Arizona Legislature: New state budget approved, will go to Gov. Hobbs for signature

The Arizona Legislature moved quickly this week to pass a $17.8 billion spending plan for next year following negotiations between Democratic Gov. Katie Hobbs and Republican leaders in the House and Senate.

Many Democratic lawmakers initially objected to what Hobbs and the leaders left out of the budget, but most fell in line and ultimately supported the deal, even if under protest. Still other top Democratic officeholders and some Democrat-aligned groups also came out against it.

Arizona Republic and azcentral.com reporters are covering the latest developments.

More on budget: AZ budget plan moving at warp speed as Dems object to plan from Hobbs, GOP leaders

House passes budget bill

The Arizona House of Representatives has passed all of the bills related to the budget, which now goes to Gov. Katie Hobbs for her signature.

Hobbs issued a statement after the House finished its work.

“I’m glad the House passed the bipartisan budget and I look forward to signing it into law," Hobbs said. "Not everybody got what they wanted, but I’m thankful legislative leaders were able to set aside their differences, compromise, and support a bipartisan deal that makes historic investments in affordable housing, builds roads, bridges, and public transit, expands access to health insurance for Arizona’s children and creates critical new ESA accountability measures."

— Ray Stern

New effort to study school voucher program

House Speaker Ben Toma, R-Glendale, and Minority Leader Andrés Cano, D-Tucson, announced a bipartisan effort to increase accountability for the state’s expanded private-school vouchers on the heels of heavy criticism of the voucher program by Democrats in the House and Senate.

The “House Ad Hoc Committee on Empowerment Scholarship Accounts Governance and Oversight,” created with agreements by House Republicans and Democrats, will help “manage a growing and complex program,” according to an announcement from the legislative leaders on Wednesday.

The study committee will include Gov. Katie Hobbs and state Superintendent of Public Instruction Tom Horne (or their designated representatives), two House members from each party and two members of the public with related experience. They will seek information from a range of community members and experts to review details about ESA students, including their number, disabilities, English-language abilities, previous public-school attendance, and the total yearly ESA award amount for each student, among other things.

A report on the committee’s findings this year is expected by Dec. 31.

What's in Arizona's state budget? Money for families, education, housing, water and more

News of the study committee followed attempted amendments to the K-12 budget bill by Democratic Rep. Nancy Gutierrez, D-Tucson, that would have temporarily halted new enrollment in the ESA program and paused enrollment if it exceeded 69,000 students.

More than 55,000 students are currently enrolled in the program.

— Ray Stern

Unfinished business on AHCCCS, medical boards

Left undone during the flurry of budget work was a vote that has the state's Medicaid agency, AHCCCS, headed for expiration as of July 1.

The Senate Appropriations Committee killed a bill that would have continued the agency until 2029. Also included in Senate Bill 1736 were provisions to extend the Board of Dental Examiners and the Board of Massage Therapy for two years, with six year extensions for the Naturopathic Physicians Medical Boardand the Optometry Board. Those extensions also failed on the tie vote. (Bills don't pass if there is a tie.)

Senate President Warren Petersen, R-Gilbert, said the agencies won't die, but suggested there's no urgency. Although the bill ends AHCCCS as of July, Petersen said lawmakers could wait until the start of 2024, when the money dries up.

— Mary Jo Pitzl

House starts deliberation on budget

The state House of Representatives started the preparation work for state budget bills Wednesday following approval of the $17.8 billion budget by the state Senate in the wee hours of the morning.

It remains unknown if the budget and its House versions of 17 activating bills, plus amendments, will find the same support in the House as the budget found in the Senate. All 16 Senate Republicans and most Democrats voted for the Senate budget bills despite early indications of a revolt among Democrats. They finished just before 5 a.m.

Critics of the budget negotiated by Republican leaders and Democratic Gov. Katie Hobbs expressed concern about several aspects of the plan, especially the lack of a limit for the Empowerment Scholarship Account private-school vouchers that some say could result in a near-future fiscal catastrophe for the state.

