Key Points:

• Montenegro pushes $17B plan, defying veto threat

• House GOP resists Senate deal, demands more time

• Budget deadlock risks government shutdown July 1

Ignoring a veto threat, House Speaker Steve Montenegro introduced his own zero-growth spending plan on June 23 for the new fiscal year, which begins on July 1.

The Goodyear Republican said it is clear that the $17.6 billion plan negotiated among Gov. Katie Hobbs, Senate Republicans and Democrats from both chambers is irresponsible. More to the point, he claimed there are not sufficient votes from House GOP members to support the proposal over their own $17.2 billion budget plan.

So now, what is scheduled for a House vote on June 25 is a $17 billion spending plan. Rep. David Livingston, who chairs the House Appropriations Committee, said that’s basically what the state is spending this fiscal year plus a few adjustments.

Montenegro indicated he’s willing to add some funds if Hobbs agrees to something the House GOP considers more reasonable. But with time running out, he wants something in place while those negotiations take place.

How far Senate Republicans are willing to go to deal with House GOP objections remains unclear.

On one hand, Senate President Warren Petersen voted for that $17.6 billion plan. And he has defended it as perhaps the best deal to be had, given that the Democratic governor has the last word.

Petersen, however, indicated he’s also willing to see what the House passes, though he is making no commitments.

But none of that will matter if the governor follows through with her promise to veto it. And if no one blinks by July 1, that sets the stage for an unprecedented fiscal crisis in Arizona, as the state Constitution has no provisions to keep the government operating without an adopted budget.

All that, however, presumes there are sufficient Republican votes for what Montenegro has dubbed his “continuation budget.”

There are 33 GOP lawmakers in the 60-member chamber.

But one, Rep. Matt Gress, R-Phoenix, is in Italy for his honeymoon. And House Minority Leader Oscar De Los Santos said not a single one of the 27 Democrats will vote in favor of the “non-starter” bill.

“That plan will short-change our public schools, our colleges, health care, lifeline services for working families and the most vulnerable in our state,” he said. He also noted that the Senate-approved plan — the one supported by a majority of Democrats in both the House and the Senate — includes dollars for other priorities, such as a pay raise for Department of Public Safety officers and state firefighters.

If Democrats balk, that means Montenegro can afford to lose just one vote in his caucus.

Whether he has that remains to be seen.

Just a week ago, Livingston said he thought there were enough House lawmakers from both parties to approve the Senate plan.

On June 23, the Peoria Republican was telling a different story.

So what changed?

“We got the real numbers,” he said, ones that showed the spending in the Senate plan was unsustainable.

Even assuming there are sufficient votes for this new GOP plan, that still leaves the question of why go through the exercise given the governor’s promise to veto it. Montenegro said he isn’t paying attention to that.

“First and foremost, the people of Arizona deserve to make sure we’re going through every budget, every dollar that’s being spent for the public,” he said. And what that means, Montenegro said, is a budget that prioritizes dollars for public safety, law enforcement and safe communities.

“Unfortunately, from the start, the executive budget laid out a framework that did not line up with having those conversations,” he said. “And we were pretty much given or told, take-it-or-leave it.”

That’s not exactly how Hobbs sees it, saying that Montenegro and House GOP leadership were invited to participate in the negotiations. The speaker disagreed.

“The House has always been open to conversations,” he said, though Montenegro acknowledged that, once the Senate began talking with the Democratic governor, it was clear that they were crafting a plan that would not be of interest to House Republicans.

“They decided to focus on their own negotiations behind closed doors,” he said. “We were not a part of those.”

Still, Montenegro said House Republicans remain ready to talk. And the spending plan that was introduced on June 23 is a way to do that while ensuring that state services do not come to a halt on July 1, once there is no state authority to spend money.

How much latitude the GOP caucus will give the speaker to agree to a deal — and avoid a financial crisis — is still up in the air.

Rep. Justin Olson is taking a hard-line stance.

The Mesa Republican said the Senate-approved budget for the next fiscal year is an 8.3% increase over current spending. By contrast, he said, inflation and population growth are up just 4.1%.

Olson said the last time lawmakers had such a giant mismatch was during the administration of Democratic Gov. Janet Napolitano.

“State expenditures increased by more than double the rate of growth in population and inflation,” he said. “We ended up with a $3.6 billion budget deficit, a budget crisis, that we were ill-prepared to be able to resolve.”

Lawmakers addressed the deficit with approximately $1 billion in cuts, a similar amount of borrowing, and a temporary sales tax increase that made up the difference.