ and hide their budget from the people of this state,” Hobbs railed at Republicans in a press release that day.

The reigning mood from Democrats is frustration — though their tone reflects a wistful resignation that they know they won’t get an extension of the former GOP Gov. Doug Ducey-era compromise.

As part of their plan to get their policy proposals heard at the Legislature, Democrats attempted introducing a strike-everything amendment to renew Prop 123 — which they’ve been trying to do since 2024.

Predictably, it flopped.

Public school advocates are equally pissed off about the lack of initiative.

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“This is the third year that they’ve had the chance to pass a renewal and it’s ridiculous that they continue to push this down the road. Our students can’t wait,” Tyler Kowch, communications manager for Save Our Schools Arizona, told us. “Our schools are kind of at a breaking point. There are collapsing ceilings, bathrooms that don’t work, potable water, all of these problems.”

While Republicans don’t necessarily have a silver bullet answer to the problem of public education funding, they are fairly confident they’ll be able to find the money again, just like last year.

Kavanagh suggested that Republicans could make some across-the-board cuts to other budgetary items, just not anything related to public safety and education.

The longstanding Capitol figure noted that legislators have dealt with bigger budgeting issues before — like after the 2008 Recession, when they cut $3.5 billion from a $10 billion budget.

But those massive cuts were made in large part to K-12 education, which actually led to a judge ruling in Cave Creek Unified School District v. Ducey that the state was failing to increase public education funding proportional to inflation. That judgment led to the compromise that was sent to voters as Prop 123 — which passed by a hair with 51% of the vote.

Kavanagh also said the state has $400 million of new revenue, which should help lawmakers find the money to fill the hole left by the expiration of Prop 123.

But just last week, the state’s Finance Advisory Committee lowered its revenue projections, saying the state will have $378 million to spend, rather than the $578 million that was projected in January.

The decrease is tied to increasing economic uncertainty and global instability, due partly to President Donald Trump’s decision to start a war with Iran — which has spiked fuel prices and, consequently, is expected to hike the prices of key commodities and goods like fertilizer and food.

So until Republicans put something on the table, it’s hard to really tell where they’ll find the money.

And as Kavanagh told us, tax cuts passed by Republicans in Congress, signed by Trump and supported by Arizona’s GOP lawmakers aren’t making it easier.

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“The tax cuts — which the governor partially supports and Republicans totally support — eats up most of that or about that amount. So then we have to find the monies for roughly $1 billion of items that are expected to be carried forward and were funded with one-time revenue,” he said. “We don’t have that, so that’s part of the problem.”

He said he expects a proposal to be ready “hopefully” during the first full week of May, if not next week.

Just like Hobbs’ office, we’re eagerly awaiting that plan to drop.

We’re not the only ones paying attention to Prop 123 right now. The sponsor of today’s newsletter also has a thing or two to say about it.

What’s the holdup on renewing Prop 123? Originally approved by voters in 2016, Prop 123 was a pragmatic, bipartisan solution that ensured Arizona students and educators received funding they were owed, supporting classrooms across the state for nearly a decade. But since its expiration in summer 2025, lawmakers have failed to act, leaving a roughly $300 million annual gap now straining the state’s general fund.

This should not be controversial. The solution is simple: send a clean reauthorization, with no additions and no extra language, back to voters and let them decide. Inaction now appears likely to continue for a third year in a row, raising concerns about Arizona’s commitment to its students and future workforce.

Arizona voters and business leaders have supported Prop 123 before. It’s time to give them that opportunity again. Read more about why lawmakers must act now and put a clean renewal on the November 2026 ballot.

Read Education Forward Arizona's latest blog to learn more.

It pays to be rich: Executives at Axon pumped thousands of dollars into the campaigns of lawmakers who passed a controversial bill last year to allow the Taser manufacturer to build a massive headquarters in Scottsdale, KJZZ’s Wayne Schutsky reports. The Axon executives created a new PAC that pushed $67,000 to lawmakers, including $5,000 to the sponsor of the bill, Republican Rep. Tony Rivero. The rest of the campaign contributions were spread out in smaller chunks to about 50 Democratic and Republican lawmakers. Axon’s founder Rick Smith also gave $5,500 to Democratic Rep. Alma Hernandez.

