Gov. Katie Hobbs lashed out Feb. 26 at Republican lawmakers, accusing them of using families with children with developmental disabilities as “pawns” in the fight over the budget.

“Their negligence is jeopardizing the health, independence and lives of more than 50,000 Arizonans with disabilities and autism, intellectual disability and cerebral palsy who depend on DDD for health services and support for independent living,” the governor told members of the Arizona Disability Advocacy Council who were meeting at the Capitol. She said the program immediately needs $122 million or it will not be able to pay providers by May.

“Funding for DDD is under threat because the legislative majority has decided that they want to use the people in this room as political pawns rather than serve you and do their job,” she said.

But Rep. David Livingston, who heads the House Appropriations Committee, said there’s a simple reason the program is running out of funds: the governor overspent her authorized budget.

“The Legislature was never consulted before these funds were spent,” he said in an open letter this week to the governor. “Yet now taxpayers are being asked to cover the consequences.”

At the heart of the funding problem is a program that provides funds for parents who serve as caregivers for their own children.

That program did not exist until 2020, when federal officials agreed to finance it entirely with Medicaid dollars. That was designed to help address the difficulty some families faced in finding caregivers during the Covid outbreak.

The problem is that most of those federal dollars are disappearing, but Hobbs has continued the program anyway.

The governor, by contrast, has insisted that everyone — including the Republican-controlled Legislature when it adopted a new budget for the current year — understood that the state would pick up the difference.

Yes, she acknowledged, there is a shortfall. But Hobbs said that’s due entirely to unanticipated growth in the entire developmental disabilities program.

And that has led to the current stalemate — and war of words — with Hobbs hoping to build public support by saying all this is an emergency and speaking publicly, with TV cameras present, to an audience who brought their children with disabilities to hear her. 

“It does not matter how many times they try to spin it,” the governor said. “They are trying to put the blame for this on me and it is squarely on them.”

She said the solution is simple: allocate more money right now. In fact, Hobbs said she sent them a budget in January not just for the new fiscal year that begins July 1, but also to provide the needed funds for the balance of this budget year.

“If they have other ideas, they should give me a budget instead,” Hobbs said. “If you don’t like the budget I presented, then send me your budget.”

Livingston said that simply providing more dollars because, as he puts it, the governor overspent, is not an option. What is needed, he said, is “serious, responsible discussions.”

“Rather than engaging with the Legislature in good faith, you and your staff have chosen to issue public statements, assign blame, and demand more taxpayer dollars — without addressing the broken system that led us here,” he wrote to the governor.

Hobbs, for her part, said that she had sent them her proposal and that the next move was up to the Legislature.

“I haven’t seen one plan from them,” she said. “Why would I negotiate with them if I don’t even know what they want?”

And Hobbs sniffed at the idea that there’s something unusual in a governor asking for supplemental funding in the middle of a budget year. She pointed out that such requests are not only routine but also granted, as happened two years ago when funding fell short for the universal voucher program that provides tax dollars for parents to send their children to private and parochial schools as well as have their own home schools.

“The same legislators who rubber stamped supplemental funding year after year, who haven’t batted an eye at the blank checks being written for pet projects, today are refusing to fund critical services for Arizona’s most vulnerable population,” Hobbs said.

This fight over funding disability programs is likely just the start of a larger battle over what happens in Arizona if and when Medicaid funds dry up.

The Arizona Health Care Cost Containment System, the state’s Medicaid program, provides care for those up to 138% of the federal poverty level, about $35,100 for a family of three. The feds pick up about three-fourths of the cost.

More than 2 million Arizonans currently receive care from one or more of the AHCCCS programs.

But the Republican-controlled Congress is moving to make cuts in Medicaid funding, leaving Arizona holding the financial bag in what, even with federal funding, is among the largest single item expenses at $2.6 billion of the $17 billion state budget.

“It is something that is looming,” Hobbs said Feb. 26.

“The hospitals and everyone are sounding the alarm,” she said, particularly rural hospitals, which might have to close because they could not bear the cost of uncompensated health care.