House members began their day at about 10 a.m. with a Committee of the Whole session including discussion of the budget bills and offered amendments. Once those are done, House members are expected to move into final votes for the bills, and if passed they would then go to Hobbs for a likely signature.

— Ray Stern

Hobbs praises budget after Democrats fall in line

Gov. Katie Hobbs early Wednesday praised the budget that passed the Senate with bipartisan votes.

“Today we showed Arizonans we can reach across the aisle, compromise and make government work," the governor said in a statement. “I am glad Democrats and Republicans in the Arizona Senate came together to pass budget bills that make historic investments in affordable housing, build roads, bridges and public transit, invest in our tribal communities, and expand access to health insurance for children.”

She said she looked forward to “continuing to partner with legislators of both parties to build an Arizona that works for all of our communities.”

Senate Democrats who objected to the spending plan on Tuesday largely ended up voting for it hours later, under protest and threat that their priorities might be stripped from the ledger.

— Stacey Barchenger

Senate passes budget package with Democratic support

The state Senate approved a 17-bill budget package early Wednesday with bipartisan support that belied the discontent Democrats have voiced about the process.

All bills passed with more than two-thirds support of the 30-member chamber. Sixteen Republicans and a rotating cast of Democrats voted for the $17.8 billion plan that will fund government operations for the year beginning July 1.

The passage with bipartisan support is a win for Gov. Katie Hobbs and Senate President Warren Petersen, R-Gilbert. They, along with House Speaker Ben Toma, R-Glendale, negotiated the budget over months of meetings. Democrats were not brought in until the final weeks.

“25 ayes, 5 nays — bipartisan,” Petersen said as the vote on the main budget bill concluded around 4:30 a.m. “Whoo! That sounds like a success to me.”

He took offense at Democratic leader Sen. Mitzi Epstein’s blistering critique of the budget process, even as she ended up voting for it.

“It’s a really bizarre thing to say I hate this budget and I vote yes,” Petersen said.

Epstein said Democrats were told Tuesday that if they didn’t vote for the budget, the $426 million in funding that Senate Democrats were able to direct to favored causes would get rescinded and redirected to GOP priorities.

Asked if she felt forced to vote for the spending plan, she replied, “Pretty much.”

Epstein added, however, that the budget had a lot of “great things” in it, including money for homeless services, a $150 million infusion into the Housing Trust Fund and a nearly 7% boost in K-12 funding for the coming year.

She criticized the Republicans for using all of the $2.5 billion surplus without leaving any in reserve for the next year. For the first time in years, the budget did not include a deposit into the state’s Rainy Day Fund. Hobbs had requested a $250 million addition to the fund, but it did not survive budget negotiations.

The budget package moves to the House of Representatives, which is expected to vote on the package Wednesday and send it to Hobbs.

— Mary Jo Pitzl

How to keep senators in line? Threaten a loss of money

Senators who don't fall in line and vote for the budget have a sword dangling over them.

Those who vote against the plan were told their "asks" would get stripped from the budget in a provision that Gov. Katie Hobbs knew about, said Senate President Warren Petersen. The warning applies to Republicans and Democrats, he said.

"I believe our votes are still intact," Petersen said of the Republican members. "There are a lot of bipartisan asks in there. If they don’t vote for it, their stuff is coming out."

Republican senators got $30 million apiece to spend, while representatives got $20 million. The budget is replete with pet projects from individual districts, like upgraded rodeo grounds in Prescott and dozens of infrastructure projects.

Sen. Catherine Miranda, D-Phoenix, said Democrats got a similar deal: House and Senate Democrats were allowed to spend $400 million "plus" that was divvied up by the caucuses instead of each member getting a firm amount. She also heard Petersen's caveat that not voting for the budget meant those asks would go away.

Miranda emphasized that the budget has positive aspects, though she expressed disappointment about how public schools were treated — mainly in terms of future fiscal problems because of the expanded ESA voucher program.

— Ray Stern

As Fontes seeks security money, he reports threat in D.C. elevator

While lawmakers were casting their first votes on the budget bills Tuesday, Secretary of State Adrian Fontes’ office notified reporters about an incident that underscored the secretary's request for security funding.

