CEBV Weekly: June 23, 2024

Our yearly budget and ballot referral recap.

Arizona’s 2024 legislative session is in the books, and once again, our Republican-controlled legislature largely ignored consequential issues like water, affordable housing and public education in favor of inaction, infighting, extremism and lawsuits. As columnist Laurie Roberts puts it, “This year's Legislature was both an embarrassment and a bust.”

Major Issues

• Abortion. The legislature’s hard-fought repeal of Arizona’s 1864 abortion ban is perhaps the biggest news of the 2024 session. Thanks to grassroots political pressure, many of the same Republican lawmakers who voted in 2022 to preserve our Civil War-era total ban were forced to roll that back. Unfortunately, we’re still left with a 15-week ban which is forcing doctors to ask how close to death a pregnant patient has to be to receive care. Thanks to a 90-day judicial stay secured by Arizona’s Attorney General Kris Mayes, the 1864 total ban will never go into effect — and voters will likely get the opportunity to take this issue into our own hands in November with the Arizonans for Abortion Access Act, which would cement our reproductive rights into the state Constitution.

• Elections. Lawmakers passed a one-time fix to a conspiracy-theory-driven 2022 law that increases the margin required for an automatic vote recount and created unworkable election timelines. The fix ensures Arizona won’t miss a deadline for counting our votes for president, and allows overseas and military voters sufficient time to receive and return their ballots. However, it also reduces the amount of time counties get to “cure” problem ballots, potentially creating issues for low-income, rural and tribal voters.

• Housing. Arizona has a new law forcing cities to allow backyard casitas, but it doesn’t apply in homeowners’ associations or cities of under 75,000, doesn’t require the casitas to have kitchens, and allows them to be used as short-term rentals, which are a factor behind our housing crisis. Affordable housing is a highly contentious topic in our gridlocked, divided Legislature, and advocates don’t agree on solutions; we can expect this issue to resurface next session and likely for years to come.

• Water. Once again, thanks in large part to gatekeeper Gail Griffin (R-19), our legislature did nothing to stop the industrial agriculture that is exploiting and depleting Arizona’s groundwater for profit. Environmental advocates describe five controversial bills passed in the final days of session (which Gov. Hobbs vetoed this week) as propping up continued sprawl by circumventing state groundwater restrictions for new developments. Bills that would have restricted this went unheard. Meanwhile, over 20% of our Central Arizona Project water supply has vanished, 3,000+ square miles of rural Arizona are literally sinking due to unchecked groundwater overpumping, and industrial agriculture is exploiting our lax policy while water in some wells has dropped more than 4 feet in a single year.

Unequal. Much of the inaction we’re seeing is a result of our divided government, and of a far-right legislative majority that’s unwilling to collaborate not only with its minority colleagues (despite the razor-thin one-vote margins in each legislative chamber) but with the Democratic governor. Compromise is necessary to make any divided government work, but unfortunately, only one of our two halves seems willing.

2024 By the Numbers

• Days in Session: 160

• Bills Introduced: 1,798

• Bills Passed: 363

• Bills Signed: 259

• Bills Vetoed: 73

• Referrals Passed to Ballot: 8 (of those, 4 are constitutional amendments)

• Lawmaker Resignations: 6

• Lawmaker Indictments: 2 

  

What to Know

• Once again, this year’s budget was negotiated behind closed doors, between Gov. Hobbs and Republican legislative leaders Ben Toma and Warren Petersen. Democratic leaders and rank-and-file lawmakers of both parties were largely sidelined.

• The plan bridges Arizona’s self-inflicted budget deficit by cutting $1.7 billion in state spending, a 10% reduction.

• Unlike last year’s budget, which garnered support from every legislative Republican, this year many MAGA and even some self-styled “moderate” lawmakers voted no. As with last year, Democrats remained divided, with some voting yes and some voting no.

• Although the deal still wasn’t extreme enough for some far-right lawmakers, Republican legislative leaders still got nearly everything they wanted and are now characterizing it as a “win” or conservative success — pointing to across-the-board cuts and the preservation of costly universal vouchers.

A Bit of Good

• Elections. A major fear of voting rights experts was that the budget would include a provision to make Arizonans’ ballot images public, a privacy violation and a blow to the integrity of our elections. Fortunately, the primary proponent of that concept, Ken Bennett (R-1), didn’t get his way — which resulted in him voting no on all budget bills.

