Arizona Republican lawmakers delivered their budget. Hobbs won't commit to ending bill moratorium

For weeks, Gov. Katie Hobbs said she would veto every bill sent her way by the Arizona Legislature until Republican lawmakers released their proposed state budget to the public. But, a day after GOP legislators published their spending plan, Hobbs is backing away from that commitment.

Hobbs, who released her budget plan in January, repeatedly chastised Republicans for criticizing her proposal without offering an alternative.

On April 13, she issued a bill moratorium, saying she would veto every bill sent to her desk until Republicans who control the Arizona House and Senate released their spending plan.

Republicans released their budget on Monday, unveiling a plan that adopts a massive new suite of tax cuts and pays for them by slashing government spending.

But, after indicating that release would end the bill moratorium, the governor wouldn’t commit to start signing bills again.

“We're monitoring the situation and waiting to see if they're ready to engage in good faith negotiations,” Hobbs said.

Negotiations

It’s also not clear whether there is any room for negotiation between Hobbs and Republicans, whose budget spends $800 million less than the governor’s plan. It also jettisons key funding measures backed by Hobbs, including reforms to the state’s school voucher program and new fees on sports gambling and short-term rentals.

Instead, Republicans adopted broad spending cuts, including reducing most state agency budgets by 5%, cutting economic development programs and getting rid of tax credits for solar, renewables and other pollution-reduction technologies.

They’re using that savings to cut taxes by an estimated $1.45 billion over the next four years by adopting the full suite of tax cuts approved by federal lawmakers last year with backing from President Donald Trump.

“When we talk about affordability, Republicans mean giving the money back to the people. Affordability for the Democrats is another government program,” Rep. Matt Gress (R-Phoenix) said.

By comparison, Hobbs' plan only adopted some of those cuts, with an estimated price tag of $1 billion.

Hobbs wouldn’t directly answer when asked if the Republican plan is dead on arrival or could provide a framework for negotiations.

“I've been waiting to see what the Republicans want to propose instead of the things that they don't like about my budget. Hopefully this is the start to those conversations,” Hobbs said.

Gress said any notion that the Republican budget is a “starting point” in negotiations is misguided.

And Rep. David Livinston, who chairs the House Committee that vets budget bills, indicated Republicans aren’t keen on going back to the negotiating table after Hobbs ended negotiations last month.

“I never turn around a good negotiation, but she walked away from the table,” Livingston said. “The first governor in my tenure ever to do that. They have to live with that.”

Hobbs walked away over disagreements concerning Proposition 123, a voter-approved education funding mechanism that expired last year. The governor has insisted that a Prop. 123 renewal plan be included in budget talks, but Republicans are not on board.

Prop. 123 boosted the amount of money Arizona public schools receive from the state’s land trust fund from from 2.5% to 6.9% before it expired last summer. Both Republicans and Democrats have expressed a desire to renew the measure for years, but they don’t agree on the details.

Lawmakers backfilled that loss in funding using other state dollars in the short term, but Hobbs argued that by letting the measure lapse, lawmakers are leaving $1 billion on the table.

“And quite frankly, there's a lot of cuts in the budget that are really concerning to me, and what it looks like on the offset is that is that the this budget is is copying the chaos from Washington by passing tax breaks for billionaires, data centers and special interests at the expense of public education and other priorities beyond that,” Hobbs said.

Hobbs also took specific issue with the agency-wide cuts.

“I support government efficiency, which is why I launched my ace initiative, which will save hundreds of millions of dollars over the next couple of years,” Hobbs said, referring to her plan to use AI and other technologies to improve government efficiency. “However, I think we need to make these cuts strategically and smartly and not slash and burn with just across the board cuts like we're seeing come out of Washington, D.C.”

Hobbs' allies in the Legislature shared her concern about the agency-wide cuts and other spending reductions used to finance the tax cut package.

“This is not a negotiated budget, and it won't get signed,” said Rep. Mariana Sandoval (D-Goodyear). “We have an affordability crisis, struggling to buy food, paying for housing and health care. Arizonans are drowning out there.”

But Gress said Democratic gripes don’t matter at the Legislature, where Republicans hold majorities in the House and Senate.

“The fact is, we don't need Democratic votes to pass this budget,” he said.

However, as Sandoval pointed out, Republicans will need one Democrat on board, and Hobbs has given no indication she will sign the plan currently moving through the Legislature.