Both Democratic Gov. Katie Hobbs and Republican lawmakers say it’s time to sit down and negotiate Arizona’s next state budget, but neither side appears willing to actually pick up the phone.
For months, Hobbs called on the Republicans who control the Arizona House and Senate to show Arizonans their own budget proposal rather than simply criticize her spending plan, which the governor released in January.
This week, Republicans released that plan, which includes hundreds of millions of dollars in tax cuts along with reductions in government spending needed to pay for them.
The budget proposal includes several provisions Hobbs has already vetoed.
With no resolution in sight, the Arizona House Republicans advanced their budget proposal on Monday without Democratic support.
Democrats say the tax relief for Arizonans wouldn’t make up for the value of services people will lose out on if other things are also cut. The budget would cut funding to healthcare, higher education, and reduce the administrative budget of the agency that administers SNAP.
“Some Arizonans are put first. Some Arizonans are giving tax relief. Some Arizonans are given tax incentives to keep making money and keep doing their thing,” Rep Quantà Crews (D-Phoenix) told her colleagues. “But I'm not here for the people who have everything under control and are coasting through this high rise of cost of living. … This budget cuts $126 million from healthcare. Almost 40,000 Arizonans will not have healthcare. On one hand, we're saying that we're putting more money in their pockets, but we're stealing it from them on the back end,” she said.
It still needs to pass through the Arizona Senate before it can be sent to the governor, who has the power to sign or veto it.
Senate President Warren Petersen (R-Gilbert) said the Senate plans to take up the budget for a vote on Monday since some GOP lawmakers are out of town.
Hobbs said there are "some things I'm encouraged about in their proposal,” such as $66 million in K-12 funding and $23 million to backfill lost federal funds for crime victims.
However, Hobbs also said that she has serious concerns about the Republican budget plan, including across-the-board spending cuts at most state agencies.
The budget also proposes getting rid of tax credits for solar energy devices while holding on to tax credits for data centers — as Hobbs suggested — and pulls money out of the state Housing Trust Fund, something Hobbs has fought to add money to in the past.
“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 on Tuesday.
But on Wednesday, Republican leaders said those negotiations haven’t actually started.
In fact, they say they haven’t received any communications from the governor since they released their plan on Monday.
“We’re going to continue to do our job. The governor for whatever reason, I haven’t received a call from her. She hasn't called me today, yesterday, the day before. The ball’s in her court,” House Speaker Steve Montenegro (R-Goodyear) said.
Democratic Rep. Nancy Gutierrez questioned why it should be up to Hobbs to make the next move and reach out to Montenegro.
"The last time I looked, she's the governor. He's the speaker of the House that took over 100 days to have a budget, so maybe he needs to call her," said Gutierrez.
Hobbs has put the onus on Republicans to reach out to her.
The governor, who had promised to veto every bill sent to her desk until Republicans released their budget, said she won’t end that policy until Republicans come to the table.
“We're monitoring the situation and waiting to see if they're ready to engage in good faith negotiations,” Hobbs said.
Hobbs said she’s “hopeful that we can get back to the table and start having real conversations about a budget that works for Arizona.”
It doesn’t appear Republicans are trying to jumpstart talks with the governor, either.
Montenegro would not directly answer when asked if he has reached out to the governor, instead blaming her for initially walking away from budget talks last month.
At the time, Hobbs said she walked away because Republicans allegedly refused to discuss a renewal of Proposition 123, a voter-approved education funding measure that expired last year. Funding from a potential renewal is a key funding mechanism in the governor’s budget plan.
Governor’s office staff said Wednesday that full tax conformity is something Hobbs can get on board with, if Republicans also agree to put Prop. 123 on the ballot. If voters approve the measure, it would boost education funding by a few hundred million dollars, but there’s no guarantee that voters will vote to extend it either.
“We have been here, sitting at the table — asked them to come to the table numerous times,” Montenegro said. “Remember, five weeks ago, she walked away. Five weeks ago plus, Governor Hobbs walked away from finding a solution for the people of Arizona in this budget.”
Despite the gridlock, Republicans are content to pass their spending plan without the governor’s input.
“We have continued to dedicate hundreds of hours — our staff, our members — into making sure we put a budget together that is thoughtful, that is serious, that makes sure we're protecting the most vulnerable in the state while funding the most critical needs,” Montenegro said.
Democrats in the House disagree.
They argue the Republican plan disproportionately favors corporations and the wealthy.
That’s because it cuts government spending on social programs like food assistance and health care while creating a spate of new state income tax cuts inspired by the federal cuts backed by President Trump last year.
It also does not include Hobbs’ request to repeal a tax break for data centers designed to boost business in Arizona even though the state is now home to one of the largest data center industries in the country.
“How can we justify a $30 million tax credit for data centers when seniors will go hungry and homeless?” Rep. Patty Contreras (D-Tempe) said.
Republicans have argued their tax break package will have broadly positive effects on Arizonans by putting money back into their pockets.
And Rep. David Livingston (R-Peoria) accused Democrats of making bad faith arguments, noting they did not propose any changes to the Republican budget, such as an amendment to get rid of the data center tax break.
“If they were so enraged about this bill, you would think they would have had amendments for us to debate and look through, but there isn't any,” he said.
House Minority Leader Oscar De Los Santos (D-Laveen), the top Democrat in the House, said Democrats didn’t offer any amendments, because they don’t consider the Republican budget a serious proposal.
“We're going to negotiate this budget like adults at the negotiating table and we're going to come ready to fight for affordability for working families,” De Los Santos said. “This budget came out on Monday, and for them to think that we're going to take it seriously on the floor less than 48 hours later is a non-starter.”
KJZZ's Kathy Ritchie contributed to this report.
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