• Housing. Lawmakers managed to preserve last year’s $150 million Housing Trust Fund deposit and add another $15 million.

• K-12 education. “Basic state aid,” the largest line item for Arizona’s public schools, remained uncut, at least on paper; this was education advocates’ top ask.

• Pork. Out of necessity, lawmakers eliminated some of last year’s pork, such as an $11 million “brackish groundwater pilot program.”¹

• Rainy day fund. This budget doesn’t touch Arizona’s $1.4 billion Budget Stabilization Fund (often called the “rainy day fund”), which was created in 1990 as a reserve the state can tap during economic downturns. This is a good thing because, when the cost of universal ESA vouchers started to snowball, Republicans said they could tap into that fund to pay for their largesse.

• Small appropriations. A variety of state departments and funded projects saw small increases. The Navajo Nation got $1 million for badly needed electrical connectivity, and the “Arizona Promise Scholarship” that aids low-income students got extended to community colleges. These sweeteners helped move some Democrats to support the budget.

• Vouchers. The budget contains a cap for corporate School Tuition Organization tax credit vouchers, ending an automatic 2% yearly increase. However, this cap is well above current levels, and experts say Arizona is unlikely to reach it.

• School spending cap. Lawmakers waived the AEL for the 2024-25 school year. This issue became a sticking point toward the end of budget negotiations, even though it would be political disaster for Republicans if they refused to waive the archaic limit and forced a public school shutdown. It’s good to have the waiver in place so that Republicans can’t exploit the issue as a political hostage next session, but a long-term fix is still needed.

Too Much Bad

• Opioid skirmish. The budget takes $195 million over 4 years from AZ’s opioid settlement to “backfill” the state prison system's budget. Christine Marsh (D-4), who made opioid issues a central issue after losing her son to a laced pill, calls the deal “blood money” and “unethical” — and Attorney General Kris Mayes says the sweep is “unlawful.” Calling it “just plain wrong,” on Thursday she obtained a court order temporarily blocking the transfer of funds until July 5 pending a hearing.

• Housing. One of Republicans’ major demands was the removal of Arizona’s Low Income Housing Tax Credit (LIHTC); Democrats were unable to preserve it.

• Agency sweeps. On average, our already desperately underfunded state agencies took a 3.45% cut. This includes $900,000 from the Arizona State Schools for the Deaf and the Blind, $57 million from the Department of Corrections operating budget, and $24 million from Department of Child Safety. DCS saw a one-time appropriation for caseworkers, but took major cuts to foster care, adoption services and out-of-home support.

• Higher education. State universities must weather $23 million in cuts. The Arizona Teachers Academy will have a longer waitlist and will be harder to access due to its $15 million funding loss, and the Arizona Promise Program is an unfunded mandate, meaning even with the cuts, the universities still must provide the scholarships. Despite these cuts, Republican lawmakers made sure to specifically preserve ideologically biased libertarian “freedom schools,” libertarian centers at our three state universities that were originally propped up by funding from the Koch brothers and other right-wing groups. Lawmakers have backed these centers with tens of millions in state funding — which they haven’t managed to spend — since 2015. Community colleges also took a $53.9 million hit, which represents a 40% cut in state funding.

• K-12 education. Public schools received a 2% increase for inflation, which doesn’t cover the true cost of inflation; in other words, functionally, schools took a cut. The “opportunity weight,” which directs badly needed resources to low-income students, was eliminated for 2026 and 2027 (a nearly $130 million loss), harming Arizona’s most vulnerable students, and dual enrollment funding was reduced from $15 million to $12 million. (The $12 million was preserved only because some Democrats dug in after being presented with the initial budget bills and demanded it be reinstated.)

• Vouchers. For the second year in a row, despite Hobbs’ campaign promises, the budget leaves ESA vouchers functionally untouched. The only real savings is $2.5 million a year from halting summertime “double-dipping,” in which families would apply for a voucher at the end of the school year, use it for summer school, then re-enroll in public school in the fall — a drop in the bucket compared to the program’s cost, a jaw-dropping $732,870,380 this year². The budget requires fingerprinting at voucher-funded private schools, but those records will be retained by the private school and not checked against law enforcement databases. Arizona continues to fund public schools at 49th nationwide while fully funding vouchers for the rich, an expense that is driving half of our budget deficit.

