This week at the Arizona Legislature: Continuation budget puts state in uncharted territory

The state House of Representatives will be back at the Capitol today to talk about the budget. But they won’t be debating the spending plan approved by the Senate last week — that’s the proposal that had been negotiated with the governor.

Instead, the House will be taking up what GOP leaders are calling a continuation budget to to keep the state running beyond the fiscal year that ends June 30 until lawmakers can come to agreement on a full budget.

This follows the House having approved a spending plan along party lines that Gov. Katie Hobbs had declared “dead on arrival." The Senate then approved its bipartisan proposal, but House Speaker Steve Montenegro (R-Goodyear) announced on Friday that the plan did not have enough votes to pass among his members.

Howie Fischer of Capitol Media Services joined The Show to explain.

Full conversation

MARK BRODIE: Howie, it doesn’t seem like where we are was necessarily part of the plan.

HOWARD FISCHER: Well, it's hard to say what's part of the plan because this is a Legislature that's known for kind of operating by the seat of its pants. It certainly wasn't part of what the Senate thought was going to happen a week ago. They thought, look, we have a deal with the governor. Republicans are willing to go along, at least a majority of the Senate Republicans, a majority of the Senate Democrats, and the governor, they said we've been trying to negotiate with the House. The House sort of stepped away at some point and said we're going to go our own way, but I figured there are votes in the House.

I mean, even David Livingston, who chairs the House Appropriations Committee, told me, oh, probably a week ago, there are enough votes here to get this bill out. There are the 31 votes in the 60-member chamber.

Well, I think part of what happened was when the Senate said we're done with the budget is they made a motion to adjourn sine die, which means the session is over, and that sent a message to the House and to the House Speaker Steve Montenegro that this was a take it or leave it budget. And they got a little ticked off and they said, no, no, no, no, no, this is not going to happen this way. And so they are due back this morning to introduce what they call a continuation budget.

The idea being we just keep the state running because otherwise if there's no budget, the state shuts down July 1. And then we will continue to negotiate because somehow, whatever we weren't able to get in January, February, March, April, May or this month, we'll be able to get in July.

BRODIE: Well, and how he, interestingly, Speaker Montenegro referenced the idea of a take it or leave it budget, and not liking that idea, in, in a statement that he put out, I believe, late Friday. Now, you have been covering the Capitol for a minute or two. Has this happened before that there's been a continuation budget?

FISCHER: There has never been. We actually had one year where we did get into July 1 and what happened is everyone knew that there was a budget coming so they kind of squinted and said, oh no, it's not July 1, these aren't the droids you're looking for, so to speak. And everything stayed open, but I have never seen a contingency budget.

I've been covering this place since '82, been in Arizona now since the early ‘70s. Obviously, I don't go back to George W.P. Hunt, who was Arizona's first governor, so I cannot tell you what happened there. But I've never heard of this in Arizona. Now this is not unusual at the federal level, because working with, you know, 535 people in Washington is a whole different thing. And so they'll pass a continuation budget before September 30, which is the end of the federal fiscal year, and they'll keep talking.

There is no provision for that in the Arizona Constitution to just keep working. You can't just say whatever we were doing, we're going to keep doing. That gets to the question of what the continuation budget looks like. I mean, last year's budget was somewhere in the neighborhood of $16.2 billion compared to the 17.6% that's in the budget that was the Senate passed or even the 17.3% that the House passed. Do we just go back to what we were doing? What about inflation? What about state aid to schools, which is adjusted every year? What about the Arizona health care cost containment system? Are we adjusting for more people going in? This is uncharted territory.

BRODIE: Well, Howie, there's also the issue of Governor Hobbs saying that she would not sign a continuation budget. So, like, how does that work into all this? Oh, we're, we're in the game of chicken mode here. I mean, it was more than I won't sign it, it was sort of telling the House Speaker, Steve Montenegro, exactly where he could stick his continuation budget. And so we don't know, is somebody going to blink? I would assume so based on prior history. Somebody has always blinked. I don't know whether maybe they could take the Senate budget and do a few tweaks in there.

Part of what the problem is, this isn't just about money. The House has a bunch of other things in there that they want, House Republicans, that is. You know, having to do with one measure that would make it harder for Attorney General Kris Mayes to do political prosecutions. They've got some things in there about a 2.5% cut in tuition at the state universities for in-state students, but they're not making it up with the general fund. It's not like we're gonna, we'll increase state aid.

And so it's the policy stuff that the governor said, look, let's not do any policy stuff, and I will sign off on some of your expenditure priorities, you know, even some of, some of the pork that's in the budget on both sides, you know, you've got folks who, you know, there are some things that are going in for traffic circles, for example.

And there were some broader projects, for example, widening Interstate 10 west from Citrus out to State Route 85 and so she was willing to go along with some of them and she said, you know, let's just keep the policy stuff out. So this is about more than money.

BRODIE: Well, so, Howie, what has the Senate said, if anything, about this? They're the ones who approved a budget that had been negotiated with the governor. Does it seem as though the Senate might be on board with a continuation budget?

FISCHER: Well, again, it depends on who you ask and when you ask them. Originally, Senate President Warren Peterson said, look, this isn't the game, you know, this isn't like, you know, we're playing the Price is Right here. We passed out a budget. It is a decent budget. It is a realistic budget. Senator John Kavanagh, who heads the Senate Appropriations Committee, said, you know, just recognize, you know, that this divided government, that's just the way this thing has to work.

Now, what's interesting is after the House speaker said, well, we're gonna put out our own budget, he said, look, I still think we've got a good budget, but we will come back and we will take a look at what you put out. So even he's a little on the soft side, and some of this comes down to what they call the Freedom Caucus, you know, they're they're the most conservative fiscally conservative members of the Legislature, and how they could try to tear things apart because they know that there aren't enough Democrats by themselves to put the thing out, even if you add a few Republicans because there's some Democrats like Priya Sundareshan who said I can't vote for this because it is give me enough money, but I will go ahead and say my caucus should support it to to get us to the votes we need.

So, again, uncharted, we're, we're just gonna be, you know, doing this, and we may be sitting here next Monday morning at 9:06 a.m. and saying “ruh roh” because next Monday is June 30 and we're starting to run out of hours.

BRODIE: Yeah, how I was going to ask you about that quickly before we wrap up. One week from today at midnight, the fiscal year ends, and as you alluded, like we don't really know what happens if there's no budget and it doesn't look like they're gonna be passing one, you know, within a few hours of the clock striking midnight.

FISCHER: I think that's the great unknown because the other piece of this is there's an assumption that essential services will continue, that prisons are not going to open their doors. We know that. What else is considered essential? Is DPS essential? What about Department of Revenue, which processes money coming in that you need? Will they go away? Will they be told to stay home or will they do perhaps where they say, look, we'll continue working on the assumption that we will backfill in our salaries later, even though there's no legal authority for them to be there. All of this is a great unknown.

BRODIE: Right. All right, lots to keep our eyes on this week as always. Howie Fisher of Capital Media Services looks like you've got an exciting week ahead of you.

FISCHER: Thank you. Keep your fingers crossed.