We got legislative budget docs

But, more importantly, what exactly are budget docs? We break down what you can glean from some disjointed spreadsheets.

Instead of a Friday report this week, we’re jumping in your inbox mid-day on a Tuesday with some breaking news.

Budget documents are the holy grail for Capitol lobbyists, reporters and gadflies who try to get the inside scoop about which projects lawmakers will fund in the upcoming state spending plan.

The elusive spreadsheets are a closely guarded secret by legislative leadership, and leaking them to the press or the lobbying corps is a major faux pas. At times, legislative leadership won’t even allow rank-and-file members to carry the documents out of small group meetings.¹

But we got a copy of the budget docs for the deal that legislative leadership struck with the governor, the same deal that Republican leaders in the House and Senate are now attempting to sell to their caucus. (Click the link in this paragraph to see the docs themselves — you’ll need to rotate them.)

The documents are a moving target. They’re a snapshot of discussions as they stand at any given point. They change constantly, and before lawmakers pass a budget, there will likely be dozens of different versions of the budget docs floating around the Capitol. 

The budget outlined in these particular documents almost certainly will not become law, but most of the line items included in the documents probably will be included in the final draft.

The documents reflect a $15.1 billion spending plan for Fiscal Year 2023 that includes a $1.3 billion tax cut over three years. It would also invest roughly $1 billion into water infrastructure over the next three years, pay down roughly $1 billion in pension liability and offer a 20% raise to all Department of Corrections employees. It allocates close to $1 billion for various road projects. And despite another massive $425 million deposit in the state’s “rainy day fund,” the spending plan would still end up with a $1 billion surplus in three years. 

It does not, however, include a viable path to becoming law, according to multiple lawmakers. 

One important line item that is not included is Republican Sen. Paul Boyer’s nearly $1 billion for Arizona’s K-12 system — a line item he has said is a requirement to earn his support on the budget.

Boyer told the Yellow Sheet Report that he’s a “hell no on the budget at this point.” And he stormed out of his small group meeting meeting where he was briefed on it, too.

And, despite lacking enough Republican votes to pass a budget, the draft doesn’t include any Democratic priorities — and includes several poison pills, like expansions of School Tuition Organizations, that will make Dems highly unlikely to vote for it.

David Cook @RepDavidCook

@PaulDBoyer let’s get this budget done and in the books ! We are all on the same team. #Letsgo

Non-budget bargaining chips, like election laws, could also come into play to get some lawmakers to vote for a budget. But don’t expect a stack of non-budget items in the budget itself: That practice got several provisions of last year’s budget struck down in the courts.

Lawmakers have only one job: to set a state budget. They have until June 30 to vote out a budget for Fiscal Year 2023, which begins on July 1. If they don’t, elements of state government could be shut down — but they could also use various maneuvers to prevent that possibility. 

The documents, which serve as the main reading material that lawmakers review before voting to spend billions in taxpayer money, really only outline the discretionary spending. 

Of that $15.1 billion, $12.5 billion is non-negotiable. It’s ongoing spending that’s baked into the budget “formula” for things like health care, education and other legal spending requirements. 

The entire budget fight mostly amounts to deciding how to spend that remaining $2.6 billion. 

That’s where the budget documents come into play. 

In a little more than 300 rows or “line items” on a spreadsheet, lawmakers outline everything that they’re fighting for or negotiating over in the budget. 

“There are 333 or something lines and it took two hours to go through all those lines,” one lawmaker said. “The thing that strikes me is there’s a lot in there … When you have that quantity of little items, it looks bad. It looks like you’re funding every little special project.” 

This year, those line items include small spending priorities like $750,000 per year to open trade offices in Taiwan and South Korea. The budget lines also include major changes to education spending, pumping $100 million per year to increase the amount of funding schools receive for special education students.

Lawmakers also want to use those discretionary funds to eliminate the state’s equalization tax, which would cost $330 million. And the documents show that lawmakers are also looking at a one-time infusion of more than a half-billion dollars into border security measures. 

But the 10-page spreadsheet makes little sense to someone who has never seen a budget document, so we called a few longtime lawmakers and lobbyists to explain what budget documents are and how to read them. 

AZlegDayofSession @AzDayofSession

Today is the 149th Day of Session. #AZLeg

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Revenues

The top section is all about revenues. But those can be misleading. 