• More pork. Adding “sweeteners” is a time-honored tradition and way of encouraging lawmakers to support a budget deal. This year’s bills contain line items such as $5.5 million for literal horse racing, $63,100 for a pay raise for Arizona’s Supreme Court justices (especially eyebrow-raising since Shawnna Bolick, R-2, is married to a justice), $7 million for a Holocaust education center, $3.8 million for low-income school lunches, and $3 million added back in for slashed dual enrollment. (Budgetary “pork,” like any concept of good or bad, happens regardless of party, and which expenditures constitute “pork” depends on who’s doing the looking.)

Kicking the Can 

As we noted above, Arizona’s $1.7 billion deficit is a self-inflicted wound. Like any household whose income is less than its spending, our bottom line is suffering, thanks to Republican lawmakers who persist in extravagant cash giveaways for the wealthy while overspending on pet projects. There are two main systemic causes and one short-term injury.

Cause 1: Ducey’s “flat tax.” This massive tax cut for the wealthy, approved in 2021 and fully implemented in 2023, caused rapidly plummeting revenues. From July to November 2023, Arizona saw a decrease of over $830 million in income tax collections, marking a nearly 30% decline. This was not unexpected: in 2021, CEBV warned that the decrease in revenues “will devastate public schools, roads and infrastructure, public safety, and cities.” (Cities statewide, like Phoenix, Mesa, Tucson and more, now face budget shortages.)

Cause 2: Universal expansion of ESA vouchers. As with the tax cut, critics warned the legislature that a universal voucher program would snowball to cost the state $1 billion per year. Legislative analysts drastically underestimated the costs, but as critics had predicted, the program’s expenses skyrocketed: $425 million for the 2022-23 fiscal year, then blowing through the next year’s allocation in the first 3 months for an estimated $788 million in the 2023-24 fiscal year.

Didn’t help: Frivolous spending. Last year, lawmakers spent every cent of our $2 billion surplus. To get a reluctant Republican caucus on board, Gov. Hobbs chose to give each Republican House lawmaker $20 million, and each Republican senator $30 million, to use as they wished. In our 2023 budget explainer, CEBV dubbed these “bribery buckets.” This led to a total of $1.1 billion (!) of spending on 70 different projects, including $10 million to advertise ESA vouchers, 50 separate road projects, a tax rebate, and a controversial and potentially illegal $15.3 million allocation for improvements to the Prescott rodeo grounds. Democrats were given a smaller pot of $700 million, which they chose to pool for one-time investments in statewide projects such as public education and health care.

Cuts to the future. The state’s nonpartisan JLBC budget analysts say the state’s bottom line will “recover” and we’ll be in the black again by FY28, but that is predicated on these cuts becoming permanent and this becoming our new normal. See page 12 of this JLBC presentation for a view of what that looks like. This is money that will not just magically come back, and may lead to Arizona never being able to complete the following deferred projects:

• K-12 education. The legislature expressed an “intent” to resume the “opportunity weight” for low-income students in FY28, but if the money doesn’t come back or the legislature chooses not to reup the allocation, that intent isn’t worth the paper it’s printed on. It’s a textbook example of lawmakers’ failure to learn lessons from its past. Those lessons include the demise of full-day kindergarten (implemented in 2007 along with School Tuition Organization tax-credit vouchers, eliminated in 2010 although the STO vouchers remain) and the 2022 backroom deal of “$1 billion for public education alongside a universal expansion of ESA vouchers” that has led to ESAs remaining fully funded while public education is cut.

• Roads. Arizona is deferring construction on many infrastructure and transportation projects for 4 years to 2028. These include a pair of widening projects to I-10, in the West Valley (though the city of Buckeye said the project was ready to begin) and from Phoenix to Casa Grande, as well as an overpass in Maricopa (the city testified postponing construction will prolong public safety issues).

• Water. Overall, despite Hobbs’ water policy task force, little progress has been made on this crucial issue. Lawmakers balanced the budget in part by sweeping $333 million from WIFA, a government agency tasked with identifying and developing new sources of water. Bad policy that failed to align with task force recommendations was vetoed, good policy went unheard, and Arizona’s water crisis deepens.

