Arizona Lawmakers at Odds Over Budget Forecasts

Arizona Republicans have decisively rejected most of Governor Katie Hobbs’ budget proposals during the inaugural Joint Appropriations Committee meeting of the legislative session.

Hobbs’ budget plan for fiscal year 2026, which was released last Friday, hinges on funding that includes $23 million for border security efforts and combating fentanyl, alongside over $100 million devoted to child care initiatives. However, an estimated $150 million in proposed savings from the universal school voucher program faced immediate dismissal from Committee Chair David Livingston, who deemed it dead on arrival.

The Democratic governor outlined total expenditures of $17.7 billion against projected revenues of $16.9 billion, while seeking to utilize the state’s rainy day fund to conclude fiscal year 2026 with a surplus of $147 million. This proposed expenditure, however, falls short by $846 million compared to the Joint Legislative Budget Committee’s estimates, with revenue forecasts exceeding the committee’s by $360 million.

Marge Zylla, the governor’s director of legislative and fiscal affairs, struggled to clarify the discrepancies between the governor’s financial projections and those of the legislature.

Representative Matt Gress, a Republican from Phoenix, cautioned that leaving a mere $147 million as a carryover may not suffice for the following two years, labeling the proposal as a “deficit budget.”

Livingston emphasized the urgency of addressing immediate funding needs, stating that an additional $340 million will be required for state agencies over the next two years, with $110 million needed imminently to avoid running out of funds.

“This proposal you sent us does not add up,” Livingston asserted. “We’re not even close.”

Still, Zylla maintained that discussions are ongoing with stakeholders to resolve these differences. The budget includes $160 million designated for increased child care subsidy payments and allocations for programs like “First Things First,” ultimately aimed at supporting day care and after-school services.

Gress raised concerns over the efficacy of a $1 million investment, arguing it could impact as few as 10 businesses. He stressed that the average child costs the program around $12,000 annually, limiting the access to support.

The proposal also increases funding for school lunch programs, providing free meals for students currently on reduced lunch plans while potentially reducing administrative costs. However, questions arose regarding eligibility concerning citizenship status. Zylla assured the committee that citizenship would remain a requirement for state benefits.

Livingston and other Republicans challenged the budget’s security funding, questioning the adequacy of the proposed $23 million for local law enforcement and border security efforts.

Gress contrasted the $23 million figure against a mere $600,000 expenditure under the previous administration, highlighting a perceived imbalance in resource allocation.

Hobbs has repeatedly sought to implement guardrails on Arizona’s universal school choice voucher program, which has become controversial amid allegations of fraud and misuse. The governor’s latest proposal includes income caps, aiming to restrict vouchers predominantly to low-income families and students with special needs.

Livingston firmly rejected Hobbs’ proposal, indicating that sacrifices made at the expense of 21,000 students would not be acceptable in exchange for the proposed $150 million in revenue. He recommended that the governor prioritize her budgetary goals to enhance negotiation prospects with the legislature.

Typically, budget negotiations extend through July, often concluding the legislative session’s activities; however, a budget agreement could be reached at any point during the session.