By Matthew Holloway |
The State of Arizona has passed a balanced budget through the Republican controlled House and Senate not only hammering down a $1.4 billion shortfall in projected tax revenues but actually expanding and reforming the state’s Empowerment Scholarship Accounts (ESA), and School Tuition Organization (STO) eligibility, much to Democrat Governor Katie Hobbs’ chagrin. Hobbs, despite her opposition toward the ESA program, implied her acceptance of the budget in a Saturday post to X, and on Monday evening signed the budget into law.
As reported by 12News, the budget was approved in a marathon of votes that stretched throughout the Saturday workday and landed on Hobbs’ desk where it was approved at the end of the business day. Many agencies in Arizona are now working with a budget cut of approximately 3% that arose primarily from depressed sales tax collections in 2023-24. Hobbs and her fellow Democrats have tried to assign the blame to former Republican Gov. Doug Ducey for tax cuts and expansion of the ESA program to allow all students access to the education of their choice.
In spite of this rhetoric, the GOP led legislature successfully prevented a reduction in the funds directed to putting students in underperforming schools into private schools and under the tutelage of homeschooling parents. The budget even included a 2% inflation-driven increase in the K-12 public schools budget.
Senate Majority Whip Sine Kerr explained in a statement from the AZ Senate Republicans:
“What’s not included in the $16.1 billion budget is an elimination of the historic Universal Empowerment Scholarship Accounts program or our School Tuition Organizations program providing tens of thousands of Arizona families the freedom to pick the best schools to meet their children’s unique learning needs.
We are continuing our commitment to providing every family in the state of Arizona with a quality education, no matter their zip code or economic status. Additionally, we said ‘no’ when Governor Hobbs and Democrats proposed eliminating our Arizona Freedom Schools at our public universities, which are dedicated to civics education and ensuring students are equipped down the road to lead our state to a brighter tomorrow.”
In the new budget, the ESA program sees an expansion to “allow the use of account monies to reimburse the parent of a qualified student or a qualified student for the purchase of a good or educational service that is an allowable expense.” Reforms to the ESA will be extensive with the Arizona Department of Education to work in consultation with the Auditor General to generate risk-based audits of the program and ensuring that educators being paid through the program are not subject to disciplinary action by the State Board of Education and requiring all teaching staff and personnel with unsupervised contact with the students be fingerprinted as public school teachers already are. Expansion to the STO program grew the student eligibility to include any students who “are placed in foster care … at any time before the student graduates from high school or obtains a general equivalency diploma.”
In her comments posted to X, Hobbs commented, “While this bipartisan budget delivers reforms to ESAs, they are not enough.” She added a commitment to bring “accountability and transparency” to the program referring to it as “unsustainable.”
In addition to the preservation and expansion of Arizona’s ESA and STO programs, the AZ Senate GOP offered the following highlights from the budget:
- Reduces state spending by $1.7 billion below the 2023-2024 enacted budget (a 10% reduction).
- Reduces ongoing spending by $330 million.
- Protects school choice programs—both Empowerment Scholarship Accounts and School Tuition Organizations are funded for continued growth.
- Protects Arizona Freedom Schools.
- Does not pull dollars from the rainy-day fund.
- No new taxes or tax increases.
- No new debt.
- Reduces ongoing funding of state agencies by 3.5%, including cuts to universities by $23 million.
- Maintains law enforcement funding, while adding $5 million for local border security support and $4 million for fentanyl interdiction and law enforcement response.
- Prohibits board fee increases for 2 years.
- Lowers vehicle emissions testing fees by 5%.
- Ends ongoing funding for COVID federal programs.
- Maintains road infrastructure funding.
- Adds additional full-time employees to reduce concealed carry permit application and renewal time frames.
- Makes conservative policy and spending reforms to the Arizona Commerce Authority, the Arizona Department of Transportation, the Industrial Commission of Arizona, and the Board of Technical Registration.
Senate President Warren Petersen summarized the contentious budget in statement, “Following last year’s state budget, where Republican lawmakers provided inflationary relief to everyday Arizonans through $274 million in tax rebates distributed to struggling families, as well as a ban on the tenant-paid rental tax taking effect this January, Republicans are again successfully supporting our hardworking citizens while simultaneously reining in spending.” He added, “In this year’s budget, we defended more than $520 million allocated last year for much-needed transportation projects statewide. We also cut fees for Maricopa County drivers on emissions testing by 5%, and we banned fee increases on Arizonans from state boards for the next two years.”
“Arizonans can rest assured that their state has a balanced budget. I’m thankful for members of the legislature who came together, compromised, and passed this bipartisan agreement,” Gov. Katie Hobbs said in a statement reported by AZ Mirror. “But I know we still have more work to do.”
Despite the modest gains of the budget, not all Republicans supported the compromise. The Arizona Freedom Caucus seemed very displeased and took their case to the public in a post to X, writing, “It’s a perfect example of the Swamp that establishment Republicans at the Arizona Capital are saying ‘the Freedom Caucus is the problem’ on this budget The reality is that this is what happens when weak Republicans negotiate a budget in secret with Democrats.”
The Caucus cited a dozen shortcomings in the budget, namely that the Democrat and Republicans who formulated it, “Fail to appropriate any new meaningful border security money for local Sheriffs, kneecap a school choice tax credit, regulate private faith-based schools, weaponize public schools’ ability to stop conservative teachers from providing instruction to ESA students, impede parents’ right to educate their children as they see fit, gift hundreds of millions of your tax dollars to the healthcare industrial complex, refuse to do anything meaningful to fix our elections, use budget gimmicks to pretend to solve the state’s deficit, rather than actually solving it, sweep $430M of water funding intended to help solve our state’s water crisis, fail to hold Hobbs accountable for her illegal pay-to-play scheme, fail to hold Mayes accountable for weaponizing the justice system against her political opponents,” and “fail to hold Fontes accountable for his totally illegal Election Procedures Manual.”
They added, “In the case of the current budget, when @AZFreedomCaucus members approached leadership, raised concerns with some of the nonstarters in the budget, offered solutions, and indicated that with changes we could achieve Republican unity… Warren Petersen and Ben Toma rejected the changes instantly without even considering them, and then spent the rest of the day attacking, defaming, and insulting the members of the Freedom Caucus for not just blindly following orders. Unfortunately, establishment Republicans’ failure to see the present battlefield for what it really is will cost us the legislature. When Democrats take control, whether it’s in November or in two years… you can look back at who voted YES on this year’s budget to figure out who to blame.”
The budget is also likely to draw a legal challenge from Arizona Attorney General Kris Mayes regarding the ‘sweep’ of funding from the $1.14 billion, 18-year opioid One Arizona Agreement. The agreement, long a bone of contention between the AG, Governor, and Legislature, stems from a lawsuit that capped the Big Pharma opioid scandal and resulted in then-Attorney General Mark Brnovich signing onto to a $26 billion national settlement with Cardinal, McKesson, and AmerisourceBergen and Johnson & Johnson, which distributed, manufactured and marketed opioids respectively.
The funds are held by the AG’s Office as steward for the money designated for opioid treatment, prevention, and education. Mayes told 12 News’ Brahm Resnick, “I am not giving that money to them. It’s in my bank account at the Attorney General’s Office. It’s not going anywhere.”
In a lengthy statement posted to X, Mayes said, “I have stated publicly + very clearly that I refuse to release these funds in this way as it would violate the agreement, & I stand by those words today. This is an egregious grab, and I will do everything in my power to protect these opioid settlement funds for all Arizonans.”
Matthew Holloway is a reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