First and foremost, lawmakers can choose to budget based on revenues that are higher or lower than the economists’ projections in order to make their spending options appear skinnier or fatter. If economists say Arizona will probably bring in $14 billion in revenue next year, lawmakers can call it $15 billion and spend it all, or can call it $13 billion and stash away the extra billion, assuming it comes in. 

As one lobbyist put it: “Everything is just made up and not as solid as you would think math should be.”

The first page of draft budget docs

Within the revenues section, there are one-time revenues and ongoing revenues. One-time revenues can’t be spent on an ongoing basis, so they’re tracked separately. 

“The revenue projections are the first fight we have,” one lawmaker said, noting that the first set of budget documents released early in the session simply compare the governor’s budget priorities and revenue expectations to the baseline budget. The Governor’s Office and the Legislature often fight over whether to rely on rosy revenue projections or more conservative ones, and these budget documents reflect a tentative agreement between the Governor’s Office and the Legislature on what the revenues and expenditures should be. 

“The silver lining of budgeting in June is that we’re much closer to the projections, like the actual day that they're supposed to kick in,” the lawmaker said. “We got five months of additional information. (Revenue projections in June) are always going to be more accurate.”

The revenues section often also include tax cuts. Anytime revenues are in parenthesis, that means they’re going down — usually because lawmakers are handing out tax cuts. 

Spending

The vast majority of the 10-page spreadsheet covers discretionary spending — the meat of the budget. 

We break down the budget using emojis

Each line item explains the state’s spending plan for a certain project over four years (including any adjustments in the current fiscal year). Just like revenues, expenditures are broken into ongoing and one-time spending. 

But what project, exactly, those line items correlate to can be difficult to ascertain. Each line item uses just a few key words showing which agency the spending falls under and what particular project it is for — though it’s not always clear what lawmakers are referring to. 

Some of the line items are relatively self-explanatory: “Attorney General additional office of Victims Services staff 2 FTE” means lawmakers want to fund two new full-time employees at the AG’s Office of Victims Services, for example, to the tune of $200,000. It’s less clear what the $600,000 earmarked for “Other – Fleet adjustments” is for, exactly.  

“This is literally just the dollars and cents. The actual budget will be hundreds of pages broken up across multiple bills,” the lawmaker said, noting that some of the language explaining what exactly these line items represent won’t be released until the actual budget bills are drafted. 

“The vast majority of legislators will only hone in on the language (in the bills) that they care about. The rest of it, I mean, it’s just too much to go through in a short amount of time,” the lawmaker said. That’s why lawmakers have theses budget documents.

For lobbyists working on the budget, the first thing they do is open the document and scroll to the section that they’re working on, searching for any key words that seem to relate to whatever project they’re trying to get funded.

“Sometimes you’re like ‘Is that me? Did I win?’ It’s stressful,” one lobbyist said. 

If the lobbyist’s item is in the budget, that’s a very good sign. They start pushing lawmakers to approve it.

“If you weren’t in the governor’s draft, but you make it into the budget documents, you’re at the table,” the source said. “If you’re in both, that’s really good, you gotta just lay low… and start lobbying for the budget to pass.” 

Three-year budgeting

And keep a close eye on those other columns outlining future spending beyond the upcoming fiscal year — they can grow exponentially. 

The budget document highlights four years of budgeting in four columns. The first column is any changes to the current year budget, which are usually relatively minimal. The second column is the one you’re mostly looking at — that’s the budget for Fiscal Year 2023. 

But pay attention to the third and fourth columns, too. While spending or revenues from those columns are absolutely not locked in (future legislatures can always disregard the future spending lawmakers outline), they form the basis for future budgets. And those future columns often hide exponential growth in spending or tax cuts. 

For example, these budget docs show lawmakers want to raise the tax write-off that corporations can take from contributing to School Tuition Organizations (STOs) that offer vouchers for students to attend private or religious schools. For the upcoming fiscal year, that will cost just $2 million cut from revenues. But by Fiscal Year 2024, that spikes to $12 million. 

Lawmakers often use this three-year spending strategy to pay for long-term projects like infrastructure projects. But they also use three-year budgeting to ease into big tax giveaways. Calling it a $2 million cut cloaks the real effect over multiple years: The STO increase looks like a mere $2 million this year, but would cost $27 million over three years. 

1. Small group meetings are the Arizona Legislature’s way of getting around open meeting laws, though considering legislators largely exempted themselves from the open meetings laws and changed the House and Senate rules against holding secret caucus meetings away from the prying eyes of the public, small group meetings are largely just relics of the need to get around those rules.