The state’s Medicaid program won’t have money to pay its bills next month unless the governor and lawmakers reach a deal — and soon — on at least some elements of a budget.
Senate President Warren Petersen told Capitol Media Services Monday that legislative Democrats are balking at providing the GOP with a list of their priorities. And without that, he said, there can be little progress on coming up with a spending plan for the new fiscal year that begins July 1.
But the more immediate problem, he said, is that some state agencies need additional funds for the current budget year. And the Gilbert Republican said efforts to resolve that have become bogged down in the talks over next year’s budget.
Most immediate is the funding for the Arizona Health Care Cost Containment System.
Legislative budget staffers say the agency requested an additional $3.3 billion to finish off this fiscal year. That includes both state funds and authorization to spend federal dollars, which cover about two-thirds of the total price tag.
Lawmakers did approve — and Gov. Katie Hobbs signed — legislation at the end of last month for half of that amount. But without the other half, GOP staffers say, AHCCCS cannot make payments to the managed care plans due in May and June for the services they are providing to eligible Arizonans.
Less pressing but also necessary is an estimated $180.6 million shortfall in spending for K-12 education. Those dollars are needed in June.
And the Arizona State Hospital also needs additional cash before June 30, though the figures were not immediately available.
Petersen said all the supplemental requests were included in the “skinny” budget that Republicans sent to the governor earlier this year. Hobbs rejected the $15.8 billion plan, saying it failed to include any of the priorities in her own $17.1 billion spending proposal.
But Petersen said there was a really simple way to resolve the issue of the current shortfall. And the answer, he said, is in the Arizona Constitution and the power of a governor to remove any item in a legislative spending plan she doesn’t like.
“She could have line-itemed everything but the supplementals,” he said. That would have preserved her bargaining power for the 2023-2024 budget while not creating a potential emergency for this fiscal year.
Hobbs is unwilling to take the blame for the current situation.
Press aide Christian Slater said his boss has been working since she took office to “pass a budget that makes meaningful investments in improving Arizonans’ lives.” What’s happening now, he said, is not her fault.
There also are a lot of people involved: The most recent report from AHCCCS shows it is providing care to nearly 2.5 million Arizonans.
“Republicans are committed to holding health care for one-third of Arizonans hostage to score cheap political points,” Slater told Capitol Media Services. And he said there is no reason that Senate Republicans cannot act now in a bipartisan way, as they did in March, to approve the supplemental funds for AHCCCS.
Even assuming the more immediate funding issues can still be worked out, that still leaves just 66 days until the end of this fiscal year to adopt a new budget.
There is no authority in Arizona, unlike the federal government, to simply enact a “continuing resolution” to keep the state operating once the new budget year begins on July 1. What happens without a budget is pretty much uncharted territory, though negotiations one year actually went a few hours into the new spending year.
Petersen said it’s not the governor holding up progress so much as legislative Democrats.
“We’ve got the governor’s ask,” he said. And he said there have been talks several times a week.
“We’re pretty close with her,” Petersen said.
What’s missing, he said, is what Democratic lawmakers want.
For the moment, he said much of the discussion is over projects that can be financed with one-time dollars, as GOP leaders are loath to start new, ongoing programs or vastly expand existing ones with dollars that may or may not be there years from now.
The budget doesn’t call them “pork.” But many of them are clearly projects requested by one or more lawmakers.
For example, there’s $5.9 million for pavement rehabilitation along U.S. 99 in Yuma County. A plan for drainage and safety improvements for Moson Road in Cochise County is logged in at $6.1 million. Some $10 million is set aside for a traffic interchange between I-10 and Cortaro Road in Marana. And there’s another $6.9 million to improve a stretch of Ironwood Drive in Apache Junction.
And there are smaller allocations, too, for everything from streetlights to reconstructing a roundabout.
Peterson said there are “hundreds of millions” of dollars available for such projects. And he said some of those dollars are available for Democrat priorities.
House Minority Leader Andrés Cano of Tucson said Democrats have provided a list of priorities. But he said that list has been sent to the Democratic governor with whom GOP leaders are negotiating — and who has the ultimate power over the budget by virtue of her veto pen.
More to the point, Cano said his colleagues have a real concern with lawmakers coming up with their own wish list of road projects which may not even be priorities of the Department of Transportation.
Yet while trying to finance favored rural road projects, he said many are refusing to advance the necessary legislation to allow Maricopa County residents to vote on continuing the half-cent sales tax that pays not only for roads but also mass transit, including light rail, programs he said are priorities for area business leaders.
Nor is Cano letting Republicans off the hook for the looming deadline to provide more dollars for AHCCCS.
He said the GOP leadership had the opportunity last month to approve the entire $3.3 billion needed for AHCCCS. Instead, Cano said, it decided to take this “week-by-week, month-by-month that tries to paint the minority party as obstructionist.”
“We’ve seen from Day One who the true obstructionists are,” he said.