by Ethan Faverino | Jan 26, 2026 | News
By Ethan Faverino |
Arizona Governor Katie Hobbs recently released her executive budget proposal for the 2026-2027 fiscal year, totaling $17.7 billion in general funding expenditures. The plan represents a $100 million increase over the $17.6 billion budget approval by the Arizona Legislature for the prior year. According to Glenn Farley, Research and Policy Director at Common Sense Institute Arizona (CSI), the proposal extends a pattern of substantial growth in state spending observed in recent years.
In a recent article, Farley told The Center Square, “This budget continues the trend of massive increases, really historically unprecedented increases in the state’s Medicaid-funded disability program run out of the Department of Economic Security (DES).”
Farley highlighted that the most significant expansions in the proposal stem from Arizona’s Medicaid program, K-12 education, and other health care-related initiatives.
A standout element is the marked growth in the state’s Medicaid-funded disability services program operated by DES, which supports home-based care for Arizonans with disabilities. Farley described these increases as “historically unprecedented,” noting a shift where the largest caseload surge now occurs in the DES disability program rather than traditional drivers like the Arizona Department of Education.
The budget addresses the needs of approximately 62,000 qualified Arizonans by expanding access to home-based services through adjusted subsidy structures for home-based providers. For FY26, the proposal allocates an additional $128.1 million from the general fund to DES, supplemented by $271.9 million in the Department Long Term Care System Fund (DLTCSF).
In FY27, ongoing funding increases include $298.8 million from the general fund and $673 million in the DLTCSF.
Farley noted that Governor Hobbs’ budgets have frequently relied on one-time funding sources rather than sustainable ongoing commitments, a pattern that limits long-term fiscal stability.
At the same time, the proposal conforms to recent federal adjustments under HR 1, which aim to restrain cost growth in Medicaid and SNAP by shifting greater responsibilities onto states.
While this alignment addresses federal requirements, it adds operational complexity without resolving underlying sustainability concerns in Arizona’s expanding health and disability services.
In contrast to the administration’s spending approach, Arizona Republicans introduced a tax relief plan earlier this year, projected to save Arizonans $1.1 billion over the next three years, which Governor Hobbs vetoed.
Farley, who served eight years under the prior administration, observed that budget finalization timelines have shifted under Hobbs from the typical time of March or April to May or June.
He further noted an unusually high volume of significant tax code changes this year, driven by federal updates to adjusted gross income calculations, including the addition of new deductions and exceptions.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
by Ethan Faverino | Dec 11, 2025 | Economy, News
By Ethan Faverino |
Arizona’s childcare system is in crisis, with the number of licensed providers plummeting nearly 50% since 2002, while costs have skyrocketed beyond the reach of many working families, according to a new report from the Common Sense Institute (CSI).
The state’s licensed childcare providers have fallen from 5,126 in 2002 to just 2,779 in 2024—a 46% decline that has driven up prices, lengthened waitlists, and left hundreds to thousands of Arizona children without access to formal care.
The report, Childcare in Arizona: An Economic Opportunity with Wide Implications, warns that without urgent policy action, the shortage will continue to push parents—predominantly mothers—out of the workforce and widen economic disparities across urban and rural communities.
Currently, Arizona ranks 6th in the country for infant care costs relative to median income. The state is behind California, Vermont, Washington, Washington, D.C., and Massachusetts.
Licensed facilities have dropped from 4,660 in 2010 to 2,687 in 2022 before a modest rebound to 2,779 in 2024, with closures accelerating to 9.2% annually between 2018 and 2022 due to COVID-era restrictions, labor shortages, and rising regulatory costs.
Arizona has only 256,267 licensed slots for 460,882 children under age 6. Rural counties like Santa Cruz barely have enough licensed capacity to support 1% of the infant population in the county.
“Even as demand remains high, the number of licensed providers has fallen sharply — limiting supply, driving up costs, and constraining labor force participation,” said Glenn Farley, Director of Policy and Research at CSI. “These pressures ripple through the broader economy, reducing productivity and household income. Based on our analysis, expanding access to affordable, quality care is not only good policy, but a necessary step for sustaining long-term economic growth in the state.”
The median daily cost of infant care now stands at $61.40, a 42.7% increase from $43.03 in 2018, requiring a minimum-wage worker to labor 72.8 hours per month just to afford one infant’s care.
Urban counties like Maricopa and Pima fare better than rural areas, yet shortages remain acute. In Maricopa County, infant slot coverage reaches 13%, and families need 37.6 hours at the average wage to afford care.
Childcare workers earn just $13.67 per hour—57 cents for every dollar the average Arizona worker makes, and per-capita employment in the sector has fallen from 1.5 to 0.8 workers per 1,000 residents since its peak.
CSI estimates that closing the childcare gap could bring 50,000 jobs into the workforce, boosting Arizona’s GDP by up to $17.5 billion and generating $188 million in new income tax revenue under a midpoint scenario.
“Costly, scarce childcare sidelines too many parents,” the report concludes. “Make it more available and affordable, and Arizona wins—more people working, higher incomes, and more state revenue.”
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
by Matthew Holloway | Oct 8, 2025 | Education, News
By Matthew Holloway |
A new report on Arizona’s Empowerment Scholarship Account (ESA) from the Common Sense Institute (CSI) shows a robust jump in ESA enrollment of nearly 15,000 students since last year.
According to the detailed report, the school choice program has reached a milestone with 92,362 students enrolled as of September 15, 2025. Projections indicate that ESA numbers will reach 103,000 this fiscal year.
