Arizona’s budget recipe

How the budget sausage gets made ... In other newsletters ... And Arizona's Antifa conservative lawyer needs your help.

Every year, your lawmakers meet behind closed doors to game out how to spend billions of your tax dollars.

It’s a convoluted, clandestine process that leaves out the public and the Legislature’s minority party as Gov. Katie Hobbs and Republican leadership try to agree on how to spend the state’s money next fiscal year, which starts on July 1.

The House and Senate have taken several weeks off for budget negotiation time — there aren’t a lot of bills left to vote on. But Hobbs’ spokesperson, Christian Slater, told us that official talks between Hobbs’ staff and legislative leaders only started last week.

Since the public doesn’t get a seat at the budget table, we figured why not lay out the budget process in a way that actually makes sense? So we turned the state’s annual budget process into something easier to digest: a recipe.

Our art intern, ChatGPT, knows that making the state budget can get messy.

Soon, budget talks will turn into a plan. And the majority of Arizona’s 90 lawmakers will have to vote to approve that plan by June 30 or the state government will shut down. The deadline is likely sooner this year because Republican Rep. Matt Gress, who vice chairs the House Appropriations Committee, has to leave by June 22 for his wedding in Italy.

The budget was delayed even more than usual this year after Republicans announced a plan to give Arizona’s universal school voucher program state constitutional protection through the renewal of Prop 123 — the $300 million per year public school funding stream that's about to run dry. Last week, Republicans gave up and said they’ll wait to send a Prop 123 renewal to voters next year.

Now, budget negotiations seem to be back at the starting place they were supposed to be at when lawmakers left for vacation earlier this month.

But even though the budget will be baked in the next few weeks, it takes a lot of time to prepare for it.

Kinda like a really complicated recipe.

---

Recipe: Arizona State Budget

Prep time: 5 months (minimum)

Serves: 7 million+ Arizonans

Warning: May cause indigestion (fiscal and otherwise)

Ingredients

• 1 Executive Budget Proposal (from Gov. Hobbs)

• 1 JLBC Baseline Budget

• 1 divided Legislature (Republican majority)

• 4 competing caucus proposals

• 1 giant pot of formula-funded programs (AHCCCS, prisons, schools)

• Heaping scoops of discretionary pork

• A dash of optimism (optional)

• Endless spreadsheets

• Political brinkmanship (to taste)

Step 1: What does the governor want to make?

When you hear about the “governor’s budget,” we’re really talking about her budget proposal. Legislative Republicans will have one too, as will Democrats. Each of the four legislative caucuses might even craft its own budget proposal.

After the governor reveals her plan each January, Republicans skim it for anything spicy they can publicly reject.

This year, Hobbs announced she wants to spend $17.7 billion on things like childcare, public safety and housing affordability. Republicans were on board with some of her initiatives, like boosting border security funding, but not Hobbs’ plan to put income caps on who can get school vouchers. This was the third year she proposed cutting back vouchers, and the third year Republicans called it a nonstarter.

Hobbs updated her budget in March to reflect that school voucher spending will surpass $1 billion next fiscal year, and that the budget needs $48.4 million for vouchers in the current fiscal year.

Step 2: What are the must-have ingredients?

After the governor announces what she wants to spend the state’s money on, two separate groups of economists offer opinions on how much money Arizona has.

It’s kind of like deciding to make lasagna homemade or with store-bought ingredients: You have two very different lists to follow based on the recipe.

The politicians and economists projecting the state’s revenues offer different, constantly evolving opinions on the economy. Lawmakers can choose to budget based on revenues that are higher or lower than the economists’ projections.

The Joint Legislative Budget Committee advises the Legislature. It’s staffed by economic intellectuals who create a “baseline budget” as a starting point based on spending increases passed in prior years and predetermined formulas. There are must-have ingredients — the lasagna’s noodles and sauce — like formula-based spending for K-12 education, Medicaid and prisons.

The Governor's Office of Strategic Planning & Budgeting is comprised of Hobbs’ staff who create their own revenue projections and write up her fiscal priorities for the state.

Like the JLBC, it starts with a baseline estimate. But this budget also includes how much money the executive branch wants to put toward specific policies.

Step 3: The budget roast

Lawmakers on the House and Senate appropriations committees hear presentations on the governor’s budget. This year’s hearings were extra spicy.

After that, there is usually a long lull in the budget action. Everyone is waiting for the more accurate, timely projections that JLBC comes up with in April.

