The Arizona Legislature was moving in fits and starts late Friday in an effort to enact a budget for the coming year that not only fills a huge shortfall in the fiscal year starting July 1 but also erases a big deficit in the current budget.
Efforts to strike a deal fell short Friday night, however, as representatives in the House adjourned until 8 p.m. Saturday morning. The Senate recessed until the same time.
House Speaker Ben Toma (R-Peoria) insisted that the delay was only temporary, and claimed there are enough votes secured to approve a budget Saturday morning. Toma said he sent people home to give staff a chance to draft and proof the documents and to let the members rest.
“We have the votes,” he said.
But House Minority Leader Lupe Contreras (D-Avondale) said otherwise.
“You don’t leave the building when something is baked. … So, if they had it, they wouldn’t be leaving this building,” he said.
Democratic Sens. Priya Sundareshan (D-Tucson), Brian Fernandez (D-Yuma) and Eva Burch (D-Mesa) said as of Friday evening they have not been given any drafts of potential amendments to the proposed budget — changes that could be necessary to secure 31 votes in the House and 16 votes in the Senate.
Both chambers are considering a package of bills hammered out between Republicans legislative leaders and Democratic Gov. Katie Hobbs. These would lead to adopting the $17.2 billion deal in the current fiscal year and a $16.1 billion spending plan for the new budget year that begins July 1.
Hobbs' staff and the Legislature’s bill-writing attorneys were scrambling to make changes to deal with issues that have come to light since the deal was announced Monday.
Among the bigger issues are complaints from Attorney General Kris Mayes about the use of opioid settlement cash to help pay for treating prison inmates with Hepatitis C and pay for medication assisted therapy for prisoners.
Mayes, a Democrat like Hobbs, is threatening to sue the governor and Legislature over the proposed budget’s use of $75 million in the current budget and $40 million a year in each of the coming three years. Mayes met with House Democrats Friday morning and left the meeting still dead-set against putting the money in the budget.
She said the settlement agreement with opioid manufacturers, marketers and distributors set up a process for spending the money, one that Hobbs and lawmakers are bypassing to grab the cash. She won’t let that happen, she said.
"We're not going to release it,'' Mayes told Capitol Media Services.
"This budget does an end-run around the process spelled out in the settlement agreement,'' she continued. "It's my fiduciary responsibility as the attorney general to make sure that this money is spent for all Arizonans and not just to backfill the budget of the Department of Corrections, Rehabilitation and Reentry."
Lawmakers need the cash in part because a federal judge ruled that the state grossly underfunds inmate health care and last year ordered the state to improve that care. The budget deal earmarks $188 million to address those issues.
But as of late Friday the Governor's Office said it is Mayes who is on legally shaky ground.
"The AG’s characterization of these funds as 'backfilling' the budget of ADCRR could more accurately be described as funding vital opioid use disorder treatment for a population that is disproportionately impacted by the opioid epidemic,'' said gubernatorial press aide Christian Slater.
And Toma said he thinks Mayes is making empty threats.
“We control the bank accounts. The legislature has the power of the purse,” Toma said.
Slater said Hobbs has agreed to make changes in the legislation to resolve Mayes' legal concerns "so that there is no doubt that any opioid settlement funds could not be used for a non-approved purpose.''
Even without Mayes' objections, there were plenty of complaints from lawmakers on both sides of the aisle about the deal.
Between the current and coming year, GOP legislative leaders and Hobbs came up with $1.4 billion in cuts that hit across all parts of government, from state agencies to universities to a big water fund set up the last year of former Gov. Doug Ducey's term.
Sundareshan said she has concerns about many aspects of the budget deal, from the legality of using opioid settlement funds to the ways Hobbs and GOP leaders crafted the compromise deal.
With those issues and others, she said the fate of the budget when votes actually occur remains unclear.
"So there's a lot of questions and of course, Democratic lawmakers haven't really been allowed to negotiate with Republicans on this,'' Sundareshan said Friday morning. She said she was leaning toward opposing the budget and didn’t know if there were the 16 Senate votes needed to pass it.
"I think there's a lot of concern that keeps growing by the hour,'' Sundareshan said.
Some Republicans, both in the House and the Senate, also were opposed to the plan.
Rep. Matt Gress (R-Phoenix) said Friday he remained opposed because of what he said were gimmicks and policy choices made to reach a deal. Gress noted his opposition in particular to the across-the-board cuts to agency budgets, which he called short-sighted.
And Sen. Anthony Kern (R-Glendale) said he was dead set against the plan because of caps on tax credits that can be taken for donations to School Tuition Organizations that help pay private school costs, as well as mandates requiring fingerprinting of private school employees if the school accepts state vouchers, formally known as Empowerment Scholarship Accounts.
Democrats and Hobbs strongly oppose the universal voucher program enacted in 2022, but have been unable to get majority Republicans to agree to scale it back.
The best Hobbs could get in the agreement was putting the fingerprinting rule in the budget along with some new limits on how cash for vouchers, known as "empowerment scholarship accounts,'' can be used and random spending audits.
Kern said he also wants new border security money earmarked for local sheriff's and not the state Department of Public Safety. But in a sign of how disparate the opposition was even among GOP lawmakers, he said he wanted bigger agency cuts and for vacant positions to be permanently eliminated.
Republican leaders of the Senate and House appropriations committees hammered out the deal after weeks of intense negotiations along with President Warren Petersen (R-Gilbert), House Speaker Ben Toma (R-Peoria) and Hobbs.
Sen. John Kavanagh (R-Fountain Hills), who leads the Senate Appropriations Committee, said the deal is a decent one that closes the $729 million hole in the current budget and a $690 million deficit in the spending plan that starts July 1. Not passing a budget would prompt a government shutdown.
"Both sides had issues. The governor had plenty of angst about what's in, what's not in, what wasn't cut, what is cut,” Kavanagh said during a Thursday committee meeting where the budget passed with no Democratic votes. “And we have some (Republican) members that also have angst.''
But he said a deal needed to be made.
"The bottom line is that the budget is a zero-sum game. It has to end with no deficit,'' he continued. "And that's a tough thing to do when you have a revenue shortfall like we have right now, $1.4 billion. ''
Despite the cuts, Kavanagh said most of the government — including schools, prisons and the state’s Medicaid program — actually see spending increases.
"That is the big victory that everybody should be celebrating here,'' he said.
"Here we are nibbling and arguing around the edges,'' Kavanagh said. "And that's the only place you have to go when you have to solve this problem.''
Small changes are likely to appear before final votes are taken, which is common and the primary reason for the "fits and starts'' on Friday as amendments were crafted to address issues and win votes.
As negotiations on the budget dragged on, lawmakers took votes on several non-budget related bills, like agency continuations, that still require votes in both chambers before final adjournment.