Fontes, according to his spokesman Paul Smith-Leonard, was cornered in a Washington, D.C., elevator Monday by an unknown individual. The secretary felt threatened and reported the matter to the Arizona Department of Public Safety as well as to the Arizona Counterterrorism Information Center.

Smith-Leonard did not have further details about what the individual said, if anything, nor did he know if Fontes was alone in the elevator nor why the matter was not reported to D.C. police.

Fontes has lobbied Arizona lawmakers and Gov. Katie Hobbs for more budget money, including funding for a personal security detail.

“These are situations that unfortunately are not uncommon for the secretary,” Smith-Leonard said.

Fontes was in D.C. for the Center for Election Innovation & Research conference, which was getting staked out by election deniers. Maricopa County Supervisor Bill Gates was approached by Laura Loomer, who casts herself as a conservative and investigative reporter who calls out people she believes are working to rig elections.

— Mary Jo Pitzl

Mayes' premature letter leads to spat with GOP

A letter sent Saturday from Arizona Attorney General Kris Mayes threatening to sue over the state’s budget plan, which wasn't made public until days later, has prompted a spat between the Democrat and Republican lawmakers.

GOP lawmakers say the letter was premature. Mayes had written that she was “prepared to go to court” to ensure her office received the state's share of a $1.1 billion settlement with opioid manufacturers. Her letter cited “talk of the Legislature sweeping” her authority to control those funds.

When the budget was revealed on Monday, however, no such sweeping was part of it.

Sen. Jake Hoffman, R-Queen Creek, chastised Mayes’ lobbyist Amy Love during a committee meeting Monday over the letter. Hours later, Rep. David Livingston, R-Peoria, followed up with his own letter to Mayes.

“Senator Hoffman rightly expressed his concern that you threatened litigation over a budget you had not yet even seen and based only on rumors, and perhaps your own misplaced speculation,” Livingston wrote. “I encourage you to learn the facts in the future before wasting taxpayer money and resources on politicized demand letters.”

— Stacey Barchenger

Public school teachers tell Hobbs to seek cap on vouchers

Katie Hobbs got some of her strongest support in her run for governor from public school educators. Now, they're asking her to step in and tap the brakes on the state's universal voucher program.

Specifically, they want the governor to impose a 20% cap on voucher enrollment growth for three years, a demand they made at a Tuesday afternoon news conference.

Such a cap would stabilize growth, said Beth Lewis, director of Save Our Schools. It's unclear how the governor, who has signed off on the budget she negotiated with GOP leaders, would do so at this stage, other than to veto the budget.

Lewis and others had strong criticism for Republicans who have championed the voucher program but held their fire against Democrats. Lewis said she and other public school advocates still have faith in the governor, but hope for more.

"Everybody here has knocked on hundreds if not thousands of doors for this governor," Lewis said at a Tuesday news conference. "We expected real support for the schools, not lip service."

The voucher program has grown more than fourfold, to 55,000 students, since universal expansion was approved 10 months ago. Meanwhile, the average scholarship award has dropped by a third, to $10,000, according to Arizona Department of Education data.

— Mary Jo Pitzl

Fast-tracked budget plan passes first hurdles

A proposed state budget cleared its first hurdles on Tuesday at the Legislature and is on a fast track for a final vote on Wednesday — with nearly no support from Democrats so far.

The $17.8 billion spending proposal passed both the House and Senate Appropriations committees on the strength of Republican votes, with all but one Democrat voting against the deal that Democratic Gov. Katie Hobbs negotiated with GOP leaders.

That sets the stage for the full House and Senate to vote on the 16-bill package as early as Wednesday, with the Senate planning to start voting soon after midnight Tuesday.

Rep. David Livingston, R-Peoria and chairman of the House Appropriations Committee, said he is confident there are unanimous Republican votes for the budget, which would allow it to reach Hobbs' desk without any Democratic backing.

— Mary Jo Pitzl

This article originally appeared on Arizona Republic: Arizona Legislature: $17.8 billion budget gets final OK at Capitol