By Howard Fischer
Capitol Media Services
PHOENIX -- The newly adopted $16.1 billion budget has left some Democrats wondering whether there was a better deal to be had.
After all, there now was divided government, with a Democrat as governor. That hadn't happened for more than a dozen years.
And the budget adopted a year ago after Katie Hobbs was first elected didn't count, as the state was flush with cash and there was plenty of money to go around.
But now, with the surplus gone and hard choices to be made, many questioned whether Hobbs could have done better.
Yes, there were some victories for the Democrats.
Lawmakers added $15 million to the state's Housing Trust Fund designed to help provide affordable homes for low-income individuals. That, however, is just 10% of what was allocated a year ago.
Democrats succeeded in getting a $135 million cap on the amount of money that corporations could take as income tax credits for contributions to "school tuition organizations'' which provide scholarships for low-income students to attend private and parochial schools.
But some noted that cap, at least for the moment, will save the state just $7 million.
More to the point, STOs are less likely to be sought now that the state has universal vouchers of tax dollars starting around $7,300 for parents to send their children to those same private and parochial schools.
Hobbs already had given up in January on any plans to curb the number of vouchers by going back to the days when they were available only to students who met certain conditions, like learning disabilities, being in foster homes or attending public schools rated D or F. Still, she promised some limits, like a requirement to have first attended public schools for at least 100 days, prohibiting price gouging, minimum education standards and accountability for how voucher funds were spent.
The final budget, however, simply closes a $2.5 million loophole that allowed double dipping: attending public schools during the regular academic year and getting a voucher for summer school. And after published reports on voucher funds going for ski trips and Lego sets, it directs the Department of Education to establish standings on how those dollars can be spent.
Voucher spending, however, remains uncapped.
At the same time, there were cuts to education funding, including a $2.1 million cut to a workforce training program and $3 million taken from a program that encourages dual enrollment in high school and college.
And additional dollars just won last year are will be evaporating, including $37 million for schools based on the number of students in poverty and $29 million in other additional assistance for some capital needs ranging from books and computers to buses.
What Democrats got instead was a promise to restore those dollars after this budget year -- but not until the 2027-2028 school year. But that is unenforceable, as it does not bind future legislators.
"That's a massive and irresponsible transfer of wealth from the poor to the rich,'' said Assistant House Minority Leader Oscar De Los Santos of Laveen,who didn't vote for the package negotiated by the Democratic governor with GOP leaders, about the spending on education.
There was another victory that could be considered hollow.
Lawmakers authorized community colleges to establish a "Promise Program.'' It is mirrored after one at the state university level, it ensures that eligible Arizona residents can get their tuition and fees paid if other financial aid does not cover the costs.
But here's the thing: It is just an authorization, with no actual money attached. Rep. David Livingston, R-Peoria, who chairs the House Appropriations Committee, said colleges are free to find money in their own budgets or go out and seek private dollars.
All that left House Minority Leader Lupe Contreras disappointed, to the point where he would not support the package. The Avondale Democrat said he -- and his caucus -- didn't have any input.
"It was built by the governor and the (House) speaker and the (Senate) president,'' he said.
"Would we have rather been in the negotiations? Yes,'' Contreras said. He said the only reason the package got some Democratic support is that GOP leaders found they didn't have the votes within their own caucus and found themselves having to "buy off'' some of them by adding back a few items that should have been there in the beginning.
And there were add-ons to the basic budget, like $2 million for a K-12 mental health telehealth pilot programs to serve individuals outside Maricopa and Pima counties, an identical amount for entities that provide after school program to low income individuals, a $1 million allocations for counseling in southern Arizona and $500,000 for heat mitigation programs in the same area.
So where does the governor fit in for what he considers a bad budget?
"I'm not going totally put the blame on her,'' Contreras said.
"She has to sign the budget at the end,'' he said, saying that House Speaker Ben Toma and Senate President Warren Petersen also played a role.
"They have to run these two chambers here,'' he said. "Myself and (Senate Minority) Leader (Mitzi) Epstein, we're still not the ones dictating how the budget was built.''
But Epstein, a Tempe Democrat, said as far as she is concerned, Hobbs is not to blame for what she said has been decades of Republican policies of cutting spending
"Gov. Hobbs has done everything she could to deal with this intractable (Republican) caucus,'' she said. "And it's a lot better than it would have been without Gov. Hobbs.
Sen. Anna Hernandez, however, is not willing to let Epstein -- or the governor -- off the hook.
"There's been a failure in leadership that could have gotten us a better budget,'' said the Phoenix Democrat.
"You should also have a spine,'' she said.
"You should have the back of your rank-and-file Democrats that are fighting for the people of Arizona,'' said Hernandez. "My leadership, from the very top of the (executive) tower failed me and all of the people of Arizona by the process that this budget was delivered.''
They aren't the only one angry with the governor. Add to that list Attorney General Kris Mayes who blasted the idea, approved by Hobbs, to take $195 million from a settlement the state made with opioid manufacturers and pharmacies to deal with the costs of treating those who became addicted. Instead, it will fund what the attorney general says is "backfilling'' a budget deficit at the Department of Corrections, Rehabilitation and Reentry.
