By the Numbers

The budget figures, broken down ... Time continues to be a circle ... And John is our most unexpected fan!

Crafting the state budget is complicated. We broke down how the process works for you in this explainer. 

Now, Arizona is heading for a nearly $2 billion funding shortfall that’s intensifying the complexity of the spending plan. The key points of contention have surfaced, but sometimes, it’s just easier to look at the numbers. 

Both Gov. Katie Hobbs and the Joint Legislative Budget Committee have dropped their budgets. Lawmakers on the appropriations committees that hash out spending issues spent yesterday reviewing both. 

Republican lawmakers have yet to present a rebuttal to Hobbs’ budget, but they spent the morning criticizing it. 

Sen. John Kavanagh kicked off the Joint Appropriations Committee by telling the governor’s budget presenter Marge Zylla that he hopes to discuss “plan B,” or the assumed backup plan with a more flexible set of policies the Republican majority is more likely to entertain. 

It will probably take a while to get there. 

The key numbers: 

• Hobbs’ office proposed a $16 billion budget, a decrease ⬇️ from last year’s $17.8 billion state spending plan as Arizona faces a worsening funding shortfall.

• The economists at the JLBC think the deficit for the next two years is $1.7 billion, nearly twice ⏫ the amount Hobbs’ $900 million estimate.

• The Governor’s Office estimates Arizona will pull in $823 million more ⏫ revenue than the JLBC thinks the state will.

• The JLBC estimates¹ baseline spending will decrease ⬇️ $1.5 million in the next fiscal year due to the cessation of one-time spending that the group deleted in the next fiscal year, although Medicaid and K-12 enrollment is up. 

• Hobbs is cutting about $1 billion ⬇️ from the budget in a mix of cuts, sweeps and clawbacks and delays.

To make up for the shortfall, the governor’s budget proposes clawing back ↩️ $770 million in existing funding: 

• $419 million in transportation projects, like the I-10 widening in the West Valley.

• $188 million for capital projects, including state corrections department repairs. 

• $163 million in operating expenses, like the Prescott Rodeo and Arizona Department of Education.

For the next fiscal year, the governor proposes cutting ✂️ $737 million, including: 

• $413 million in ESA cost.

• $300 million of planned funding for long-term water projects.

• $4 million from the House and Senate budgets, combined.

• $3 million from the Governor’s Office budget, including $1 million from the Missing and Murdered Indigenous People Task Force.

The governor also wants to sweep 🧹 $282 million in funds from 44 agencies to help make up the difference.

Hobbs’ budget adds $344 million to ongoing initiatives next fiscal year, and $527 million in one-time spending, though as JLBC Director Richard Stavneak noted, many of the items on the one-time funding list, like state employee health insurance and child care, are likely not expenses that can be sustained within a single year.

Compared to the JLBC’s baseline budget, Hobbs makes more than 250 policy changes. 

ESAs: This is the main point of contention among legislative Republicans, and it was the most frequently hammered point at today’s Joint Appropriations Committee hearing. Republicans just made the vouchers universal, and they don’t plan on budging to get the budget passed. 

• Hobbs’ budget proposes limiting ESAs to students who’ve attended public schools for 100 days. Her office estimates that will save the state $244 million next fiscal year by reducing the number of vouchers awarded to 27,000 from the current 72,000.

• The JLBC forecasts ESA enrollment, without a new public school attendance requirement, will reach 82,000 next school year at $825 million. 

School Tuition Organizations: Hobbs’ plan would get rid of School Tuition Organizations, known as STOs, or entities that receive income tax credits to fund scholarships to private schools. 

• Starting in fiscal year 2026, the Governor’s Office estimates this will save Arizona $185 million.

The border:  Hobbs is pushing two acronym-named programs to combat the fentanyl epidemic and make the border more secure: SAFE (Stopping Arizona’s Fentanyl Epidemic) and SECURE (Safety, Enforcement, Coordination, & Uniform Response). 

• Her budget puts $15 million into the anti-fentanyl initiative, such as $5 million to expanding drug-interdiction efforts with the Department of Emergency and Military Affairs. 

• Operation SECURE gives $1 million Department of Homeland Security to monitor the border. 

Healthcare reform: Hobbs made a point to put up funds to clean up the healthcare licensing system after an influx of sober living homes defrauding the state Medicaid system caused the governor and Attorney General Kris Mayes to call attention to them in May. That includes: 

• $24.8 million in healthcare licensing reform measures, including … 

• $10 million to AHCCCS to get more people to join behavioral health quality improvement initiatives.

• $1.9 million ongoing and $157,500 one-time to add employees to respond to complaints at the Department of Health Services.

Water: Hobbs wants to put $73 million into efforts to protect the state’s water resources next fiscal year. 

• $33 million for the  Long-Term Water Augmentation Fund to import new water into Arizona and create long-term water supply development projects (down from a planned deposit of $333 million).

• $27 million for proactive forest restoration for areas prone to wildfires.

• $9.5 million to the Water Quality Fee Fund that makes sure surface and drinking water are clean.

Childcare: Hobbs’ budget proposes $100 million for childcare as COVID-era funding for this purpose wanes. 

• The governor’s office says this will keep 5,000 families off an indefinite waitlist.

• $91 million more will also go to the Federal Child Care Development Fund, a federal program for childcare assistance.

