By the Arizona Free Enterprise Club |
Governor Katie Hobbs rolled out her budget last month and, unsurprisingly, it doesn’t add up.
Not only because her “solutions” don’t match the problems she claims to be solving, like suggesting we can make goods and services more affordable by piling on new taxes and fees, but because her budget quite literally just doesn’t add up.
While it’s become common for governors to release budgets built on rosier revenue assumptions than the Legislature’s more conservative Joint Legislative Budget Committee (JLBC), Hobbs’ proposal relies on projections so fanciful it resembles a fairy tale more than a fiscal plan.
Counting Chickens Before They Hatch
Hobbs’ budget is a $17.7B spending plan ($100M more than last year) that leaves a meager $37.8M balance at the end of FY27. That means her revenue projections leave very little room for error. Yet one of the more obvious facts about her budget is just how likely error-prone these projections are, a fact that Republicans during a joint appropriations hearing were sure to point out.
One of the most speculative assumptions Hobbs is making in her budget proposal is relying on $760 million of “reimbursements” from the federal government for expenditures the state has made for border security since 2021. That is a good chunk of change, and her budget is unworkable without it.
The problem is it is actually way more likely than not that even if the state receives something in the way of reimbursement, it will not be the full amount, and who knows on what timeline. Regardless, it is irresponsible to commit money out the front door that may never come in.
This is nothing new for Hobbs. Just last year she continued a COVID-era program that neither had legislative authorization to continue nor the ongoing financial allocations to support it. That wound up blowing a $122M fiscal hole in the previous year’s budget mid-session that Republicans had to mop up.
The Governor’s budget also depends on tapping the State Land trust for another $1.5 Billion. Setting aside whether its a good idea to raid the land trust set up for various beneficiaries (K-12, Universities, deaf and blind, etc), changing the formula for trust land distributions requires a constitutional amendment that would need to be approved by voters in November.
Hobbs’ “Affordability” Plan is Really a Chaotic Tax-And-Spend Plan
Hobbs wants to brand her budget as improving affordability, but it does just the opposite. Every idea in her plan is built around $1B in new taxes and fees and the hope that the bureaucracy can “manage” the cost of living while literally contributing to its inflation…
