The Young and the Budgetless

The Legislature’s budgeting process under Gov. Katie Hobbs has been turbulent, quickly swinging from surplus-fueled slush funds to deficit-driven cuts.

But amid the political infighting, shutdown warnings and intraparty betrayals, lawmakers have still managed to pass a state spending plan every year.

And despite the current standoff, history suggests Arizona will probably get one this year, too.

Just not before the Capitol wrings every possible ounce of drama from the process.

This season’s plot already has the theatrics: the governor walking away from negotiations, Republican lawmakers leaving town after sending Hobbs a plan they knew she wouldn’t sign and a looming June 30 deadline to fund state government.

Behind-the-scenes budget talks only recently resumed.

The big unresolved issues are the same ones that blew up negotiations in March: whether voters will get a chance to renew Prop. 123, the roughly $300 million-a-year education funding stream that expired last year, and whether Arizona will fully adopt President Donald Trump’s tax cuts — and what the state will cut to pay for them.

Hobbs left budget talks after Republicans refused to budge on referring Prop. 123 to the ballot. Her condition for returning was a public explanation of how Republicans planned to pay for tax conformity.

The GOP’s now-vetoed budget gave the answer: across-the-board cuts to state agencies, fund sweeps and reductions to social services.

Already, this year’s budget season is borrowing a lot from past episodes.

So while our lawmakers take a midseason break, we’re gonna catch you up on each year’s budget drama under our divided government so far.

And in honor of the drama with which lawmakers handle our tax money, we’re doing it in soap-opera style.

Previously on “The Young and the Budgetless” …

The first season opened with a new ruler in the executive tower and a Republican legislative majority still mourning the reign of Doug Ducey.

Then, Hobbs released her first executive budget proposal. The Capitol’s Republicans collectively gasped.

Hobbs had proposed rolling back one of the GOP’s crown jewels of the Ducey era: universal school vouchers.

Republicans warned that Hobbs’ first-ever executive budget proposal could bring state government to the brink of a shutdown. Rep. David Livingston sounded the alarm: How was the state supposed to prepare for possible layoffs by July 1?

So the GOP moved fast with a “skinny budget,” a bare-bones continuation of the spending plan Ducey had already signed the year before. This would be the new budget approach under Hobbs’ reign, leaders declared: pass the basics first, then fight over the extras later.

It was a doomed act of political bravery. Republicans knew Hobbs wouldn’t sign the plan — she had already said as much. They passed it anyway.

Once the skinny budget met its predictable demise, lawmakers moved on to the fuller-figured version: a budget bulked up by one-time surplus cash. GOP lawmakers secured money for their districts — just enough to convince them to vote for the budget.

Hobbs got her first budget deal.

Republicans got hometown wins and preserved their voucher crown jewel in the process.

But Democrats were left watching from the wings, wondering why they hadn’t been written into the happy ending.

The surplus romance was over.

Thanks to our leaders’ largess, Arizona was suddenly staring into a roughly $2 billion budget hole. The Legislature’s financial experts delivered the heartbreaking news that income tax collections had fallen sharply from the year before.

One of the Ducey era’s other crown jewels, the flat income tax, was no longer sparkling quite so brightly. Instead, it was helping drain the state coffers.

Lawmakers spent months fighting their way through a drawn-out session, complete with “shame” chants and plenty of intraparty sniping.

By June, Hobbs and Republican leaders finally struck a deal.

It was not a good sign for state government.

The budget cuts came for water conservation, roads and universities.

Then came the final twist of the knife: $155 million in opioid settlement funds swept into the prison budget.

Just when Hobbs thought the chaos was over, a betrayal emerged from her own party: Attorney General Kris Mayes blasted the opioid sweep as an “egregious grab.”

Hobbs signed the budget anyway, effectively blessing the reduced-government era that Arizona’s deficit had forced.

Mayes sued to stop the sweep of opioid funds, a tranche of dollars her office distributes.

But she eventually dropped the case.

The money returned last year, but peace did not.

Hobbs opened the session with a long list of promises, including another shot at Republicans’ favorite family heirloom: universal school vouchers.

The program was a “billion-dollar boondoggle,” she said, though her first two budgets had failed to meaningfully reform it.

And as voucher costs climbed toward the $1 billion mark, Hobbs saw a hypocrisy ripe for daytime television: Republicans were willing to spend big subsidizing private education, but not immediately willing to cover a $122 million shortfall in a Division of Developmental Disabilities program for children with disabilities.

So Hobbs decided to stop messing around.

She would veto every bill that landed on her desk, she announced, until Republicans agreed to fund the program.

House Speaker Steve Montenegro called it “political blackmail.”

Livingston, the House’s budget expert, was irate. Hobbs, he said in a dramatic floor speech, should negotiate with Republicans or “sit up in her ivory tower ... and drink her wine and not worry about it.”

After weeks of brinkmanship, Republicans relented and funded the Division of Developmental Disabilities program. But the drama was not over.

Lawmakers took sporadic, week-long breaks from the Capitol while the negotiators in charge hammered out the budget behind closed doors. After all that time away, they returned to finally end the session by voting on the deal leadership had spent weeks brokering.

But House Republicans had spent their time off preparing a twist ending: They unveiled their own budget plan, written without the governor’s blessing.

Across the Capitol plaza, Senate Republicans refused to entertain the theatrics and embraced a governor-negotiated budget.

Senate President Warren Petersen withstood vile RINO accusations, but Montenegro clung to his beloved budget plan as the shutdown clock ticked louder.

After a second failed attempt at a House-only budget, Montenegro finally relented.

Hobbs signed a budget that secured many of her own priorities.

For one fleeting moment, the governor had won.

But 2026 was already waiting, this time, with what could be her final budget fight.