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This week at the Arizona Capitol: Can state lawmakers and Hobbs agree to budget before June 30?

The Arizona Capitol building
Bridget Dowd/KJZZ
file | staff
The Arizona Capitol building in Phoenix.

It’s less than three weeks from the end of the month, and less than three weeks from the end of the fiscal year, the time at which state lawmakers and the governor need to agree to a new budget or have the Arizona government shut down.

That budget will have to include cuts to address a projected $1.3 billion deficit over the next two years.

Republican leaders at the Legislature said they are preparing to present a budget draft to rank and file lawmakers, one of the last steps in the process before they can officially vote on a budget to send to Arizona Gov. Katie Hobbs.

“I am hopeful that we will get there very soon,” Arizona House Speaker Ben Toma (R-Peoria) said last week. “Over the next few days, hopefully get a broader agreement at which point it's going to be shopped to the members and then, obviously, we’d like to get out of here as soon as possible.”

State Sen. John Kavanagh (R-Fountain Hills), chairman of the Senate Appropriations Committee, said leadership will send a draft to all members Tuesday, but he is unsure whether a final vote will happen this week.

To talk more about the situation with The Show, as he is every Monday during the legislative session to talk about what to expect this week at the state Capitol, is Howard Fischer of Capitol Media Services.

Full conversation

MARK BRODIE: Howie, good morning.

HOWARD FISCHER: Good morning, good morning, I tend to feel like one of those protesters in sackcloth saying "the end is near," … hoping and praying that I am right. Today is day 155 of the "100-day legislative session." As you point out, we are running out of runway here, not only to adopt a new budget for the coming fiscal year, but to balance the one for this fiscal year because constitutionally speaking, if we don't have the books in balance by the end of the year, somebody's in trouble. Not sure what the penalty is. But the Constitution says you have to have a balanced budget and we do not.

BRODIE: Right. So, like it sounds as though there are meetings, there might be some amount of progress going on between the governor and legislative Republicans. What do we know about where things are right now?

FISCHER: Well, one of the things that we do know is that there's a belief that they can figure out how to balance this year's budget without too many gimmicks. You may remember in prior years, one of the things that they've done is pay June's bill in July. Now, that doesn't solve next year's problems, but it does get us out of the problem of ending the fiscal year on a note, on a balance note, particularly. So what they're talking about, though, is making some cuts, as much as you can get agencies to cut, you know, between now and June 30. Some of them have already been making cuts, there's been a quasi-hiring freeze by the executive department. Plus they're out there looking for, what they call, other funds. In other words, agencies have money they put aside for special purposes. You know, it could be improving state lakes, it could be certain road projects, and to the extent that they can sweep them into the budget, say, "Look, we have money," they can balance the books. The question is, what will everyone agree to? I mean, everybody has his or her sacred cows. For the governor, a lot of that is the housing funds. For some lawmakers, you know, it's the money for the voucher program. So can you pull together a deal quick enough to do that?

BRODIE: Well, quick enough, Howie, but also do the numbers add up? I mean, there's a, what, a $600-plus, $100 million deficit for the fiscal year that ends in three weeks. And, you know, there's only so many road projects that have been allocated for but haven't started yet that you can call all that money back. And, as you point out, only so much money in all those funds.

FISCHER: Well, I think that they're going to be searching the cushions of every couch of every state agency, if you will, and they believe they can make it happen. Now, will there be a last-minute budget maneuver just to make sure that we're over the edge and end the year in the black versus the red? Possibly, but House Speaker Ben Toma assures me, we can do this without playing games with the budget. ... When you and I talk on a future Monday morning, we will find out whether they can do that.

BRODIE: Well, Howie, what about next year's then? Because you still have a multi-$100-million deficit for next year as well. Any sense of what might be on the cutting, on the cutting board for that?

FISCHER: Well, I think that that's a piece of the puzzle, but I think they need to get past this year first. I think they recognize that if in fact, they don't have a "balanced budget" for the year beginning July 1, they can work out the details on that. You know, I think that Republicans would like to have something in place just in case, maybe they're not in the majority after November 5. And so they'd like to have their their priorities, their options, you know, on the books, not that they can't be amended, but it'd become sort of a starting point. I think that we're about to see what's important, what can be pushed even further down the road. If you look at the books by FY27, we should be back in balance. Now, if you can just kind of tread water until then, I think that you can make things happen. Part of it has been the tax cuts the prior years, part of it has been retail sales have been very weak, you know, certainly with high interest rates, credit card debt, everything else. Even just home sales. You know, when you've got mortgages in the 7% range, people are staying put, which not only means they're not buying homes, but they're not buying furniture. They're not doing all the other things that help the retail sales tax on which this state is so dependent.

BRODIE: So, Howie, I've got about a minute left or so. So I wanted to ask you, you know, there have been some predictions that, you know, they're gonna go right up until June 30, before they actually get a deal done and to the governor. Does that, I mean you've been doing this a long time, is this what it seems like to you? Is that how is looking?

FISCHER: Well, the House and Senate come back on Wednesday, and they do have some calendars scheduled for Thursday and Friday, which theoretically — again, underline, boldface, italics — means we could have a budget by the end of the week. I don't think they want to go right up to the end, if for no other reason, now, remember, the primary this year is July 30. There are a lot of folks who are hoping to win the primaries for re-elections in their own districts, or, for example, in the case of Ben Toma, he'd like to be the Republican nominee for CD8. He'd like to be out on the road, and he'd like not to be sitting in the chambers and trying to figure out, "do I have 31 votes?" So there's a lot of pressure on a lot of folks to do that. But there's always recalcitrant folks on both sides of the aisle who say, I'm going to hold my breath till I'm blue. Now, the good news is, it almost has to be a bipartisan budget, not only because we have a Democratic governor, but because of the fact that some Republican lawmakers may not be on the floor. They may have had pre-planned vacations. And so there is a lot of pressure to say, what do we need to do to get the heck out of Dodge?

BRODIE: Alright, we'll check in with you again next week. Howie Fischer of Capitol Media Services, thank you.

FISCHER: You're welcome.

Mark Brodie is a co-host of The Show, KJZZ’s locally produced news magazine. Since starting at KJZZ in 2002, Brodie has been a host, reporter and producer, including several years covering the Arizona Legislature, based at the Capitol.
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.
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