Arizona budget: Negotiations progress slowly as June 30 deadline nears

Rank and file members of the Arizona Legislature are on another break as Republican leaders continue to negotiate a budget with Democratic Gov. Katie Hobbs.

The Arizona House of Representatives met on Wednesday for the first time in two weeks before adjourning again until June 16. That means lawmakers will return with just two weeks left to pass a budget before the June 30 deadline to avoid a state government shutdown.

Meanwhile, Republican legislative leaders are still at the Capitol hashing out a budget with the governor’s office.

The legislative session began on Jan. 13, and Hobbs’ office presented her budget proposal to lawmakers a few days later. But Hobbs and the Republicans who control the Legislature did not begin negotiating a budget in earnest until about a week ago.

And Hobbs blamed Republican lawmakers for the delays.

“I think we’re still in talks,” Hobbs said. “The House and Senate are still on different pages.”

Sen. John Kavanagh (R-Fountain Hills), who chairs the Senate Appropriations Committee that vets budget bills, supports a plan to give the governor, House Republicans and Senate Republicans $90 million each to spend on their budget priorities.

“But the governor will end up with more in the end based on past experiences,” Kavanagh said.

The proposal is reminiscent of the plan Republican leaders and Hobbs used to pass a budget in 2023, when the state spent down a large budget surplus by handing out millions of dollars to individual lawmakers to spend on their priorities.

Kavanagh confirmed that negotiators from the Arizona House of Representatives don’t support that plan.

“The House negotiators oppose the split plan but their members may disagree with that position,” Kavanagh said.

Rep. David Livingston, who chairs the House Appropriations Committee, did not respond to a request for comment. But Rep. Matt Gress, the committee’s vice chair, told KJZZ last month that House and Senate Republicans disagreed over how much spending should be included in the budget.

That came after legislative budget analysts issued a report with revised state revenue estimates for this year that showed Arizona could have more money than expected.

Kavanagh said the disagreement over his plan isn’t the only point of contention to come up between the three parties negotiating the budget.

“Many but bridgeable,” he said of those disagreements.

Budget negotiations are also complicated by the Republican tax cut and spending bill moving through Congress. The bill, supported by President Donald Trump, would shift some federal spending on programs like Medicaid and food assistance programs to the states – costs Hobbs has long said Arizona is not in a position to absorb.

“We’re obviously watching closely what’s happening in Washington, but we’re focused on getting a balanced, bipartisan budget that meets the needs of Arizonans that we have right now,” Hobbs said.

Congressional Republicans have said they want to send a version of the federal bill to Trump’s desk by July 4. Gress noted that Arizona lawmakers face a difficult task, because they have to pass a budget before that deadline.