The Daily Agenda: Budget cuts ahead!

Adios slush funds, hello slash and burn ... Tempe is creepy like that ... And unfortunately, we don't pay him by the bill.

The budget that lawmakers passed and Gov. Katie Hobbs signed just four months ago is already busted — and everyone’s pointing fingers. 

Arizona’s budget gurus revised their estimates this week, saying the current year’s budget¹ probably won’t end with that $10 million surplus they expected. Instead, they now think it’ll be a $400 million deficit by next June. And the next year’s budget projections get even worse, at about $450 million in the hole. 

Budget cuts are returning to the Capitol. After eight consecutive years of budget increases, agencies are bracing once again for potential shrinkage. Except this time, it’ll be a Democrat who has to sign off on the cuts. 

There are ways around making cuts, of course. 

The state still has $1.5 billion in the “rainy day fund,” for example, that lawmakers could call on to fill the shortfall. But they’d have to vote to spend that savings account, which will take some convincing, even among more moderate Republicans. 

Still, that’s certainly more likely than lawmakers voting to raise taxes, the other possible solution to the shortfall. Democrats will no doubt call on the governor to raise taxes to cover the shortfall and continue to boost spending in areas like education. 

All of this puts Hobbs in an extremely difficult position next year. It’s not that the hole is huge — $400 million is only about 2% of total spending. But tell that to the agency that has to withstand a $10 million cut to help make up the difference, potentially right after increasing their budget this year. 

And there is still a lot of need within state government, as a review of state agencies’ annual budget requests filed this month shows. The Department of Corrections wants another $175 million, and the Department of Economic Security wants about $140 million, to name a few. 

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Arizona’s looming budget shortfall is one of those lovely rare moments in politics where everyone deserves a little blame. 

Democrats are screaming about the reckless out-of-control spending from Legislative Republicans and former Gov. Doug Ducey, who ushered in Arizona’s universal voucher program and massive tax cuts in his final year in office. 

Republicans blame the Democratic governor who rejected their “skinny” budget and instead signed the largest spending plan in state history, despite warning signs of a looming economic slowdown. 

The economists blamed, well, the economy and the unpredictable nature of huge policy changes like the state’s largest-ever tax cuts and a first-of-its-kind universal school voucher policy. Also to blame are lawmakers who didn’t heed warnings that the future was uncertain and spent nearly every dollar they could get their hands on. 

We’re happy to report that they’re all right!

Yes, Republicans passed a universal ESA program that was expensive and is likely going to cost far more than anticipated. And sure, Ducey’s tax cut was the largest in state history, and it cost more than expected, in part, because it hasn’t produced the kind of trickle-down effect that economists thought might mitigate the cost. 

On the other hand, Democrats have long warned that the cost of a universal ESA program would skyrocket and argued that Ducey’s flat tax proposal that Republicans approved in 2021 would bankrupt the state. Hobbs and Democrats knew all that was coming and went on a spending spree anyway. They blew through the extra $2 billion Ducey left in the bank on his way out the door just as federal COVID and stimulus benefits were drying up and the economy was slowing. 

And let’s not forget the legislative slush-fund-style budgeting that left the budget a mere $10 million in the black. Meanwhile, each lawmaker who supported the budget received between $20 million and $30 million to spend on their own pet projects. And many of those “one-time” spending projects sure look like a gimmick, economists noted, since things like “inmate healthcare costs” are usually ongoing.

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This year, lawmakers crafted a budget that attempted to please everyone. It was balanced on a hair trigger, and it’s no surprise it didn’t hold up. 

Still, it was the responsible thing to do. 

The budget was the result of a rare political compromise and a novel tactic of democratizing the spending plan among all 90 lawmakers. While we like to make fun of the “Everyone Gets a Slush Fund” budget², it was probably necessary in a divided government. 

Lawmakers may not have crafted the most responsible budget we’ve ever seen, but it was certainly more responsible than not passing a budget at all. It wasn’t easy, but it was bipartisan. 

But coming to a bipartisan consensus on cuts might be even more difficult. 

Big brother is watching you: Attorney General Kris Mayes’ office is investigating the City of Tempe after it paid a consulting firm to track and monitor opponents to its plan to let the Arizona Coyotes build an arena and entertainment district on city-owned property, the Republic’s Sam Kmack writes. Mayor Corey Woods recommended the firm that did the tracking, Strategy 48, and the council never voted on the contract and only discussed the firm’s findings in executive session, which could violate both the open meetings law and the law prohibiting public funds for campaign activity. 

“In sum, the city did nothing wrong here, nor did I,” Woods said. 

Green is the new No Labels: The Green Party wants to be a real party in Arizona again. It’s making a push to collect signatures and needs about 35,000 valid ones to be able to run candidates again after it lost ballot access in 2019, Cronkite News’ Reagan Priest reports. A Green Party spokesman said they’ve already passed the 35,000 signature mark, but are aiming for closer to 70,000 to ensure they survive any legal challenges. 

The ACA is a scam: The Arizona Commerce Authority’s entire existence is basically a violation of the state Constitution’s gift clause, Substacker Robert Robb writes, following auditors’ request that the AG look into ACA’s lavish spending on wooing CEOs. Robb is leading the charge to get the gift clause rebranded as the less-catchy but more accurate “anti-subsidy clause.” 

“Lordy, if that’s not failing to see the forest for a solitary and very scrawny tree,” Robb writes of auditors’ fixation on things like booze and sports tickets rather than wholesale subsidies. 

Their God is very picky: Phoenix Rescue Mission, one of the valley’s leading organizations providing homeless services, and other religious organizations like it regularly discriminate against LGBTQ volunteers by requiring they sign “a religious agreement that mandated employees follow the organization’s Christian values, including its disapproval of same-sex marriage,” Juliette Rihl writes in Lookout Phoenix. The document says God “immutably” creates each person as male or female, that “marriage only has one meaning” (not the legal one), and that “God intends sexual intimacy to occur only between a man and a woman who are married to each other.” Courts can mandate people enter treatment programs with organizations like Phoenix Rescue Mission, Rihl notes. 

Road trip: U.S. Rep. Ruben Gallego is attempting to visit all of Arizona’s 22 tribes in his bid for U.S. Senate, and the New York Times’ Jazmine Ulloa tagged along. But on the Tohono O’odahm stop, Pima County Recorder Gabriella Cázares-Kelly said while she’ll probably vote for Gallego, she doens’t like his new “build the wall” stance. 

“Now having Joe Biden pushing for the expansion of the border wall is so disappointing and frustrating, and then to hear Ruben echoing those sentiments in solidarity with our president is just really disappointing,” Cázares-Kelly told the Times.

No charges, no answers: In other news from the Tohono O’odham lands, federal prosecutors won’t file charges against border patrol agents who shot and killed a Tohono O’odham man outside his home this year, though federal authorities didn’t tell the family exactly why they weren’t pursuing charges, the Intercept’s Ryan Devereaux reports. 

The U.S. House of Representatives is still in chaos after Republicans could not decide on a new speaker yesterday, an unusual ask that became necessary last week after Democrats and eight far-right Republicans, including Arizona’s Andy Biggs and Eli Crane, voted to oust former speaker Kevin McCarthy. The chaos is pretty funny itself.

But because of this, we learned that Biggs has only had one bill signed into law since voters sent him to Congress in 2016. And it wasn’t exactly a banger. Get to work, dude!

1. The state budget works on a July 1 — June 30 schedule called a fiscal year. The budget lawmakers passed in May was for the Fiscal Year 2024, which started July 1.

2. Fun Fact: It would only take about 20 lawmakers giving up their slush funds to solve the shortfall this year.