She contends that transfer violates the terms of the deal, signed by a federal judge, that restricts how those dollars can be used. And, the swept funds aside, Mayes argues that puts the entire $1.14 billion settlement in legal jeopardy.
Lawmakers did add verbiage saying that the funds can be used only for the agency's costs of care, treatment, programs and other expenses for individuals with opioid use disorder and co-occurring substance use disorder or mental health conditions or for any other approved purposes as prescribed in a court order, a settlement agreement or the 'One Arizona' distribution of opioid settlement funds agreement that is entered into by this state and other parties to the opioid litigation.''
Mayes called it an "egregious grab,'' saying it still doesn't comply with the process that requires the funds be awarded by competitive bidding. And she said is exploring legal options.
Hobbs declined an interview request to talk about preparing the budget and, specifically, about what some Democratic lawmakers were saying about what was presented to them as a finished product.
But press aide Christian Slater, in a prepared statement, said that there were 38 budget meetings from May 2 until the plan was adopted "to inform Democratic legislators of negotiations, hear their priorities, and receive feedback.'' Some of those, he said, were just "staff to staff,'' with other including Democratic legislative leaders and members "and at times the governor herself.''
None of this is to say that Republicans who refused to support the package are any more happy with their own leadership.
"Many of my colleagues on this side of the aisle think that Katie Hobbs is not particularly bright,'' said Rep. Alexander Kolodin, R-Scottsdale, as he voted against the package. "But today she has certainly outplayed us, because she's playing the long game.''
And Rep. Barbara Parker said she thought that, as a member of the House Appropriations Committee, she should have been involved in the negotiation process to represent her Mesa constituents to get a fiscally responsible budget.
"It's been implied that I'm asking for something unreasonable or that I'm not working with the body on this,'' she said. "And I want my voters to know that I continued to plead for a little bit of policy that I consider Republican platform principles, conservative and constitutional,'' she said. "And I didn't get those requests.''
But Rep. Travis Grantham, the House speaker pro-tem, said his party members should recognize reality.
"We have a one-seat majority in the Arizona House, we have a one-seat majority in the Senate,'' said the Gilbert Republican. That means if not every Republican goes along, leadership has to get votes from Democrats.
And on top of that, he said, the governor who can sign or veto the budget -- and even has the constitutional power to line-out expenditures with which she disagrees -- is a Democrat.
Personally, Grantham said if he got to prepare a spending plan "most of what's being asked for wouldn't be in it.''
"But I can't get that because I'm not in a majority with 50 other people who think like me,'' he said. "This is how it works.''
And Petersen, finding himself attacked on social media, penned a similar response.
"This is an incredibly conservative budget, especially in light of divided government,'' he posted.
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On X and Threads: @azcapmedia
This is a list of specific projects being funded in the budget plan just adopted by the Legislature above and beyond regular appropriations to state agencies. Order is only how they are listed in the legislation
- Enhance state fair operations -- $3.7 million
- Adult workforce diploma program -- $1 million
- Community college adult workforce development program -- $1 million
- Additional funds for English learner administration -- $5 millon
- Money for a nonprofit organization to promote horse racing -- $4 million
- Add money to the Housing Trust Fund -- $15 million
- Deposit into the Arizona Trail Fund -- $100,000
- Arizona Arts Trust Fund -- $2 million
- Pilot program for Pinal County Sheriff's Office for a pilot program to connect records management systems -- $600,000
- Pepperball and pepperball weapons -- $1.4 million
(Recipients include the Cochise, Santa Cruz, Navajo and Pinal sheriff's offices and police departments in Scottsdale, Nogales, Tempe, Payson, San Luis, Phoenix, Apache Junction, Tombstone, Goodyear and Queen Creek)
- $600,000 to Yavapai County to create simulations for law enforcement free of charge to other law enforcement agencies
- Connect individual homes on Navajo Nation to electrical grid -- $1 million
- Funds for agencies who provide case management for those with serious mental illness -- $1 million
- Grants to business centers that provide training and technical assistance to underserved small business -- $500,000
-- Food distribution for low-income persons on tribal reservations -- $250,000
-- Youth programs on the Navajo Nation -- $500,000
-- Funds for a Pinal County nonprofit that provides nutrition, housing and rental assistance programs -- $500,000
-- Aid for area agencies on aging -- $2 million
-- Social services funds for Pascua Yaqui tribal government -- $1 million
-- Funds for Cochise County nonprofits that provide food distribution services for low-income individuals -- $1 million
-- Job training and life skills services for developmentally disabled in Maricopa and Pima counties -- $1 million
-- High school centers for success -- $1 million
-- After school programs for low-income individuals -- $2 million
-- K-12 mental health telehealth pilot program outside Maricopa County -- $2 million
-- Preventative health care services for low-income and underserved women -- $500,000
-- Organizations that provide counseling services for parents whose children have died as a result of violence -- $500,000
-- Counseling and community services in southern Arizona -- $1 million
-- Senior health promotion in Santa Cruz County -- $1 million
-- Heat mitigation programs in southern Arizona -- $500,000
-- One-time funding for teacher's academy -- $1 million
-- Referral services for employment, job training, housing and utility assistance for veterans -- $500,000
-- Source HB 2897