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Legislature lags behind on budget negotiations — and forecast is not optimistic

The Legislature is well past the midway point of an ideal 100-day session. But with several big issues still hanging in the air, and not even a legislative budget proposal drafted, finishing the session promises to be anything but quick and easy.

When Gov. Jan Brewer outlined her goals at the annual State of the State address in January, lawmakers knew they had their work cut out for them. Brewer demanded the Legislature tackle several big issues this year — any one of which could be a marquee measure for one legislative session.

She ordered lawmakers to simplify the sales tax codes and formulas, and demanded money and an outline for the transition from the AIMS test to Common Core education model. But those were only the appetizers. The meat of the heavy meal she prepared for the Legislature was Medicaid expansion, and nearly 70 days into the session, lawmakers have only started nibbling at its edges.

Those issues and more have to be settled before lawmakers can begin to work on their one constitutionally-required job: passing a state budget.

The budget itself, though, isn’t the potential disaster it has been in past years. Revenue projections are up, both from the Legislature’s point of view and the governor’s, and everyone agrees that the time for deep cuts into state government and services has passed.

Now the debate is focused on how much funding to restore, if any, and where the most pressing needs are.

Brewer’s $8.9 billion budget proposal for fiscal year 2014 includes $317 million in new spending, largely for K-12 education, child safety and debt reduction.

While the Legislature hasn’t put out a budget of its own yet, Republican Rep. John Kavanagh of Fountain Hills, who chairs the House Appropriations Committee, said he thinks the governor’s proposal is too rich for his fellow lawmakers, though the numbers aren’t as far apart as they have been in past years.

Kavanagh said he thinks his fellow lawmakers are willing to spend $100 million, maybe more, beyond the unavoidable automatic baseline spending increases. Those have been projected at $156 million. But he said lawmakers need to be looking several years into the future to ensure the state doesn’t face the type of massive budget shortfalls it had in recent years again in 2017.

The governor’s revenue projections are a bit more optimistic than those of the Legislature, but that isn’t a big point of contention, he said.

He said budget negotiations between the Legislature and governor only have been on the staff level so far, and have been “sputtering” at that. But he is hopeful that once the Medicaid expansion issue is solved one way or another, they can get down to business.

“Traditionally we have never been willing to spend as much as the governor’s proposal, which may or may not be what she really wants to spend anyway,” he said. “So this is much like going to a flea market. It’s a bargaining and negotiating process.”

Similar priorities
House Speaker Andy Tobin, R-Paulden, said the governor’s spending priorities and revenue projections are the closest to the Legislature’s that he’s ever seen in his seven years at the House. If it weren’t for Medicaid expansion, he thinks the Legislature could pass a budget and adjourn for the session in a week or two.

“If Medicaid wasn’t on the docket, we would probably be very, very close to getting out of here very, very quickly… But right now the Medicaid piece is a long way off,” he said.

His best bet on when the Legislature will adjourn is July 4, which would make this one of the longest sessions in history The deadline to have a budget passed is June 30, before the beginning of the next fiscal year.

Senate President Andy Biggs, R-Gilbert previously said that in spite of the tall order Brewer gave to lawmakers, he was hopeful the Legislature could adjourn by the end of March. But he has slowly scaled back that assessment.

“I’m not hopeful for the end of March anymore, but I’m hopeful that a few weeks into April we can get it done,” he said.

Republican Sen. Don Shooter of Yuma, who chairs the Senate Appropriations Committee, has an even less optimistic guess of when the Legislature will adjourn: Dec. 31.

“If I say December now, I’ll be a hero when we get out of here in July,” he joked, noting that he isn’t making any summer plans.
Brewer has dug in her heels in support of expanding the state’s Medicaid system to cover people at 133 percent of the federal poverty level, as incentivized by President Obama’s signature Affordable Care Act. Tobin knows the Legislature is in for a long haul, a possible special session and maybe a repeat of Brewer’s 2012 threat of a blanket veto on legislation until she gets what she wants.

Already, she has told legislative leaders to slow down on sending bills to her desk until lawmakers make some progress on her top priorities, such as Medicaid expansion and sales tax simplification.

Three possible roads
Currently, most of those involved with the budgeting process see three possible roads that they could take in order to get to a budget.

The quickest way would be to include Medicaid expansion in a budget proposal and send it to the governor’s desk. But that may not be politically feasible, as many Republicans are adamantly opposed to expanding the program. House and Senate leadership have said they don’t want to put the proposal up for a vote without the majority of their GOP lawmakers in support.

Another option Tobin sees is to send the governor a budget without Medicaid expansion tacked on, and promise to work on it during a special session later. But Tobin admits he doubts Brewer would accept a budget without one of her main priorities included.

The third option is the least desirable to everyone involved — and boils down to a standoff. If legislative leadership can’t get the necessary votes to pass a budget including the Medicaid expansion, and the governor refuses to accept anything less, Shooter’s joke about a December deadline could become a reality.

In a typical year, the legislative budget proposal is usually unveiled in mid-February or early March. After a final agreement is reached, it usually flies through the Legislature in a matter of days, often leaving rank and file lawmakers on both sides of the aisle complaining about not having enough time to read the document.

House Democratic Leader Chad Campbell of Phoenix said he hopes the process moves quickly. But he worries that GOP leaders will drag their feet as long as possible, and tack on a “poison pill” to the budget, or a controversial provision that would keep Democrats from supporting the budget package even if it includes Medicaid expansion.

In the end, Campbell thinks Brewer won’t accept a budget without expansion, and he’s prepared to wait it out if necessary.

“I think the governor is going to hold firm with this one. We’ve seen her hold the line when she wanted her temporary sales tax measure, so I think she’ll do it again. I’m willing to sit down here all year long if necessary. If we have to get Medicaid passed in December, I’ll be here in December. I’m not going anywhere,” he said.

— Ben Giles contributed to this report.

Historical Legislative Session Adjournment Dates:
Year       Date        Days in Session
2000     April 18   100
2001     May 10     123
2002     May 23     130
2003     June 19    158
2004     May 26     136
2005     May 13     124
2006     June 22    164
2007     June 20   164
2008     June 27   166
2009     July 1       170
2010     April 29   109
2011     April 20    100
2012    May 3         116
*The longest legislative session since the modern 90-member Legislature was established was in 1988, when the legislature adjourned on July 1, after 173 days of session.

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