Our state is in crisis. We must reverse course — and that cannot happen without electing a new legislature.

In their final flurry of activity, Republican lawmakers also passed four more ballot referrals, meaning this is likely to be the longest ballot we’ve seen in years.

• SCR1012, Kern (R-27), asking voters to ban Arizona agencies from creating rules that would increase regulatory costs, and instead require the Legislature to put the proposed rule into law. This would kneecap Hobbs and Mayes' ability to regulate unaccountable, wasteful spending such as in the universal ESA voucher program. 

• SCR1040, Mesnard (R-13), asking voters to amend the Arizona Constitution to create a submininum hourly wage for tipped employees that is up to 25% lower than statutory minimum wage. (A lawsuit attempting to knock this referral off the ballot is pending.)

• SCR1041, Mesnard (R-13), asking voters to amend the Arizona Constitution to allow anyone to sue to knock a citizen initiative off the ballot on grounds that it is not constitutional, in yet another attempt to stifle citizens’ initiatives. Signature gatherers would have to fundraise to defend themselves against legal challenges before they even turn in any signatures.

• SCR1044, Gowan (R-19), asking voters to amend the Arizona Constitution to keep judges in Arizona’s most populous counties appointed until the mandatory retirement age of 70 instead of retained by the voters. The measure is written retroactively, so if voters pass it, the entire judicial retention slate for November would be thrown out, including for Supreme Court Justices Clint Bolick and Kathryn King, and all the judges would stay in office. (A lawsuit attempting to knock this referral off the ballot is pending.)

The one that didn’t make it. Passed in a special election in October 2015, Prop 123 directs proceeds from Arizona's land trust to settle a 2013 lawsuit over missed inflation funding — but that funding expires on June 30, 2025. Lawmakers debated the mechanics of a renewal all session, but in the end, Republicans were not only unwilling to negotiate across the aisle, but failed to agree amongst themselves. The new plan is for another special election in May 2025, which means Gov. Hobbs calling lawmakers into special session as early as possible in 2025. If this plan fails, the state General Fund must backfill the loss starting on July 1 — meaning Arizona will have another $300 million to be responsible for.

Hurting our democracy. According to Maricopa County election officials, anything more than 7 ballot measures will require a second ballot page. Republicans have now placed an astounding 12 measures on our November ballot³, leading to fears that Arizonans will face an unprecedented 3-page ballot. This means longer lines at the polls, the risk of voters returning only one page of their mail-in ballot, poll worker mistakes when handing out a multiple-page ballot, and more paper and higher postage costs — in short, all costs to democracy.

Image credit: the Arizona Agenda

⏰ If you have 30 minutes: Arizona desperately needs a more reasonable legislature. Find a competitive legislative district near you⁴, then sign up to volunteer for, or donate to, the candidates that best represent your values.

⏰⏰ If you have 60 minutes: Join us on Zoom at 4pm on Sunday for our next CEBV Happy Hour. This week’s conversation is our annual budget recap. This marks our only presentation on this topic, so don’t miss it! We’ll meet every Sunday at 4 PM through the end of session. Sign up here.

2024 Timeline

Monday, 7/1             Last day to register to vote for primary election
Tuesday, 7/30         Primary election
Monday, 10/7          Last day to register to vote for general election
Tuesday, 11/5          General election

Flag this handy list of contact info, committee chairs and assignments, updated for 2024.

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1. Disposing of the brine from treating brackish groundwater is difficult, expensive, and can damage habitats. Also, like all groundwater, brackish groundwater is non-renewing, so relying on it only leaves cities in the same predicament they were in before they used up their brackish groundwater.

2. We reached this figure by multiplying the "average award amount" from page 16 of the Arizona Department of Education’s Q2 2024 ESA report ($9,769) by ADE’s reported current number of ESA voucher recipients (75,020 as of 6/17/24).

3. This number includes the extension of the “Prop 400” transportation tax, which will appear on ballots in Maricopa County.

4. Those districts are 2, 4, 9, 13, 16, 17, 23, and 27. (Yes, we’re going to keep repeating this until November 5.)

Just like Arya Stark from Game of Thrones repeating the names of those who wronged her, we’re repeating the numbers of the districts that can save us. Don’t judge.