March 23, 2020

With the passage of a “skinny budget” this afternoon, the Legislature has temporarily completed work and will now adjourn for three weeks as a public health precaution. For the first time in recent memory, both the House and the Senate changed the rules to allow legislators to vote remotely using a computer conferencing program first introduced last week. Roughly 20 lawmakers used the technology to remotely cast their votes for the $11.8 billion spending package, which allocates $50 million to create the Crisis Contingency and Safety Fund, administered by the Governor’s Office, to mitigate the social economic impact of COVID-19. Funding is intended to provide housing assistance, aid for businesses, nonprofits and health care providers with fewer than 50 employees, and assistance for food banks as well as organizations serving people experiencing homelessness.

The measure now goes to the governor's desk, along with a basic budget that will keep state government operating into the next fiscal year. Here's a quick look at other key aspects of the bare-bones budget:

One-Time Spending Changes to the Baseline

General

• $8.3 million in AHCCCS/DIFI—Children's Behavioral Health/Mental Health Parity 
• $11 million to Department of Corrections for capital projects including locks for Lewis and Yuma prisons
• $22 million for state employee health insurance funding 

Health 

• $180 million for AHCCCS formula adjustments
• $1.7 million for rural Graduate Medical Education 
• $1.3 million for urban Graduate Medical Education

K-12 Education

• $335 million in new formula adjustment funding for growth and inflation 
• Includes the final installment of the 20X2020 teacher pay raise
• Allocations of the existing results-based funding program using the results from the Spring 2019 statewide assessment
• $5 million for Career and Technical Education Incentive Grants 
• $67.8 million Schools Additional Assistance fully restored by FY22 
• $90.8 million to the School Facilities Board for Building Renewal Grants
• $31 million to the School Facilities Board for new school construction ($28M in supplemental for FY20 and $13M in FY21)

Community Colleges  

• $2.2 million for community colleges formula adjustments (excludes Maricopa & Pima) 

Elections

• $500,000 to Independent Redistricting Commission 2020 Redistricting Cycle 
• $4 million to SOS for 2020 Primary/General Election Services

While the goal is to resume session by Monday, April 13, the Senate President and Speaker of the House have the final say. To return earlier, legislative leadership must notify lawmakers and the public at least 24 hours before recommencing. When we started the session back in January, leadership was very optimistic that we would adjourn sine die by mid-April. With this in mind, it’s hard to say how motivated members will be to work through the pile of remaining bills—particularly when the alternative would be to stay home and continue campaigning for the upcoming election.

That said, there is still a significant amount of work to be done on the remaining bills. As of today, the Legislature has only passed 58 bills, 23 of which have been signed by the governor. To put this in perspective, 1,605 bills have been introduced this session and roughly 600 of them remain in play. By April, we’ll also have a better sense of how the state’s finances have been impacted as a result of a decimated tourism season, and whether or not there’s even anything left to craft a more robust budget.

Also this afternoon, Gov. Doug Ducey issued an executive order clarifying which businesses and operations would be deemed “essential” in the event that a shelter-in-place mandate is issued (note: he has not yet issued the order and, as of today, does not currently have plans to do so).

The executive order outlines “essential services” to include the following:

• Health care and public health operations, including hospitals, public health entities, distributors of personal protective equipment and biotechnology companies;
• Human services operations, including those that provide services for the elderly, those with developmental disabilities, foster and adoption children and the homeless;
• Infrastructure operations, including food production, utility operators, construction and internet providers;
• Government functions, including first responders, emergency management personnel, 911 operators, child protection staff, welfare providers and more;
• Business operations, including grocery and medicine providers, outdoor recreation;
• Organizations that provide charitable and social services, including religious and secular non-profit organizations and food banks;
• Media organizations, including newspaper, television, radio and other media services; 
• Gas stations and other transportation-related businesses;
• Financial institutions, including banks and credit unions;
• Hardware and supply stores;
• Critical trades, including plumbers, electricians, cleaning, sanitation, HVAC and security staff;
• Mail, post, shipping and logistics; 
• Education institutions, including public and private K-12 schools, universities and research entities; 
• Laundry services; 
• Restaurants for consumption off-premises; 
• Supplies distributors that enable telework and work from home and those that supply essential businesses; 
• Transportation, including airlines, taxis, and ride-sharing;
• Home-based and care services, including for seniors and those with developmental disabilities;
• Residential facilities and shelters, including those for children, seniors or at-risk populations;
• Professional services, including legal services, accounting services, insurance services and real estate services;
• Day care centers for employees exempted through the order;
• Manufacturers, distribution and producers of supply chain-critical products;
• Hotels and motels;
• And funeral services. 

The order allows individuals and entities to utilize teleworking to complete essential services.

This is a proactive and administrative measure to ensure consistent guidance across the state. As such, counties and municipalities are preempted from issuing their own shelter-in-place mandates.

The governor also issued an executive order implementing an Enhanced Surveillance Advisory that will accelerate tracking of COVID-19 cases and strengthen the ability of the Arizona Department of Health Services (ADHS) to respond to the outbreak. The advisory requires hospitals and testing laboratories to report key metrics that will inform the state’s response to COVID-19.

We can expect to see additional executive orders issued in the coming days.