The fun part of a budget deal is announcing it.
But after Tuesday’s celebration over Gov. Katie Hobbs and Republican legislative leaders finally striking a deal, lawmakers now have to contend with what’s actually in the spending plan.
Yesterday, lawmakers spent more than three hours processing the nitty-gritty details of the deal, including by listening to testimony from people upset that their funding priorities didn’t make the cut.
But despite some objections to the bipartisan budget compromise, lawmakers passed it in a 23-3 vote during a Joint Appropriations Committee meeting, signaling that it is likely to garner enough support in both chambers to land on Hobbs’ desk by the end of the week.
Today, lawmakers are expected to make last-minute amendments before taking final votes on the budget.
The headline of the $18.3 billion budget, as we reported yesterday, is that it cuts $1.4 billion in state taxes, which House Appropriations Chair and GOP Rep. David Livingston and other Republicans gushed over during the committee meeting.
“It’s a big deal, and it’s all that matters in this budget. Everything else is small potatoes, and we can fight over small potatoes,” Livingston said. “We have implemented H.R. 1 (aka the ‘One Big Beautiful Bill’), and we were the first state to do as much of it as we did.”
To give those tax breaks — some of which the House’s Democratic leader, Rep. Oscar De Los Santos, noted he had tried to pass in a previous bill — plenty of budget cuts had to be made. In the end, the compromise made 2.5% cuts across the board for state agencies, down from the 5% cuts the Republicans pushed in the last budget they passed in May — which Hobbs swiftly vetoed.
The overall sentiment prevailing on both sides of the aisle was that the budget is a solid compromise for a divided government.
“I take the criticism of this budget to heart,” Democratic Rep. Stephanie Stahl Hamilton said. “We were tasked with creating a plan that can work in the political environment we are in, and I think that’s what we’ve done. While no budget is perfect, and this one certainly isn’t, I believe this budget delivers relief for working families who are struggling in an affordability crisis.”
She pointed to funding for child care, food assistance, rural hospitals and public safety as examples of Democratic wins that survived the negotiations.
But now that the excitement of getting a budget deal cut is petering out, some lawmakers are becoming more aware of the “small potatoes” changes that Livingston mentioned.
“There appear to be some more kinks to be ironed out in this budget, some i’s to be dotted and t’s to be crossed,” De Los Santos said approvingly, “but for now, I vote ‘aye.’”
Biggest winners
Both parties claimed victories in the negotiated compromise, but Republicans secured one of the budget’s most obvious wins by getting near-full adoption of President Donald Trump’s tax cuts.
Hobbs vetoed Republicans’ early attempts to adopt the new federal tax code, while Democrats consistently blasted them as tax breaks for the rich. The budget that Hobbs negotiated has most of them anyway.
@azhousedems #azleg #azhouse #housedems
But Democrats weren’t completely pissed about the tax cuts, some of which will help out the working class — such as getting rid of taxes on tips and overtime and raising standard deductions.
In fact, the standard deduction change was included in a pair of bills sponsored by Democratic leadership back in January.
Meanwhile, Democrats’ most-cited win was a three-year pause on issuing new tax breaks to data centers.
“Dozens and dozens of everyday Arizonans who worked hard for their money … told me repeatedly that they did not want to see their money going to data centers. We have completely flipped the switch,” De Los Santos said. “Today, Arizona takes the next step in becoming the first state in the country to place the toughest moratorium on the data center tax giveaway.”
While the unpopularity of tax incentives for data centers has made the issue an easy one for Democrats to pounce on, ending the incentives does not translate to a very large piece of the budgetary pie. The moratorium on data center tax exemptions is expected to bring in about $38 million every year for the state — a minuscule portion of the $18.3 billion budget.
And the economic impact of the end to data center tax incentives is about 2.5% the size of Republicans’ tax cuts.
Democrats can also claim a few defensive wins through programs that survived the new deal after Republicans targeted them in the budget they passed on their own last month. That includes civil legal aid, after-school child care and food bank funding.
Democrats didn’t stop new eligibility checks for the state’s SNAP and Medicaid programs, but they made them less aggressive than the GOP-only plan, swapping broad mandates for more targeted reviews and added staffing.
Biggest losers
To negotiate within the confines of the state’s tight finances, budget writers found money for bigger priorities by cutting from places that would carry the least political blowback.
In some cases, lawmakers swept existing pots of money back into the General Fund, including accounts set aside for rural water projects, financial fraud policing and business recruitment.
While most state agencies took 2.5% cuts, Arizona’s three public universities took a significant hit of $16.5 million combined — and the Arizona Board of Regents also got hit with a major cut as the Legislature limited the amount of funding ABOR can take from the universities for its operations.
