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Budget negotiations heat up as AZ faces $1.3 billion deficit

Budget talks are heating up at the state Capitol as the Republican-controlled Legislature and Democratic Gov. Katie Hobbs negotiate how the state should address a projected $1.3 billion budget deficit.

Those negotiations have been complicated by disagreements over where the state should cut spending to address the deficit, and Republicans have blamed Democrats for being slow to come to the negotiating table.

“We have had a budget ready since December,” said Senate President Warren Petersen (R-Gilbert). “The Democrats did not want to seriously engage until April.”

Hobbs presented her budget proposal to lawmakers in January, but, in March, Senate Minority Leader Mitzi Epstein (D-Tempe) said serious budget talks should wait until April, when lawmakers received updated financial projections from legislative budget staff. Hobbs agreed with that assessment, saying “those projections will have a better picture of where the revenue is.”   

Those projections, presented at an April 11 Financial Advisory Committee meeting, showed better than expected revenues that reduced the projected deficit from about $1.7 billion to around $1.3 billion.  

But even after that meeting, budget talks appeared to move slowly as lawmakers focused on other contentious issues, including the state’s territorial-era near-total abortion ban and border security legislation.

Petersen said lawmakers have little left to do this year except pass a budget and that budget meetings are happening daily. Before sending senators home last week, he told them the plan is to call them back to pass a budget.

“But that’s our next move folks. It’s time to do it. Time to make it happen,” Petersen said.

Hobbs has already announced a hiring cap at state agencies to cut costs. She has also pushed for cuts to the state’s school voucher program, which is a non-starter for Republicans. 

A spokesman for Hobbs declined to comment on any remaining points of disagreement with Republicans, saying the governor won’t comment on ongoing negotiations.

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Wayne Schutsky is a broadcast field correspondent covering Arizona politics on KJZZ. He has over a decade of experience as a journalist reporting on local communities in Arizona and the state Capitol.