Republicans criticize Hobbs for budget balancing gimmick they supported last week

Republicans at the state Legislature accused Gov. Katie Hobbs of using federal funds that may never actually materialize to balance her proposed state budget — a week after top GOP lawmakers suggested a similar plan.

On Tuesday, Hobbs budget director Ben Henderson met with lawmakers to present the governor’s spend plan. The proposal, first announced last week, relies heavily on a one-time, nearly $760 million payment from the federal government to pay for the governor’s priorities, including tax cuts and programs to help lower everyday costs for Arizonans.

“We feel confident that all ($759.7 million) are allowable costs and can be reimbursed by the federal government,” Henderson said.

Rep. David Livingston (R-Peoria) and Sen. John Kavanagh (R-Scottsdale) bristled at the prospect of relying on that federal money to balance the budget.

That’s because it would be paid out of a $13.5 billion pot of money that is supposed to be used to reimburse states for costs related to securing the border. The Department of Homeland Security has yet to release the application process for states seeking that money and other states, namely Texas, are already jockeying for the bulk of those funds.

“What are your low priority items that you will jettison in the event you don't get the federal money, which, quite frankly, is rather doubtful from this Republican’s ear on the rail,” said Kavanagh, the Senate majority leader.

Kavanagh made those comments a week after the Senate’s top Republican, President Warren Petersen (R-Gilbert), suggested lawmakers could draw down that very same federal reimbursement to pay for a broad $1.2-billion tax cut package they are backing that Hobbs vetoed on Friday.

Republicans are now backing away from that idea.

“Until they decide that they're going to do something, I guess we will just take a wait and see attitude,” said Sen. T.J. Shope (R-Coolidge), president pro tempore of the Senate. “Traditionally, though, if you don't have it in hand, you have to plan for it potentially not being there.”

Republicans have not yet released their own state budget plan, but both Shope and Livingston said GOP lawmakers are not relying on those dollars to pay for their tax cut or other priorities for the time being.

“We don't use Monopoly money when we put together a budget,” Livingston said.

Henderson defended the governor’s decision to include the money in the budget.

“The moment you come out with a public number like $300 million or $400 million, you're undercutting our ability to strategically ask for every dime that Arizona deserves,” Henderson said. “So I would encourage you not to put out a number that says we would be fine with $200 million, because then likely, the federal government would only give us $200 million.”

However, he acknowledged the state has yet to receive any assurance from the Department of Homeland Security that it will receive the full amount it is seeking.

“They have not released their grant process yet,” Henderson said. “We don't know what kinds of things they’d consider in approving or denying those reimbursements.”

Even as Republicans and Hobbs spar over using the money in the budget, both sides are making an effort to ensure Arizona receives its fair share from the Trump administration.

Republican leaders signed a letter asking the administration for the money, and Petersen also said he met with senior administration officials back in October to lobby for the funds.

Henderson said Hobbs “directly asked” DHS Secretary Kristi Noem about the request multiple times. She also met with Tom Homan, Trump’s top border official, in December to talk about the request, he said.