Spending

AZ lawmakers approve $18 billion bipartisan spending plan

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The Arizona Legislature approved an $18 billion bipartisan spending plan early Thursday that will make substantial investments in public schools, build new highways and pay down long-term debt.

House and Senate lawmakers ended a months-long stalemate, working through the night to approve the budget shortly before sunrise. Only a handful of dissidents from each party voted against the package of bills, and Republican Gov. Doug Ducey was expected to approve it.

“That’s what our state, where voters are almost evenly divided by party affiliation, has long asked us to — work together,” said Rep. Reginald Bolding of Laveen, the top House Democrat.

The unlikely bipartisanship was made possible by an unprecedented surplus exceeding $5 billion, allowing for a wide range of new spending and savings.

That includes $544 million for border security, about half of that for a wall, and $1 billion for highway construction, including the widening of Interstate 10 north of Casa Grande. State employees will receive a raise, often for the first time in a decade. Hundreds of millions are being set aside for water infrastructure as the state faces a prolonged drought.

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Republican Gov. Doug Ducey is expected to sign the $18 billion budget that lawmakers approved on June 23.

The budget also makes a $1.1 billion deposit into the Public Safety and Corrections Officers Pension Fund, repaying the state’s unfunded liability for future retirement benefits. And it’s pumping an additional $425 million into the Rainy Days Fund to help the state weather a possible recession.

It also eliminates the state equalization tax, an education property tax, and fills it with $330 million from the general fund.

The package of budget bills passed with overwhelming support, which is highly unusual in the modern era.

Ducey praised the deal, saying his policies of limited spending and regulatory cuts can be credited for the surplus, though massive federal COVID-19 relief money was also a major contributor.

“The result is a booming economy with record incomes,” Ducey said in a statement. “With this budget, we’re putting those dollars to good use and investing in priorities that Republicans and Democrats can agree on.”

Republican leaders had struggled for months to craft a spending plan that could find unanimous support in the restive GOP caucuses without relying on Democrats. Tiny majorities in both houses meant that the opposition of a single Republican lawmaker was enough to sink the budget if Democrats were united in opposition.

Ironically, it was the more conservative lawmakers in the Legislature who forced the hand of GOP leaders when they balked at more modest initial spending proposals. After losing support from the right, House Speaker Rusty Bowers and Senate Speaker Karen Fann had to look elsewhere for votes, and they found them across the aisle.

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GOP leaders “decided to just take the easiest route, the route of least resistance and give up and just spend,” said Sen. Michelle Ugenti-Rita, a Republican from Scottsdale who voted against the budget.

“The budget is not solid and it does not reflect my conservative values,” Ugenti-Rita said.

Nobody likes a budget once all the trade-offs are made, said Senate Majority Leader Rick Gray, R-Sun City.

“Every budget is bad,” Gray said. “But for me, it’s encouraging that we’ve come together.”

The plan includes a handful of small, targeted tax cuts for farm machinery and private aircraft, but no large-scale cuts. Last year, Republicans cut $1.7 billion in income taxes.

The GOP and Democratic leaders agreed to add $526 million in ongoing new funding for K-12 schools, a substantial increase from the original GOP proposal. Their agreement adds $80 million in combined additional funding for Arizona State University and Northern Arizona University, aligning their funding increases with the additional funds already allocated to the University of Arizona.

Marisol Garcia, vice president of the Arizona Education Association, spoke about the $18 billion spending plan.

Marisol Garcia, vice president of the Arizona Education Association, spoke about the $18 billion spending plan.

Senator Sean Bowie, a moderate Democrat from Phoenix, joined moderate Republican Senator Paul Boyer in pushing for increased funding for schools, noting that in total more than $1 billion in funding for new schools was planned, of which more than half are in progress. Both are leaving the Legislative Assembly after this year.

“Now this budget isn’t perfect. I had a bill that was really close to my heart that I wanted to include in the budget, a tax cut for low-income working families,” said Bowie. “I was told the choice was this bill or more investment in K-12 schools, and I chose our public K-12 schools.”

He cited Boyers’ “leadership, your stubbornness, your perseverance” for securing the deal.

Boyer, who started as a Senate staffer and served as a lawmaker for a decade, said it was the first bipartisan budget in at least 15 years.

Lawmakers also agreed to technical changes in a formula for distributing money to schools and $4 million each for school testing and 2022 election costs. A proposed expansion of a tax credit to subsidize private school tuition was removed from the inescapable budget, likely dooming it.

The bipartisanship spilled over into the opposition – a handful of conservative Republicans and liberal Democrats voted against the budget deal.

Senator Martin Quezada, a Democrat from Glendale, has spoken out against plans to spend $335 million on a southern border wall, which he says would be unnecessary to keep people from crossing.

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“It’s really stepping on a soapbox and vilifying immigrants and creating a political point,” Quezada said.

But for Democrats, this may have been the last chance for the foreseeable future to make an imprint on the state budget. Republicans are expected to stretch their majority in the 2022 election thanks to new district boundaries that appear to favor the GOP.

The Legislative Assembly plans to return Thursday afternoon to pass legislation setting out how the new water money will be spent and other remaining bills, with a view to adjourning for the year once those are completed.