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Arizona lawmakers pass $18 billion budget early Thursday

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By Howard Fischer
Capitol Media Services
PHOENIX -- Arizona lawmakers adopted an $18 billion spending plan early Thursday, rebuffing efforts by some Republicans to tear apart the deal.
The vote came as Republican legislative leaders, unable to get votes from their own members, cut a deal with Democrats by offering million more in funding for public education than the GOP and Republican Gov. Doug Ducey had proposed. That ensured there would be enough Democrats to offset the Republicans who found the spending proposal too high to support.
But House Speaker Rusty Bowers told Capitol Media Services the foes may have outsmarted themselves.
The Mesa Republican said he made it clear to fellow party members that he needed every one of them to support the spending plan. That's because the GOP has a one-vote edge in the House; an identical situation exists in the Senate.
More to the point, Bowers said he told them that holding out only forces him and Senate President Karen Fann, R-Prescott, to go to the Democrats.
``Do your own thing? Great,'' he said he told them. ``March out there in your purity and condemn.''
He pointed out, though, that the Arizona Constitution gives the legislature just one mandatory job: adopt a budget.
``And that's what we're doing,'' Bowers said, saying he informed them that having to work with Democrats meant it would raise the price tag.
The result is that the final budget will immediately add $526 million to base education funding for K-12 schools, an 8.8% increase. That's $60 million more than the original package.
There's more.
As originally proposed, charter and district schools would equally divide up $60 million in what is classified as "additional assistance.'' These are funds with certain flexibility on how they can be used.
But Democrats said that was a non-starter, pointing out that would give far more cash on a per-student basis to charter schools which have only about a quarter of the students as traditional public schools. Now the formula is on a per-student basis, with a plan to nearly double the additional aid by the 2024-2025 school year.
The final plan offers not just more basic state aid to public schools. It also provides an immediate $50 million infusion in "opportunity'' funds, dollars earmarked to help students who come from low-income households
Universities also will do better than what had been proposed -- at least two of them
The original plan provided $41 million for the three schools. But there was a big concern that the University of Arizona was getting more than it's fair share given its enrollment.
So the final deal provides an additional $54 million in one-time dollars for Arizona State University and $22 million for Northern Arizona University.
The deal also scraps something some Republicans wanted but Democrats did not: an expansion of the ability of individuals to get dollar-for-dollar tax credits for donations to help students attend private and parochial schools.
Those credits reduce the amount of funding available for all other state programs, including public education. In the 2020-2021 budget year, the most recent figures available, individuals and corporations took $250 million in credits.
But it would still allow people to take those credits, though existing limits would remain.
Republican foes of the budget did not give up without a fight.
Sen. Michelle Ugenti-Rita, R-Scottsdale, sought to cut the state's 5.6-cent income tax rate by a penny.
``This is important because we have no meaningful tax cuts in the budget,'' she said. And Ugenti-Rita said the public, struggling with inflation and higher gasoline prices, needs relief.
Fann said the state's can't afford a permanent tax cut of that size, with the plan instead including a $300 million in property tax cuts.
She said while Arizona has a $5.3 billion surplus, only $1.3 billion of that is sustainable, meaning revenues that can be counted on year after year. And she said what the Scottsdale senator wanted would cost $1.5 billion annually.
Ugenti-Rita rejected that contention.
``It's not accurate to say we can't afford it,'' she said.
``It's just that we spent it all,'' Ugenti-Rita continued. ``We put our priorities in pork instead of a tax cut.''
She had no better luck with a proposal for a one-time rebate of $250 for individuals and $500 for couples, saying that could be done out of the one-time surplus.
Fann, however, said those dollars are being used for one-time priorities, like setting aside $1 billion over three years to find new sources of water and paying off about $1 billion in debt in the state pension fund, a move Fann said would save the state about $100 million a year in interest payments.
The opposition in the House by Republicans opposed to the plan was more muted, to the point where Rep. Jake Hoffman, R-Queen Creek, didn't even try to offer an amendment to cut some one-time funding from the state's three universities. And Rep. Jacqueline Parker, R-Mesa, withdrew her amendment to slash proposed pay raises for state employees.
``It like protects voters, cuts spending in government, and no one seems really interested in doing that right now,'' she said.
What the package also did is create the first truly bipartisan budget since the Republican-controlled legislature was forced to negotiate with Democratic Gov. Janet Napolitano. And that hasn't happened since 2008.
``There are things we love and, quite frankly, there are things we hate,'' said House Minority Leader Reginald Bolding, D-Laveen.
``But, weighed all together, the good in this budget finally outweighs the bad,'' he said. ``We must not let perfect be the enemy of the good.''
But Rep. John Fillmore, R-Apache Junction, said what got approved, over his objection and that of seven other House Republicans, was really a Democratic budget ``full of pork.''
Among the things the Democrats could not get removed is $335 million for a border fence. That's above and beyond another $209 million for general border security which covers everything from aid to local sheriffs to $15 million to transport those who entered Arizona from other countries seeking asylum to other states.
There also is a tax cut for individuals who own aircraft.
And one piece of the final package, set for a vote later Thursday, includes creation of a system to provide state funds to parents who can use these vouchers to send their children to private and parochial schools. Those vouchers essentially redirect the state aid for that student that would have gone to the public school.
There is one thing in the package that doesn't directly affect state funds: an agreement to ask voters if they're willing to tax themselves to help support rural fire districts. The measure proposes a sales tax of one-tenth of a percent which could generate about $150 million annually.
Sen. Paul Boyer, R-Glendale, said he is hoping residents of urban areas support it because they recognize that it is the rural fire departments that respond to accidents and health emergencies when people are on the road.
Separately, lawmakers adopted other Republican priorities, ranging from tax credits for companies that build facilities for making movies and TV shows to capping how much the state can keep in taxes from the expanded gaming approved last year.
They also approved a measure to require a 60% approval rate for future ballot measures if they involve new taxes. By way of comparison, Proposition 208 which sought to impose an income tax surcharge on the most wealthy to increase state aid to schools, passed with a margin of less than 52%.
As a constitutional amendment, however, it is itself subject to voter approval in November.
But they rejected a proposal by Sen. T.J. Shope, R-Coolidge, to allow students to get high school credits for everything from outside jobs to participating in organized sports.

On Twitter: @azcapmedia