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Hobbs, GOP can't agree to fund 2 programs running out of cash. Is this a budget battle preview?

Families and advocates gathered at the Arizona Capitol on Feb. 26, 2025, to call on lawmakers and Gov. Katie Hobbs to approve emergency funding for a program that provides services for Arizonans with disabilities.
Wayne Schutsky/KJZZ
Families and advocates gathered at the Arizona Capitol on Feb. 26, 2025, to call on lawmakers and Gov. Katie Hobbs to approve emergency funding for a program that provides services for Arizonans with disabilities.

Arizona Republicans and Democrats are pointing fingers at each other over a pair of budget situations that need immediate attention.

The Department of Child Safety’s congregate care program is in danger of running out of money Monday, while a Department of Economic Security program for residents with disabilities is also running out of cash.

And, the fights over these programs could be a harbinger of budget battles to come when lawmakers and the governor get into the nitty-gritty of the budget for the next fiscal year, which starts on July 1.

Wayne Schutsky from KJZZ’s Politics Desk breaks it down on The Show.

$122 million for Division of Developmental Disabilities

WAYNE SCHUTSKY: The DDD program, which is that program you mentioned for Arizonans with disabilities, provides, it's basically provides all the funding for the long term care that they require, the caregivers, that kind of thing, and basically it needs $122 million or else it will run out of money by May, is what the department is saying.

A lot of reasons why that has happened, you know, costs that are above expectations, that kind of thing, and some fighting over whose fault that is. Republicans say the governor for continuing some programs that they didn't provide funding for.

Republicans in the Arizona House blocked an effort by Democratic representatives to fast track funding Gov. Katie Hobbs says is necessary to save a program that provides services for Arizonans with disabilities from bankruptcy.

$6.5 million for foster kids in group homes

The other one is, as you mentioned, DCS, Department of Child Safety, their congregate care programs, that's children who are, you know, wards of the state and are in group homes specifically.

They, the governor sent a letter to lawmakers a few weeks ago, basically saying they need money by next week, or $6.5 million, or else that program is also going to run out of money.

Republican lawmakers say the state program providing care for Arizona foster children living in group homes could go bankrupt by next week, but Democratic Gov. Katie Hobbs’ office says they’re using routine budget adjustments to play politics.

Republicans and Democrats are not in agreement on what to do about this. For the DDD program, the chairman of the House Appropriations Committee, David Livingston, was on The Show a few weeks back and said, “we're not going to do what's called a supplemental appropriation for this. We're not gonna add money now. This will just have to be part of the next budget.”

But it doesn't seem like the Legislature is all that close with the governor on getting that done.

SCHUTSKY: That's correct. Yeah. Democrats keep saying, “hey, let's just take care of this problem now.” And they've tried multiple times different procedural maneuvers to kind of force through a bill that would give that supplemental, as you called it, which is basically just a clean, “here's the $122 million you say you need,” new money to the budget to pay for these programs.

In the current fiscal year, yeah, so to give them that money to finish out this year and then we can hash out what we do next year in the next budget.

Republicans say, whoa, whoa, whoa, this is structural, this is ongoing, so this should be part of discussions for the next budget as well, and we can fit that supplemental into that new new budget because even though it's a budget for next year, they can include some of those supplementals to cover the rest of the cost for this year.

The problem, as you mentioned, is budget negotiations in recent history have stretched all the way into June sometimes. Well, this division's going to run out of money in May, and so that's why the governor and Democrats are saying no, let's take care of this now.

But Republicans control the Legislature and they're saying no, we want all of this done as one deal.

Is that Republicans’ argument for the DCS congregate care program as well? 

SCHUTSKY: No, that's a little bit different, and it is a bit of a different situation. They're actually holding a meeting [Thursday], a joint budget committee, so Republicans and Democrats and both sides of the Legislature come together on this budget committee, and they're going to look at solutions to get that $6.5 million.

It's a little bit different because the governor's not asking for new money here. She's actually proposed pulling the money from other funds within DCS that they already have, that go towards kinship care, which is having family members take care of kids who are in foster care, and foster home placements, saying that basically those two line items, for lack of a better word, are coming in under budget, so we have extra money. We have, basically haven't served enough kids that we've budgeted for. So let's pull it out of there, put it into congregate care.

Now, Livingston, the chair of the Appropriations Committee, said no, we're not taking money away from foster care. We're not taking money away from kinship care. We do want the governor to find places in her budget to to pull this money from, but those are non-starters for us.

Will there be some kind of solution before next week for the congregate care program?

SCHUTSKY: I think for the DCS one today's meeting will be really, really show us where they're coming from. I think the Republicans are going to come up with some options where they think the governor can pull money from the budget, and then it's just kind of up to whether the governor agrees with that because she basically has to.

A request their approval to make those budget changes, but they can't do that in reverse. They can't like approve it without her requesting it is how I understand the process works.

I do think that problem will get solved, at least temporarily. It's $6.5 million a lot of money for you or me, but in the scope of the larger budget, not as much. However, that only gets them through the end of April, so then we could be right back where we started if a budget isn't solved by then.

End of April also coincidentally when DDD needs that funding. So Livingston has consistently said we could get a budget done by April if the governor would come to the table, but then the governor counters and says, I've made my budget public. You guys haven't, so why don't you do that?

So it's kind of this back and forth of, of who's not coming to the table. Both sides say I'm willing to talk, but both sides blame the other side for not being willing to talk. So it's kind of a stalemate at the moment.

How would you take what we're seeing right now and look ahead to budget talks?

SCHUTSKY: Yeah, I mean, as I said, budget talks have taken a long time in recent memory, and this is indicative that this year is going to be no different because if you think about it, the budget covers everything the state government does.

These are two specific programs and they can't even come to an agreement on that. And it's not like these are two specific programs that's just a problem this year, all these costs are going to be needed next year as well. These aren't, these are ongoing programs.

So these fights they're having right now about how these programs should be run, where cuts need to be made, potentially are all going to be part of the discussions about next year's budget, too. So if they can't agree today, then there's no promise that they might be able to agree tomorrow.

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KJZZ's The Show transcripts are created on deadline. This text is edited for length and clarity, and may not be in its final form. The authoritative record of KJZZ's programming is the audio record.

Mark Brodie is a co-host of The Show, KJZZ’s locally produced news magazine. Since starting at KJZZ in 2002, Brodie has been a host, reporter and producer, including several years covering the Arizona Legislature, based at the Capitol.
Wayne Schutsky is a senior 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.