Democratic Gov. Katie Hobbs’ budget director told state agencies not to ask for too much money for next fiscal year, as Arizona braces for the impact of federal funding cuts.
State agencies submitted their budget requests last week. The governor’s office will use that information to craft a budget proposal to present to lawmakers in January.
“We're facing a tough budget year and with a lot of uncertainty coming from the federal government, and we want to act responsibly and ensure that we’re safeguarding taxpayer dollars and not increasing budgets to a level that’s not sustainable,” Hobbs said last week.
Earlier this year, Hobbs’ budget director instructed state agencies not to ask for any more than a 2% funding bump.
The Governor’s Office of Strategic Planning & Budgeting Director Ben Henderson said in a letter to state agencies that Arizona will be forced to try and mitigate the impact of federal cuts with state funds.
“Significant changes and uncertainty at the federal level will pose additional challenges in the budget development process this year,” Henderson wrote to state agencies in July. “As you know, H.R. 1 was recently signed into law and will reduce state revenues, create extensive red tape and paperwork for our customers, all while driving up costs to comply with ever-growing federal mandates.”
A report by the state’s Joint Legislative Budget Committee predicts the federal budget will have an impact of several hundred million dollars on the state.
“It is clear that we are at the edge of a cliff in federal funding unlike anything in recent history,” Henderson wrote. “It is impossible to backfill all of these federal resources with state dollars. We will do everything we can to mitigate the impacts of these decisions, but it is important to set an expectation with both your staff and stakeholders that the state is unable to shoulder such a large gap in federal support.”