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Make 2024 2016 again: Former President Donald Trump is hosting a rally at the magically COVID-free Dream City Church next week. Meanwhile, he gave Kari Lake a shout-out after winning the Iowa caucus Monday, saying she’ll be a great U.S. senator. (It wasn’t lost on Arizonans that he didn’t say “great VP.”) Meanwhile, Lake and a PAC aligned with Democratic U.S. Rep. Ruben Gallego are already hitting the local airwaves with ads blasting U.S. Sen. Kyrsten Sinema ahead of November’s election, even though Sinema isn’t officially running for re-election yet, the Republic’s Ron Hansen notes. 

Succession: Gov. Katie Hobbs is trying to out-flank legislative Republicans by proposing an even bigger teacher pay raise (and deeper dip into the state’s land trust fund) than legislative Republicans proposed. The idea was first championed by Gov. Doug Ducey back in 2016, but now his Prop 123 is running out and politicians are scrambling to replace it. State Treasurer Kim Yee, however, called Hobbs’ plan “dangerous and unsustainable,” which should ring bells if you were around for the Prop 123 fight, when then-Treasurer Jeff DeWit told Ducey his plan was also unsustainable.² Hobbs, however, wants to increase the draw to 8.9% rather than the 6.9% distribution in Ducey’s plan and legislative Republicans’ planned extension, Capitol scribe Howie Fischer reports. 

Got swindled, still running: Former Arizona Republican state Rep. Walt Blackman is accusing his campaign treasurer of embezzling $50,000 of donor money from Blackman’s failed 2022 congressional campaign, the Arizona Politics Blog reported based on filings to the Federal Elections Commission. The treasurer, Thomas Datwyler, has been involved in a bunch of shady campaign finance violations while working for Republican candidates and is apparently hiding out from law enforcement, per Blackman’s complaints. Blackman is attempting to return to the Legislature from the sprawling Legislative District 7 in a crowded GOP primary that caught the attention of the Payson Roundup’s Peter Aleshire. It’s quite the lineup!

The good old boy’s club parties are over: You can’t just throw lavish parties for uberwealthy CEOs with state money in an attempt to wine and dine them into moving operations to Arizona, Attorney General Kris Mayes announced, agreeing with the Auditor General’s Office that the Arizona Commerce Authority’s longstanding practice of throwing posh shindigs for CEOs appears to clearly violate the state constitution’s “gift clause.” The announcement comes as far-right lawmakers are attempting to eliminate the Arizona Commerce Authority altogether, the Republic’s Stacey Barchenger writes. Hobbs, who voted against creating the ACA back in the day, “disagrees” that its parties are unconstitutional, per her spokesman.

Unhoused and unsheltered: The U.S. Supreme Court is set to review the 9th Circuit Court of Appeals decision declaring politicians cannot criminalize “urban camping” AKA homelessness if they don’t provide funding for enough shelters to house people, Reuters reports. The 9th Circuit precedent, first set in another case in 2018, has vexed Western states and cities under the court’s jurisdiction, including Phoenix, which complained that the ruling tied the city's hands when it came to dealing with “the Zone.” Meanwhile, Phoenix launched a new court for unsheltered people accused of low-level offenses that is aimed at connecting them with resources to solve the long-term problems leading to their infractions, KJZZ’s Christina Estes reports. 

Fitting: Republican Rep. Justin Wilmeth wants to make Pluto the official Arizona State Planet, even though it’s not a planet. Pluto was discovered by astronomers at Lowell Observatory in Flagstaff. And back in Wilmeth’s day, it was still called a planet, he explained to Capitol Media Services, which included a helpful list of other official Arizona state items, including our official drink, firearm, butterfly, gemstone, fossil, metal, mammal and dinosaur

Send them to Tucson: U.S. Border Patrol plans to end “street releases” of asylum-seekers amid a reported dip in border apprehensions, the Nogales International’s Angela Gervasi reports, citing county officials. Border Patrol hasn’t confirmed the plans, but locals say they’ll bus migrants directly to Tucson without dropping them off in Nogales.

Today in Tucson: It’s coyote mating season, and they may be more aggressive, Tucson Wildlife Center’s executive director Lisa Bates told ABC15’s Bri Pacelli.

“Coyotes are not aggressive toward people, but if you put a little dog or a little cat out there, unattended, they will think of it as a steak sandwich,” Bates said. 

Today in Safford news: A Safford cat³ saved its human’s life twice, once after her camper caught fire and the cat woke her up, then again after she ran inside to save her boyfriend and the cat called her back out. The boyfriend wasn’t in the camper and nobody, including the cat, was injured, the Eastern Arizona Courier’s Brooke Curley and Tom Bodus report.

Longtime readers will remember that one time we included Republican Sen. John Kavanagh’s testimonial praising the Agenda as an unexpected compliment. 

Well, yesterday, he continued his campaign to ruin our street cred by reading the Agenda ALOUD in the Joint Appropriations Committee meeting for two full minutes. 

“My thoughts were really summed up this morning in an online news publication called the Arizona Agenda, which I think we can all agree is not a conservative or Republican publication…” he began.

Friends, it was wild…

We couldn’t include the whole video in today’s email, but you only have to scroll to the 2:40 mark to find it — he interrupts the Governor’s Office presentation before it even gets started.

Meanwhile, gubernatorial Chief of Staff Chad Campbell seemed to imply there was no Plan B.

To be very clear here: Here’s gubernatorial spokesman Christian Slater answering a question about Plan B during the brief on-the-record portion of Friday’s budget briefing.

1. The JLBC crafts spending estimates based on any spending increases passed in prior years and predetermined formulas that calculate spending for things like K-12 education and Medicaid.

2. Upon mentioning DeWit’s name in association with Prop 123, we are contractually obligated, as an all-inclusive Arizona politics newsletter, to once again direct your attention to “the doughnut incident” of 2016.

3. The cat was, regrettably, not named in the original news story.