The report from CSI is released on a quarterly basis to address “a lack of reliable and consistent data about who is using the program and how.” CSI noted, “Applying scrutiny to hundreds of thousands of individual transactions on an almost real-time basis has made the program vulnerable to exaggeration, misinformation, and mischaracterization. No comparable program is subject to this kind of examination.”
The quarterly findings indicate the program is maturing from an initial stage of rapid growth to a more steady-state. Universal eligibility, rolled out in 2022, has fueled the fire, but the real story now is “switchers”—57% of new enrollees ditching public schools for tailored options like private academies, therapies, or homeschooling setups. The report underscores how shrinking school-age cohorts (down 20,241 since 2021) aren’t slowing the momentum.
Glenn Farley, Director of Policy & Research at CSI and the report’s author, explained, “Arizona’s ESA program is reaching a point of steady participation. The rapid expansion is behind us, and future growth will be shaped more by broader demographic trends and the choices families make across an increasingly competitive K–12 landscape.”
The key questions that CSI seeks to address include the ultimate cost of the program at full expansion, the steady-state count of how many people are using the ESA program, its ultimate extent, the demographic characteristics of its users, and the efficiency and good operation of the program.
CSI found that total ESA costs are on track to reach $1.0369 billion in FY 2026, with an average award of $10,349 per student. Notably, 88% of funds have already been spent, the highest percentage ever recorded. Administrative approval rates are at a peak of 88.8%, and reimbursements are processed in just 13 days on average, with a whopping 455,142 orders handled in the last quarter alone.
As far as budgetary impact is concerned, a common complaint from opponents like Governor Katie Hobbs, the CSI projects that “state K–12 Basic State Aid costs will exceed appropriations by $35 million in FY 2026, due largely to higher ESA participation and lower-than-expected district enrollment.”
The report also offers a firm, authoritative rebuke to allegations that the program is most used by “the wealthy.”
“Nearly 57% of ESA recipients live in ZIP Codes with a median family income of between $75,000 and $150,000 – up slightly since our last report. A quarter of ESA users may be lower-income, 13% reside in rural areas, and nearly 20% are estimated to be nonwhite,” the report states.
Farley concluded the CSI report’s findings, writing, “Administrative reform throughout 2025 by the Department of Education has improved various high-level metrics: the Department is approving purchases faster and at greater volume and embracing its statutory authority (risk-based auditing, Handbook language noting use-tests for technology purchases and not limiting the purchases directly, etc.). However, the ESA environment often remains narrative rather than fact driven. We remind users: ESA enrollment costs are offset by reduced enrollment in other K-12 programs; ESA misuse rates are lower than comparable programs; ESA growth is slowing and increasingly driven by students switching from traditional public options.”
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Matthew Holloway | Jun 16, 2025 | Economy, News
By Matthew Holloway |
A new report from the Common Sense Institute of Arizona (CSIAZ) has laid to rest claims that Arizona’s budget deficit stems from the state’s adoption of a 2.5 percent flat tax. The report found that the deficit is attributable to increased spending by the state in the last year. The report also found that in defiance of detractors, the flat tax has actually led to an increase in state tax revenues, and Arizona is once again experiencing a budget surplus.
In a statement, CSIAZ Director of Policy & Research Glenn Farley said, “The facts tell a very different story than many of the headlines would lead us to believe. The data shows us that Arizona’s revenues are strong, local governments are collecting more than ever, and education spending is at an all-time high. The flat tax has not created a revenue crisis—but rapid and unsustainable spending growth has created real budget pressures. If we want to restore stability, we need to focus on the underlying drivers of the imbalance.”
The report from CSIAZ offers a direct refutation of a claim made by the far-leftist think tank Center on Budget and Policy Priorities (CBPP), which claimed in 2024 that the state would face a $1.6 billion deficit through fiscal year 2025 due to the flat income tax and universal private school vouchers. This assessment, however, leaves off a critical necessity in any conservative budget: spending cuts.
Farley and Senior Economist Thomas Young found unequivocally, “Since the flat tax passed, state revenues have grown by $3.3 billion. But the state budget is 25% larger than it was; at peak spending was up $3.7 billion, and even today it’s still up over $2.5 billion versus pre-flat Tax. If spending had followed historical trends, Arizona would have had a $4.3 billion surplus rather than a $1.6 billion cash shortfall last year.”
Farley and Young also debunked a claim from Dave Wells, Research Director at the Grand Canyon Institute (GCI) on “Arizona Horizon” who claimed in October 2024, “The flat tax’s $2 billion annual cost has had visible consequences and was a prime contributor to the budget deficits and cuts made during this legislative session.” They noted that despite forecasts that the budget would cost $4 billion over the next decade, updated estimates accounting “for dynamic effects and rapid growth in other tax types,” adjusts that to a more modest $1.4 billion impact while “revenue growth from a strong economy has more than offset the difference, meaning the state still collects more each year than before the tax cut.”
Much closer to home, claims that the tax reforms haven’t helped everyday Arizonans can be confidently cast aside with the fact that the average Arizonan saves about $400 per year from the flat tax while per-capita income has risen by 68% since 2015, with Arizona’s economic growth far outpacing the rest of the nation.
The report also addressed claims that the reforms hurt city budgets, despite the reforms increasing the share of state income tax filtered down to city and municipal governments by three percent from 15% to 18%, totaling an additional $250 million over two years. The report also refuted claims that education spending would be cut as a result of the flat tax with K-12 education spending up nearly 80% since 2010, growing by 14% since 2022.
Essentially, CSI Arizona has shown that arguments against a flat tax are definitively driven by politics and rhetoric, not facts.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
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