Anti-vaxmaxxing: As measles cases continue to spread through Arizona and the rest of the country, Arizonans who refuse to get vaccinated would not be denied services or employment under a bill that’s moving through the state Senate, Capitol scribe Howie Fischer reports. HB2248 wouldn’t just allow unvaccinated students to attend schools, it would also force any business, such as a concert venue, to let unvaccinated people use their services. The bill’s sponsor, Republican Rep. Lisa Fink, said her bill was inspired by the Declaration of Independence and protects a person’s “bodily autonomy.” Democratic lawmakers tried to use that principle to rouse support for SB1396, which would have guaranteed the right to obtain contraceptives, but Senate President Warren Petersen didn’t assign the bill to a committee, guaranteeing it would have no shot to become law.

Running the gauntlet: Gov. Katie Hobbs’ nominee to run the Arizona Department of Housing made it through Republican Sen. Jake Hoffman’s director nominations committee relatively unscathed, Camryn Sanchez reports for KJZZ. Ruby Dhillon-Williams, who currently serves as the department’s interim director, took some heat from Hoffman over low-income housing tax credits and the findings of a 2024 audit of the department, but she still fared better than many of Hobbs’ nominees in recent years. Dhillon-Williams’ nomination is now headed to the full Senate for confirmation.

Speechless: Apparently inspired by state Rep. John Gillette’s infamous description of Muslims as “fucking savages,” Arizona Senate Republicans pushed through a package of memorials urging President Donald Trump to designate CAIR as a terrorist organization, the New Times’ Morgan Fischer reports. Interestingly, the normally vocal Republican senators didn’t say a word during debate on the Senate floor, Fischer noted. Despite constantly being vilified unjustly, the Council on American-Islamic Relations, which has a chapter in Arizona, focuses on religious freedom and civil rights protections.

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Back in the saddle: Former Republic editorial page editor Elvia Diaz wrote her debut column for the Arizona Mirror (she also publishes Notas on Substack) by eviscerating Maricopa County Recorder Justin Heap, calling him “exactly the kind of person you don’t want to oversee elections” and taking readers step-by-step through Heap’s MAGA-fied first 15 months in office.

Debates season is right around the corner!

As we prepare to grill the candidates as part of the Arizona Citizens Clean Elections Commission legislative debate series, we want to know what issues matter most to you.

Sure, we know you care about issues like education, elections, water, the border, infrastructure and the environment.

But those are pretty broad.

So this week, we’re asking you to help us narrow it down a bit by filling out some simple surveys. Today’s “What’s Your Issue” is about education.

Think of it this way: If we can only ask candidates about one of the subtopics on this list, what should it be?

Longtime Republican Sen. John Kavanagh doesn’t usually face much of a fight during GOP primaries in his deep-red Fountain Hills district.

Which is a shame, because when he does, we get content like this.

Kavanagh launched an opposition research hub for his primary opponent, Robert Wallace — a website helpfully titled WeirdWallace.com — to make sure voters know exactly what their other option looks like in the LD3 Senate race.

The site is a curated archive of Wallace’s musings on topics like traveling to alternate dimensions and experiencing “hallucinations of Teletubbie & lizard-like beings.”

Among the collection of Wallace’s self-published videos and podcast clips, the Senate contender discusses “bathroom spirits,” that is, “spirits who actually derive a sense of joy from a person spending an abnormally long time sitting on the toilet.”

In another clip, Wallace recounts his time working at the Church of Scientology, where he says he studied past lives and once dreamed about his own past life as a “gangbanger” which, he adds, “explains a lot about (his) current life.”

Those are just some of the many gems uncovered by the investigator Kavanagh told us he hired to compile material for the site.

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“I don't believe in reincarnation, but I'm a retired cop, so I might have actually arrested him once,” Kavanagh said.

The crown jewel of the investigator's findings, however, is what the website dubs the “Taco Bell Sauce Incident.”

The site links to a Reddit post from a user he claims is Wallace, “DMTinme,” recounting an interaction with a Taco Bell manager who refused to give him 20 packets of hot sauce, a courtesy he had “never been denied in 20+ years of going to Taco Bells across the country.”

In a happy turn of events, DMTinMe later reports that the Taco Bell representatives apologized and sent over coupons, and he can now “go back to Taco Bell without anxiety.”

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