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A $5 billion budget surplus has Arizona lawmakers scrambling to choose priorities

Unable so far to craft a budget deal despite — or because of — an anticipated $5 billion surplus, Republican leaders are looking for an exit strategy to finally end the legislative session that began in January.

The activity, or lack thereof, comes as lawmakers return to the Capitol this week for what’s supposed to be the last week of the 2022 legislative session.

But efforts to adopt a state spending plan for the upcoming fiscal year have so far failed, as individual lawmakers jockey for how each wants to allocate an estimated $1.3 billion in ongoing surplus revenues. There’s also another $4 billion in estimated funding that can be used for specific one-time projects, like bridge construction or debt payments.

Hear Ben Giles discuss the budget and more with host Lauren Gilger on The Show


Lawmakers say failure is not an option. The Arizona Constitution requires the legislature to adopt a budget by July 1. So some Republicans are promoting a plan to enact a baseline budget, or “skinny budget” — current state expenses would be adjusted for inflation and population growth where necessary, but beyond that, spending would not increase.

It’s a plan akin to a continuing resolution at the federal level. 

House Majority Leader Ben Toma (R-Peoria) said he thinks that Democrats would go along with what would more formally be called a "continuation budget."

But House Minority Leader Reginald Bolding (D-Laveen) said Republicans are fooling themselves if they think Democrats are willing to leave billions of dollars unspent this coming fiscal year.

"How do I tell a parent whose child is in a classroom with a substitute teacher to just wait one more year for your kid to get a full time teacher, or another who's sleeping on the street in the Arizona heat another summer, to just say, 'Stay on the street one more year because we're' not putting money in homeless shelters,"' he asked.

And his Senate counterpart, Rebecca Rios (D-Phoenix) said Senate President Karen Fann (R-Prescott) is offering nothing to Democrats to support a continuation budget.

"She recognizes if she gives us anything in this skinny budget, then it's no longer a skinny budget and everybody's going to want their items in there," Rios said.

But Fann said she is willing to talk deals. And at some point there has to be some common ground where everyone — or at least a majority of the lawmakers — get at least some of what they want, Fann added.

In fact, Fann said she shares some of the priorities that Democrats have, like dealing with the homelessness.

"If people are homeless because they have mental illnesses we need to get them better help so that we can get them back to some sort of a safe, fulfilling life," she said. Ditto getting treatment for those living on the street who are addicted to drugs.

"I know a lot of people say that's not our problem," Fann said. "Well, it is our problem. And it's a problem getting bigger."

Fann said there are other possible compromises.

Democrats want a state version of the earned income tax credit, where those in low-paying jobs actually get some state cash. In exchange, Fann said, they might be willing to provide some votes for a proposal by Sen. Paul Boyer (R-Glendale) to expand the voucher program for private and parochial schools to include all families in poverty.

None of this talk of compromise with Democrats should be necessary. After all, the Republicans control both the House and Senate and the governor's office, and routinely adopt budgets without any support from the minority party. But those margins are razor thin in both chambers. 

That reality has allowed Boyer — and possibly others — to hold out for things they want.

For Boyer, it's not just voucher expansion. He said voters made it clear in 2020 they want more funding for K-12 education by approving Proposition 208. The only reason it didn't take effect was that the Supreme Court said the cash raised by the 3.5% income tax surcharge on the wealthy could not be legally spent absent legislative action. 

Boyer said the state, now flush with cash, could easily fund that $900 million from existing proceeds.

Democrats support that. And even Toma said that may be do-able.

But to complicate matters, he, in turn, wants something: universal vouchers, regardless of income or need, far more than Boyer is proposing.

"We either believe in parental choice, or we don't," he said. "You either believe that you know what's best for your child or you don't believe that you as a parent know what's best for your child and the government knows better."

That, however, remains a non-starter for Democrats.

And it's that kind of stalemate that has so far held up progress on adopting a budget.

There's another player in all this: current Gov. Doug Ducey who would have to agree to a continuation budget — or any deal at all.

"We don't negotiate through the press," said spokesman C.J. Karamargin.

But a skinny budget could prove unacceptable to Ducey. It would mean not just leaving that $5 billion surplus on the table for his successor but also giving up on enacting all the programs and tax cuts he wants to put an exclamation point on his final year in office.

There's another factor that may help force a solution sooner rather than later, with or without Democrats.

It's an election year, with an Aug. 2 primary. And early ballots go out 29 days before then. The more time lawmakers spend at the Capitol, the less time they have to campaign, whether for reelection or some higher office. State law also precludes legislators from taking campaign donations from lobbyists while they are in session.

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Ben Giles is a senior editor at KJZZ.