Arizona Democrat lawmakers reject $17.8B state budget

Arizona Gov. Katie Hobbs is angling to sign a $17.8 billion spending plan she negotiated with the Republican majority, even if legislators from her own party refuse to go along.

The move comes as Senate Democrats on Tuesday voted against every piece of the spending plan that Hobbs had approved. A key objection is the lack of a cap on state spending for unrestricted vouchers of state funds for private and parochial school tuition.

But Democrats also are unhappy that what was proposed to be state aid for the poor crafted by Hobbs instead was converted by Republicans — with the governor’s consent — into an income tax credit that gives no benefits to the neediest Arizonans.

All that leaves the question of whether there will be any support from Democratic lawmakers for the package that Hobbs negotiated when the final votes are counted as early as Wednesday. That may not possible with multiple key points of disagreement.

But their votes may not be necessary.

The governor’s press aide told Capitol Media Services on Tuesday that his boss stands behind the measure as she agreed to it in closed-door negotiations with GOP leadership — and as it now stands — regardless of objections from members of her own party.

“She negotiated a budget that makes historic investments in housing, education, infrastructure and child health care in a divided government,” said Christian Slater. He also said the package has “critical accountability measures” for empowerment scholarship accounts, the formal name for the vouchers of tax dollars available for students to attend private and parochial schools regardless of financial need.

Democrats, however, are less than impressed.

Aside from allowing the program to grow unimpeded — forever — those “accountability” measures largely include reports that have to be prepared about where students were enrolled before they got the vouchers, how many are English-language learners, how many have disabilities, and the annual amount of each voucher. Those figures can run from about $7,000 for a student without special needs to more than $30,000 depending on the individual needs of each student.

Slater, however, said the governor sees the wins she said she got as a good deal, even if the package contains things that she and many Democrats do not like. And Hobbs wants them to vote for it.

“We believe everybody, regardless of party, can support these critical policies that will directly help everyday Arizonans and call on members of the Legislature to join together and pass this budget,” Slater said. And he took a swat at those trying to pull the deal apart.

“Arizonans want elected officials to be practical leaders, not bickering politicians,” Slater said.

Rep. David Livingston, R-Peoria, said Democratic lawmakers may have no one but themselves to blame if they don’t like what’s in the package.

Livingston, who chairs the House Appropriations Committee, acknowledged the negotiations were a three-sided deal, with the governor, House Republican leadership and Senate Republican leaders.

And what of the 29 Democratic representatives and 14 Democratic senators?

“They had the governor’s voice,” Livingston said. And he said it was their choice to default to Hobbs rather than negotiate on their own.

“I met with a number of Democrats in the House and requested their ‘asks,’” he said of the spending plan. “And the Democrat leadership decided not to do that.”

Sen. John Kavanagh, R-Fountain Hills, who chairs the Senate Appropriations Committee, echoed the sentiment.

“We had a deal with the governor,” he said, with the rank-and-file lawmakers defaulting to her to make the case for Democratic priorities.

“Some of them may have buyer’s remorse,” Kavanagh said. “But this is a good bipartisan budget.”

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One point of contention is that Hobbs asked for — and Democratic lawmakers supported — a new and permanent tax break that would give low-income parents $100 per year for each child.

There is a tax cut in the spending plan to which the governor agreed. Only thing is, it is an income tax credit of $250 a year per child for up to three children.

And it’s for one-year only.

More significant from the Democratic perspective is that, as a credit, it is available only to those who actually owe and paid at least $1 in state income taxes in 2019, 2020 or 2021. And that means no tax relief for the neediest Arizonans.

Kavanagh said members of his caucus believe rebates should be available only to people who actually have paid income taxes.

“I think from the Republican standpoint we have a problem giving people tax breaks who don’t pay taxes,” he said. “And people whose incomes are so low that they don’t pay taxes are probably getting a large amount of government money from the state and federal government already.”

Not mentioned, though, is that families who don’t pay income taxes have other obligations including sales taxes and property taxes, the latter either paid directly by homeowners or indirectly through the rents paid to landlords.

But Livingston said he sees what the Democrats wanted as a form of wealth transfer: If people who made no income tax payments get cash from the state “that means other citizens had to give them money.”

Livingston conceded, though, GOP lawmakers have supported “these kinds of ‘unearned tax credits’” — rebates of money they never owed or paid — in the past. But that, he said, was for corporations, something Livingston called part of economic development incentives.

The package does include things Democrats want, like scrapping a program started under Republican Gov. Doug Ducey that awarded extra cash to high-performing schools. Instead, those dollars — about $68 million — will be divided up on a per-student basis among all schools.

On top of that there is a one-time $300 million infusion for K-12 schools.

Eligibility for free health care for children of the working poor was lifted from 200% to 225% of the federal poverty level, a figure that computes to $55,935 for a family of three.

And Kavanagh said the package includes a lot of money for infrastructure, mainly roads and state highways, including programs that have bipartisan support like widening Interstates 10 and 17.

“We’re not going to install Republican-only lanes,” he said. “All parties benefit from road improvements.”

That doesn’t mean there are no special interest provisions in the $17.8 billion spending plan.

“Everything in the budget was designed to bring votes,” Livingston said. And many were more local than others.

For example, one provision provides $12.5 million for improvements to Happy Valley Road in his district to make it three lanes in each direction. There also is cash to extend a road between Loop 303 up to State Route 74.

Livingston said he did this in partnership with the city of Phoenix “because of the economic development I thought it would bring to the state of Arizona.”