This year, the JLBC warned that Arizona will have a lot less new revenue than originally projected — President Donald Trump’s tariffs threw the economy into a tailspin — but they revised those projections slightly after individual income taxes came in higher than expected in April.

Economists warned lawmakers not to count on that extra revenue, but to treat it as a one-time spending opportunity. And they're still urging cautious budgeting: Although a federal court shut down Trump’s tariffs (thanks to a lawsuit led by Arizona Attorney General Kris Mayes), the federal budget bill making its way through Congress shifts a lot of expenses to states.

Step 4: Stir in the pork

This is the fun part for Arizona’s lawmakers.

Leaders hold a series of three-way meetings between the governor, Senate President Warren Petersen and House Speaker Steve Montenegro in the proverbial “cage”¹ where the three fight it out to come to some sort of final product that all parties can settle for.

Once that agreement becomes public, House and Senate leaders have to round up enough votes to pass it. The documents that outline spending usually get leaked to the press (often via lobbyists, who lawmakers share the documents with freely) and foster some (unintentional) public discourse.

The annual budget leak is a sign that the budget process is getting serious.

To whip up the 31 minimum votes in the House and 16 in the Senate, leaders can give a lawmaker’s bill a hearing, fund their pet projects or make other concessions. Think of them as the extra spices tuned to lawmakers’ preferred flavor profiles to make them sit down and eat.

In 2023, lawmakers put together a budget with widespread bipartisan support by giving lawmakers their own individual pots of money, up to $30 million each, to spend as they pleased in exchange for supporting the overall package.

Lawmakers overspent.

They had to fill a $1.3 billion gap the following year, but leaders still gave lawmaker-specific handouts to get the votes.

Democratic Reps. Myron Tsosie and Mae Peshlakai, who represent the Navajo Nation-based Legislative District 6, supported the budget after it included $2 million for the Navajo Nation.

Lawmaking sisters and Democratic Reps. Alma Hernandez and Consuelo Hernandez voted for last year’s budget after securing health and food distribution programs in Southern Arizona and $7 million for an Arizona Holocaust Education Center.

Step 5: Serve the budget bills

Legislative leaders only introduce budget bills after they believe they have enough votes to pass the deal outlined in the budget docs. Then they’ve got to ram the food down lawmakers’ throats before it gets cold.

Those budget bills are served in two main courses:

The General Appropriations Act is the main bill that supplies state agencies with their operating money from the state General Fund and comprises most of the budget’s allocations.

Budget reconciliation bills, or BRBs, cover more policy-specific areas connected to how the state spends funding buckets.

Those BRBs are often how we can tell whose votes were bought.

Step 6: Take a nap

Lawmakers sine die, or close out the session, after completing one of their only required tasks of passing a state budget.

While they’ve had a lot of time to rest on vacation, they’ll be able to take a break until next year. Most legislators have other gigs to beef up their income when they’re not in session.

Several lawmakers will turn their focus to 2026 election campaigns. Senate President Petersen is challenging Mayes for the attorney general spot, and Republican Rep. Alexander Kolodin is challenging Secretary of State Adrian Fontes. Others, like Gress, would be happy to sneak in a quick honeymoon and be reelected to their current gigs.

But even when lawmakers leave for the year, we’ll still be in your inboxes serving up important Arizona-based news. Add your line item to our budget reconciliation bill today.

---

Correction to yesterday’s edition: We said Democratic superintendent of public instruction candidate Teresa Leyba Ruiz works at Education Forward Arizona. In fact, she resigned earlier this year to focus on the race.

Back in March, President Donald Trump riled up the education world when he started dismantling the Department of Education. A ton of people sued, including Arizona’s attorney general.

In this week’s Education Agenda, we zoomed in on a federal judge as he eviscerated the legal arguments coming from the White House.

The 88-page ruling from U.S. District Judge Myong J. Joun read like a middle-school teacher grading a book report that obviously was written the night before it was due.

In the end, Joun, a Biden appointee, blocked the Trump administration from cutting the department’s workforce by half, which he said would have stopped the department from completing the duties set by Congress.

He also blocked the administration from moving services, like protecting the rights of special needs students or handling the student loan portfolio, to other federal departments.

“None of these statements amount to a reasoned explanation, let alone an explanation at all,” the judge wrote.

It got worse from there.

