John --



Good morning, and welcome to our twentieth weekly update from the state capitol. Quite the week last week, right?



In case you missed it, the budget conversations blew up last week, and instead of passing a state budget and possibly adjourning for the year, both the House and the Senate adjourned until next week, Thursday, June 10th.



We could come back sooner, but we would need at least 24 hours advanced notice. I’m typing this on Monday evening, and we have received no indication yet that we will be returning in the next couple of days.



So, what happened? Well, regular readers of this newsletter knew for weeks that the budget did not have the votes. There was enough Republican opposition to deny it the sixteen votes in the Senate and thirty-one votes in the House to pass.



There was feverish lobbying from the governor’s office and legislative leadership last week in attempt to pass a budget. The governor’s office insisted on pushing their flat tax plan, which several members of the majority had concerns about. There were also some Republican members on the more conservative side of the caucus concerned about some of the spending levels in the budget, and they wanted those items removed in order to get their votes.



Since the Senate is 16-14 and the House is 31-29, any one member of the majority can sink the budget or any bill, so that gives them a fair bit of power. And since the inclusion of the flat tax means that no Democrats would support the budget package, that meant leadership had to corral every single Republican or else the budget will fail to secure the necessary votes to pass.



Last Tuesday, as a member of the Senate Appropriations committee, we heard all of the budget bills in our committee. The hearing took all day, and my Democratic colleagues and I asked a lot of questions about the flat tax plan and the accounting numbers that were being used to say the budget plan was “balanced.”



Remember, in what is normally around a $13 billion budget, the inclusion of a $1.9 billion tax cut is no small deal. And while, yes, we do have some one-time federal dollars coming in, those dollars are not permanent.



The governor is also relying on very optimistic revenue projections and growth over time, which many of my colleagues feel is not sustainable for the long term.



One of the most egregious accounting gimmicks the budget uses is a line that just reads “Other Sources of Revenue,” and accounts for $500 million over FY 2023 and FY 2024. When I pressed staff about these numbers in our Appropriations committee hearing, the answer we received was that this was revenue coming in from the recently signed gaming compact.



But if we go back and look at the official revenue projections from the nonpartisan Joint Legislative Budget Committee back in March, they told us expanded gaming would only bring in $34 million in FY 2024.



So no big deal, just a $466 million difference between what was forecasted in March and today. The $500 million forecast from the governor has no data to back it up. It’s these sorts of budgetary gimmicks that have me worried about passing a massive tax cut that we may not be able to pay for down the road.



After the budget bills passed committee on Tuesday, the plan was for the House and Senate to pass the budgets through the full chambers on Wednesday. This was always puzzling for me, because I had known through conversations with several of my Republican colleagues that the budget did not have the votes to pass.



This is important, because if we go through the production of passing budget bills on the floor and adding amendments, if the budget bills go for a final vote, they can’t be amended again to address any concerns or issues that members who are currently no votes would need to turn in to yes votes. In that case, there would have to be new budget bills introduced and the process would have to start over.



So all along I kept thinking, “the smart thing to do would be to not move forward yet.” Take some time between now and the end of June to modify and amend the budget, because right now you don’t have the votes. As Benjamin Franklin once said, “facts are stubborn things.”



Cut to Wednesday, and the House announces that they will adjourn until June 10th. This was a surprise announcement, to be sure. But right after the House announced it was leaving, the Senate said we would come back to the capitol the next day, Thursday, and pass a budget. Say what?



We knew we had the votes to stop the budget as currently written. Nevertheless, we went to the Senate floor Thursday afternoon prepared with talking points and amendments to offer ready to share why we had concerns about the budget, and what changes we wanted in order to secure our votes.



So we arrived on the floor around 2pm on Thursday afternoon and finally received the inevitable news: the Senate would also be adjourning until June 10, or possibly sooner, because the budget did not have the votes to pass.



So, what comes next? Well, I’m in the office today, working through ways we can come together and pass a bipartisan budget that addresses all of the needs we have as a state: investments in our schools and our economy, paying down some of the billions of dollars in state debt we have as a state, and responsible, reasonable tax reform that helps all Arizonans, not just those at the high end of the income scale.



Those who know me know that I don’t take vacations very often. I should, but I don’t! I’ll be hard at work these next couple of weeks working on a budget that I can support and that can secure the votes needed for passage.



And we do have a deadline of June 30th, when the current fiscal year ends. So these next couple of weeks should be interesting!



Thanks for reading, and remember that you can always follow me on social media for more frequent updates!



Thank you,



Sean





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