“ABOR is getting 32% (cut),” Republican Rep. Matt Gress said. “Cutting it to $5 million, I have serious concerns about — and that would be a dramatic impact to the operations of the regents. So, I would encourage my colleagues to see if we could address that in a floor amendment.”
Negotiators also cut $16.3 million from one-time funding added to the Arizona Promise Program last year— a signature Hobbs initiative that pays for low-income residents to attend a public university. 1
And some lobbyists — as well as people actually affected by funding changes — showed up to chime in or air their grievances.
Nick Ponder, a lobbyist representing the Arizona Community College Coordinating Council, told the joint committee that adult education — like GED and workforce development programs — is at risk if the Legislature doesn’t pass more funding for it. He advocated for that funding by pointing to research that shows adult education is an effective way to get people off food stamps or other welfare programs and save the state money.
Lauren Armour, a government relations director for Maricopa Community Colleges, noted that the budget would be the 12th consecutive budget with no funding for the workforce development-oriented schools.
And a woman named Amber Brown, who said her son has “severe autism” and a history of being assaulted by school district and group home employees, showed up during the Appropriations meeting to criticize the disappearance of $1.2 million for group home oversight from the budget.
She referenced the Hacienda Healthcare rape case, and called the cut for oversight funding a “penny wise, pound foolish decision.”
More tangled webs: A special prosecutor appointed by the Maricopa County Attorney’s Office has been looking into whether County Recorder Justin Heap’s employees removed a scanner and provisional ballot envelopes from the county’s election headquarters, Sasha Hupka reports for Votebeat. Former Pinal County Attorney Kent Volkmer, a Republican who’s also involved in Pinal County’s “investigation” of Mark Lamb’s sexting escapades, was appointed after Maricopa County Attorney Rachel Mitchell determined there would be a conflict of interest if her office did it. Volkmer says he hired an off-duty reserve deputy at the Pinal County Sheriff’s Office to help look into the scanner incident and now their investigation is “wrapping up.”
Chatting about chicken: After our very own TJ L’Heureux broke “Chickengate” wide open, FOX10 interviewed him about the oddly hilarious incident of Democratic Sen. Kiana Sears demanding a chicken joint remake food for her that she didn’t pay for and everybody else seemed to enjoy. The anchors had a lot of fun with the puns.
Overstepping overruled: A Maricopa County judge just blocked another attempt by state water officials to limit groundwater pumping in the Phoenix area, Tony Davis reports for the Arizona Daily Star. Judge Scott Blaney (who’s also overseeing the dispute between Heap and the board of supervisors) said state officials overstepped when they allowed new housing developments in areas that don’t have enough groundwater if developers find an alternative supply for 25% of the groundwater they use. That ruling came two months after Blaney overturned a decision by state water officials to block new homes in the Phoenix area that rely on groundwater.
Playing favorites: Former Democratic state Rep. Amish Shah made clear during a debate this week that he’s pissed at national Democrats for openly supporting his Democratic rival in Arizona’s 1st Congressional District, per the Republic’s Laura Gersony. Shah says party “insiders” are putting their thumb on the scale for Marlene Galán-Woods, a former reporter and widow of former Arizona Attorney General Grant Woods. For her part, Galán-Woods chastised Shah for not committing to support the primary winner in the general election.
Going her own way: Democrats in west Phoenix added to their complaints about state Rep. Lydia Hernandez, the Republic’s Ray Stern reports. Dems in Legislative District 24 censured Hernandez for regularly voting with Republicans, as well as using the term “colored kids.” Hernandez says it’s a ploy to help one of her Democratic rivals and the district is actually “purple,” not blue. She has a long history of clashing with her party — while still winning elections — at the Legislature and on the Cartwright Elementary School District Governing Board.
Welcome to the next installment of the never-ending chronicles of politicians royally screwing up, refusing to admit it, and then blaming it on something else.
This time, it’s Deer Valley Unified School District Governing Board member Kimberly Fisher making a Nazi salute and saying “Heil” at a board meeting.
As you might expect, that was met with a backlash from district officials, parents and the local Jewish community.
Fisher apologized, saying she was just pointing out that the board president runs meetings like a dictator.
But that apology melted away when parents called her out at the next board meeting, Chase Golightly reports for 12News.
In fact, she claims she’s the victim here. The teachers union, Democrats and news outlets are out to get her.
Why? Not because she looked and sounded like a Nazi. It’s because she’s a Christian, she says.
“The biggest thing y’all hate me for, my faith in Jesus Christ,” Fisher said.
More than a few people at the meeting called for her to resign, but she says they’ll have to do a recall to get her off the board.
1 Clarification: We edited this line to clarify the $16.3 million cut was from one-time, extra funding, not the program’s baseline funding.