Elsewhere in education news, Arizona’s voucher program is getting the deep dive treatment, international students are once again in crosshairs, and the race to be Arizona’s top education official is heating up.

---

Who gets to regulate artificial intelligence? For now, states are taking the lead as Congress dithers.

But that could change soon, as we detailed in this week’s A.I. Agenda.

AI moves fast. Congress doesn’t.

But if Congress gets its way, they’d be the only ones who can regulate AI.

A proposal to block states from passing any AI-related laws for 10 years was tucked inside the “big, beautiful” budget bill that made it out of the GOP-led U.S. House earlier this month.

In effect, the same people who move at a glacial pace want to hold the reins of a technology that makes breakthroughs every day. And each one of those breakthroughs generates serious, and largely unknown, implications for society as a whole.

Meanwhile, a “compute city” is coming to Arizona, an East Coast-West Coast battle is brewing among AI intellectuals, and AI might be good at massages, but not so much as a reviewer of job applications.

---

And the Water Agenda landed an interview with Attorney General Kris Mayes, who offered a behind-the-scenes look at one of the biggest water lawsuits going on right now.

Come for the water nerdery, stay for Mayes’ war stories as a former journalist.

An interview with Arizona’s Attorney General?

✔ Check.

The annual weather report prepared for Arizona’s Governor?

✔ Check.

The most important water news stories in the state?

✔ Check.

You must be reading the Water Agenda — Arizona’s weekly water newsletter, brought to you by a dedicated independent journalist who must really care about this stuff.

We’ve spent this Memorial Week crying in our beers for all the dead local news organizations we miss (and for those bought and gutted by terrible companies).

But we wanna close out this sales gimmick with something different.

In the wake of seemingly endless rounds of layoffs at the big corporate papers, the consolidation of TV and radio news, and the shuttering of many other local publications, something cool has happened.

Small, local, independent news organizations are sprouting — and many of them are run by actual journalists.

We’re still not big enough to fill the void left by the giants.

But we’re trying. And we need your help.

So today, rather than dwelling on what we’ve lost, let’s celebrate a couple of the new, independent news sources that have popped up around Arizona.

• We love LOOKOUT, Arizona’s best LGBTQ+ news outlet. They’re covering LGBTQ+ issues in the way they deserve, but have never had locally — with hard-hitting investigative and enterprise coverage on issues affecting the community and the state. But they need your help to keep doing it.

• We’re also huge fans of Arizona Center for Investigative Reporting. They’re not exactly new to the scene, but AZCIR is attempting to fill the massive investigative journalism hole that the bigger papers are creating, and that the little news organizations can’t fully fill. They don’t publish much, but when they do, it’s worth reading. Kick them a few bucks if you can.

• And of course, we gotta show love for the dozens(?) of local newsletters that have been born since the Agenda came on the scene, from Robert Robb’s heady newsletter to David Fitzsimmons’ strange Substack. We also love the veteran border reporting from the Border Chronicle, the progressive advocacy training at Civic Engagement Beyond Voting’s Substack, the scrappy conservative school takes from State 48 News, the public-records-based Fourth Estate 48, the mouthy Southern Arizona Three Sonorans newsletter, and so many more.

Each one of them is trying to step up to make Arizona a better place, and they all need your support to keep doing it.

So please subscribe, donate, or just tell a friend about them.

Trust us when we say that each dollar, each click, and each mention helps.

Speaking of helping journalists, Rachel Alexander needs your help.

Don’t recognize that name?

Well, back when Maricopa County Sheriff Joe Arpaio was running the show and his buddy, Maricopa County Attorney Andy Thomas,² was still investigating judges and politicians that they didn’t like, Alexander was a deputy on their team.

Thomas and another deputy, Lisa Aubuchon, were eventually disbarred for their roles in the political investigations, but Alexander was let off with a six-month suspension for her involvement in the legally dubious RICO lawsuit targeting local politicians and judges.

That was 2013. Since then, she’s become a conservative blogger and frequent tweeter.

Now, she wants her law license back. And she’s hoping you can kick in a few bucks to pay off her $101,500 in disciplinary fines.

1. “The cage” is the nickname for a windowless, unremarkable room in the equally unremarkable JLBC building where budget leaders traditionally fought it out. These days, we hear negotiations often take place in the executive tower or in the House and Senate, but we assume someone still locks the door and slides food through a slot until negotiators are finished.

2. Thomas, we discovered while writing this article, has his own Substack. Because of course he does.