$150 million for housing, half a billion for education in budget proposal

A new budget proposal emerged today that delivers a child tax rebate, major spending on housing and education, and a reshuffling of money destined for water projects. 

The $17.8-billion proposal would balance total spending with estimated revenue for fiscal year 2024, while allocating the state’s more than $2 billion cash balance to a range of one-time projects from infrastructure to education. 

The package includes big-ticket spending on two of Gov. Katie Hobbs’ top priorities: housing and education. There’s $150 million for the Housing Trust Fund, $40 million for homeless shelters and services, $69 million in ongoing education funding increases, a $300 million one-time cash infusion for the department of education and $183 million in one-time spending on school building renovation. 

There are also big appropriations for infrastructure – $89 million for expanding Interstate 10 and $76 million for expanding Interstate 17; and prisons – more than $100 million for capital projects at state prisons and $51 million for increased inmate health care costs as the state seeks to come into compliance with federal court orders mandating better healthcare for people incarcerated at Arizona prisons. 

There’s a $260 million one-time child tax rebate that will pay out $250 for each claimed dependent under age 17 and $100 for dependents 17 and up. 

The budget bills haven’t been introduced yet, but an eight-page line-item budget spreadsheet obtained by The Arizona Capitol Times provides a broad outline of the plan.  

A major point of contention this year has been the growing cost of the state’s universal school voucher program passed by Republicans last year. Democrats, including Gov. Katie Hobbs, have said the growing program will “bankrupt” the state and they want to kneecap funding for Empowerment Scholarship Accounts. 

The spreadsheet doesn’t include any reference to a potential voucher spending cap, but Sen. Christine Marsh, D-Phoenix, indicated on Twitter that the proposal doesn’t include a spending limit for the Empowerment Scholarship Account program. (A spokesman for the governor said that anticipated ESA spending increases are accounted for in the budget.) 

But if the major spending items look like a series of wins for Hobbs, that’s because the budget is also chock-full of small projects added at the behest of Republicans, who allowed each member to spend a small portion of the state surplus on individually-chosen projects. 

Each House Republican got $20 million to spend how they wanted, and Senate Republicans each got $30 million, Rep. David Livingston, R-Peoria, the House appropriations committee chair, said last month. The novel strategy required less collaboration and resulted in dozens of line items for projects under $20 million: $350,000 to redo the gym floors in the Miami Unified School District; $5.6 million for the Lowell Observatory; $1.6 million for roadwork near Hayden and Winkelman; among others. 

The plan that surfaced on Monday represents something of a bipartisan compromise, unlike the competing proposals put forth by the governor’s office and Republican lawmakers in January. 

At a news conference earlier in the day, Hobbs didn’t directly answer a question about how involved her team had been in negotiating the budget or whether she would sign it as-is, but she did sound an optimistic note about the proposal. 

“We’ve been meeting with Republican leadership and Democratic leadership for a couple months now to negotiate what you’ll see in the (budget) bills,” the governor said. 

“I knew from day one that to get a budget over the finish line, it had to be bipartisan. We were going to have to give some things up, the Republicans were going to have to give some things up, and I think you’ll see that in the bills,” she added. 

Still, it’s not clear whether Democrats in the legislature were substantially involved in the negotiation process and whether the caucus will hold out for further changes. 

At a committee hearing on Monday afternoon, members of the Senate Rules committee voted 4-2-1, with Democrats opposed, to allow budget bills to be introduced (the committee’s approval was needed because the bills are coming after the normal deadline for new bills).  

Senate Minority Leader Mitzi Epstein, D-Tempe, said that she voted ‘no’ with Sen. Catherine Miranda, D-Phoenix, because they hadn’t seen the budget bills yet. 

Sen. John Kavanagh, R-Fountain Hills, chair of the Senate Appropriations Committee, said that Republicans in the Senate are ready to back the budget bills and expected to vote in favor of them on Wednesday. 

Democrats in the legislature were more cautious. 

Sen. Eva Burch, D-Mesa, the minority whip, said that Senate Democrats hadn’t seen the budget bills and would need time to review them. 

“I don’t think that we have a caucus who is united in favor of the budget right now,” she said. 

Last year, former Gov. Doug Ducey signed an $18 billion budget, a record-high figure that was the product of an eleventh-hour bipartisan deal reached after some right-wing Republicans refused to compromise with centrist members of their own party. 

Arizona Capitol Times reporter Camryn Sanchez contributed to this report.