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Republican lawmakers say Hobbs' Arizona budget numbers 'don't add up'

Arizona Gov. Katie Hobbs speaks at the 2025 Legislative Forecast Luncheon hosted by the Arizona Chamber of Commerce & Industry in Phoenix on Jan. 10, 2025.
Gage Skidmore/CC by 2.0
Arizona Gov. Katie Hobbs speaks at the 2025 Legislative Forecast Luncheon hosted by the Arizona Chamber of Commerce & Industry in Phoenix on Jan. 10, 2025.

Republicans at the Arizona Legislature lambasted the state budget proposed by Gov. Katie Hobbs, claiming it's riddled with mistakes.

Rep. David Livingston (R-Peoria) said the governor’s revenue and expense projections differ significantly from forecasts created by legislative budget analysts and that those problems must be resolved before lawmakers can consider the specifics of the governor’s spending plan, like proposals to lower child care costs or increase the supply of affordable housing.

“So I'm frustrated that the numbers don't add up, not even close, and it makes it very difficult to have real negotiations when it’s a proposal that's not even real,” said Livingston, who chairs the House committee that must approve all spending proposals.

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One of those errors, according to Republicans, is how the governor’s budget accounts for the Arizona Health Care Cost Containment System, or AHCCCS, the state’s Medicaid agency.

Rep. Matt Gress (R-Phoenix), who was the budget director for former Gov. Doug Ducey, pointed out that Hobbs’ budget doesn’t include any projected growth in enrollment in AHCCCS in 2027 or 2028.

“So the executive is forecasting no growth in any cost to provide medical care and that nobody else enrolls in AHCCCS in the next two years, which is unheard of,” Gress said.

The governor’s budget does project 2.15% enrollment growth in 2026, along with a 4% increase in the capitation rate, or a fixed amount paid in advance to pay for services.

But the budget doesn’t account for growth in those categories over the next two years.

According to legislative budget staff, applying the Legislature’s projected AHCCCS caseload growth to the governor’s proposed budget would result in a deficit in 2027 and 2028.

That could account for an estimated $846 million in expenses over that time, Livingston said.

The governor’s office and Legislature also differ on how much money they believe the state will bring in over the next few years.

The governor’s budget team projected $56 million more in revenue in the upcoming year compared to legislative projections. That difference balloons to $126 million next year.

Livingston said those unaccounted-for expenses, coupled with differences in revenue projections between the governor and Legislature, don’t leave enough extra money in the budget to pay for Hobbs’ plan, which includes over $1 billion in new spending.

“It’s bankrupt before we even got here today,” Livingston said.

When pressed by lawmakers, Marge Zylla with the governor’s office did not spell out why Hobbs’ budget team left out AHCCSS growth projections, but she did say Medicaid costs in the coming years will be part of future budget discussions.

“Certainly, the technical experts at the analyst level forecasting this contemplated a host of things … we'll continue chatting through any caseload differences across a whole host of agencies,” Zylla said.

Republican lawmakers weren’t happy with that answer.

“Unfortunately, instead of my goal of passing a budget in February, as chairman, I'm looking at this, and I'm saying, ‘July 1 is coming along, and we're not gonna have a budget,’” Livingston said, referencing the date by which officials must adopt a new budget to avoid a state government shutdown.

Despite their disagreements, there were some parts of the governor’s budget Republicans could support.

Livingston, for instance, said that includes giving 5% pay raises to law enforcement and corrections officers.

But other areas of Hobbs' proposals are dead on arrival, including an attempt to put income restrictions on the state’s school voucher program that the governor’s office estimates would save $150 million by removing 9,000 students from the program and lowering voucher amounts for another 12,000 families.

“I'm just telling you no now,” Livingston said.

He said there are currently no meetings on the books scheduled between legislative staff and the governor’s office so the two sides can resolve their differences. Those meetings need to happen before legislative leadership can pitch a budget proposal to individual lawmakers to amass the votes necessary to pass a spending plan by the end of June.

Once that happens, Livingston said leaders in the Arizona House will not offer pots of money to individual lawmakers in order to win their support – a strategy employed by Republicans two years ago to pass a budget and floated again by Sen. John Kavanagh this year, according to the Arizona Agenda.

“We do not believe in earmarks,” Livingston said. “This leadership team and I, we will not be doing that.”

More Arizona politics news

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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