The Daily Agenda: Budget brouhaha brewing

Last year was easy … The DOJ isn’t known for tipping its hand … And welcome to Phoenix, we guess.

In May, Gov. Katie Hobbs struck up a deal with Republican lawmakers to pass a $17.8 billion state budget that should have left the state with a slim $10 million surplus by the end of the year. 

Now, the state is facing a $800 million budget shortfall for this year and the upcoming one, fueled by declining income and sales tax collections. 

Also gassing that fire is overspending on universal school voucher dollars that are anticipated to reach $900 million throughout the next year, far surpassing the original $65 million estimate. 

Our art intern, ChatGPT, went all out today. We didn’t really understand the symbolism, but who are we to question an artificially intelligent artist?

Legislative Democrats blame the shortfalls on Republican tax cuts under Gov. Doug Ducey and unaccountable private school tuition subsidies for the wealthiest in the state.

But most Republicans aren’t so concerned — the shortfall isn’t structural, and worst case scenario, they can dig through the metaphorical couch cushions and postpone some of the road repairs they approved last year. 

“We're not falling off a cliff. There are people who for political reasons want to say that, but this is easily manageable,” Republican Sen. John Kavanagh told us. “We have some funds to sweep, we can defer some capital projects going forward because some already are ready for that. So it's not gonna be a big disaster.” 

Crafting a budget is a fine art of give-and-take, but Democrats criticized Hobbs' first budget negotiations for giving too much. Limiting school vouchers was one of her big priorities, but it fell flat at the GOP-controlled Legislature. Instead, Democrats got wins like a $300 million increase in K-12 education and a $150 million deposit into the Housing Trust Fund. 

Republicans celebrated a tax rebate of $250 per child for families with dependents, capped at three kids. They also celebrated what wasn’t included, like $40 million to provide college scholarships Dreamers, or children of undocumented immigrants. 

There’s an argument to be made that Republicans emerged victorious in the budget brokered by Arizona’s first Democratic governor since 2009, having secured tax cuts, protected school vouchers and garnered lots of one-time project spending to bring back to their districts. 

Last year’s bipartisan budget process was greased by lawmakers’ largess, with each lawmaker who supported the budget receiving up to $30 million to allocate as they saw fit. Next year’s budget battles won't be so easy.  

When legislators return in January, they’ll face the prospect of the first real budget cuts since 2015. And unlike back then, the Republican majority in the Legislature will have to negotiate with a Democratic governor to decide on those cuts. Negotiations will be brutal. 

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But even in a budget crunch, state agencies still have needs. A quick review of their budget requests to Hobbs this year shows that nearly every agency has some ask for additional spending, and many have big holes to fill. 

• The Department of Public Safety, for example, is facing an unprecedented vacancy rate, with nearly 500 positions unfilled, or almost a third of its sworn positions, according to the Arizona State Troopers Association. 

• The Department of Corrections needs roughly $100 million to improve inmate healthcare to comply with a federal court order. 

• Even the Arizona Supreme Court wants an additional $30 million for a host of needs, including recruiting and retaining probation officers. 

No peeking: The City of Phoenix wants to peek at the draft of the report that the Department of Justice is working on as it investigates the Phoenix Police Department for a wide-ranging series of complaints, from its use of force policies to its interactions with the homeless and targeting protesters, ABC15’s Dave Biscobing reports. The DOJ said no, since it never offers previews to police forces or municipalities under investigation. Phoenix officials were “surprised and disappointed” to learn about this standard operating procedure.

Changing her mind in a heartbeat: U.S. Senate candidate Kari Lake is no longer cheerleading the Texas “fetal heartbeat” law banning abortions after about six weeks of pregnancy, the Republic’s Laura Gersony notes, although on the campaign trail for governor last year she swore that she would sign the bill “in a heartbeat.” And if you want to understand abortion policy in Arizona, you’d be wise to read up on Cathi Herrod, the president of the mega-influential Center for Arizona Policy and the leading anti-abortion voice in the state. The Republic’s Evlia Diaz sat down with Herrod, who told the columnist that she was once pro-choice. 

Rural Republicans love it: While Republican leaders at the Capitol don’t seem too keen on Gov. Katie Hobbs’ plan to create new “Rural Groundwater Management Areas,” county supervisors in northwestern Arizona actually like it, the Kingman Miner’s Brandon Messick writes.  Mohave County Supervisor Travis Lingenfelter, La Paz County Supervisor Holly Irwin, Coconino County Supervisor Patrice Hortman and Yavapai County Supervisor Donna Michaels, penned a letter recently applauding the idea. 

“We see the devastation in our communities and across rural Arizona from unsustainable groundwater overuse, coupled with historical inaction at the state level to address it,” they wrote. “Our constituents, business communities, neighbors, friends and family members have watched their aquifer levels substantially drop.”

The buck stops there: After the University of Arizona’s financial debacle, the Arizona Board of Regents wants increased oversight on all three state universities, and to make them all check each others’ budget math in a peer review process, per the Daily Star’s Ellie Wolfe. Meanwhile, UA presented its own plan to deal with the shortfall: fire the CFO, cut financial aid for out-of-state students and start a hiring and pay freeze, Wolfe reports.

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Go big or go home: It’s not looking good for Lake’s ethically challenged lawyers, Brian Blehm, Kurt Olsen and Andrew Parker. Blehm and Olsen face bar complaints for claiming that it was an "undisputed fact" that tens of thousands of ballots were fraudulently injected into the system in the 2022 election, among other lies, while Olsen and Parker face a complaint for representing Lake and Mark Finchem in their attempt to outlaw vote tabulation machines. The State Bar found probable cause to move forward with the complaints against them, a big step towards some kind of formal discipline, be that a reprimand or disbarment. 

There’s always an Arizona tie: The colonel of Donald Trump’s volunteer meme militia is a former Arizona man named Brenden Dilley who apparently ran for Congress in the West Valley in 2018 but only garnered about 800 votes. The New York Times dug into the podcaster and social media influencer whose #DilleyMemeTeam “traffics freely in misinformation, artificial intelligence and digital forgeries known as deepfakes. … (and memes) riddled with racist stereotypes, demeaning tropes about L.G.B.T.Q. people and broad scatological humor.” The group seemingly coordinates with the Trump campaign but is wholly unregulated as a campaign entity because it doesn’t deliver its attacks via TV or radio. This quote pretty much sums up the problem: 

“If you go super PAC or official campaign, you can get paid, but the problem is a lawyer has to watch every single thing you put out, and we don’t want that,” Dilley said on his podcast in October, per the Times. “What we need is people that were going to give huge dollar amounts to the super PACs and the campaigns to just give directly to us.”

Speaking of troll armies, Turning Point’s “America Fest” promises to gather some of the worst people from various dark corners of the internet and put them all together in real life in downtown Phoenix this weekend. 

But what caught our eye was local event sponsor Grand Canyon University.