Triadvocates Navigator:FY24 Executive Budget Proposal

This afternoon, Governor Katie Hobbs unveiled her first budget proposal as Arizona’s commander-in-chief—a $17.1 billion spending plan for the 2024 fiscal year, Roughly $1.3 billion is for new and one-time priorities, including $150 million to assist families and individuals at risk of becoming unhoused and $273.7 million in new funding for education.

While the governor’s spending plan focuses on priorities traditionally viewed as “Democratic issues” (think K-12 education and social services), the total budget actually comes in about $1 billion under the budget signed by her Republican predecessor last year.

This proposal essentially serves as the governor’s opening bid, as she'll spend the coming months negotiating a final budget with the GOP-controlled Legislature. Republican leadership has made clear their intention to pass a “skinny budget” – a budget that just continues spending at current levels – by early February, although Governor Hobbs has signaled she’ll be whipping out her veto stamp if (when) that hits her desk.

At this point, the only thing we know for certain is that lawmakers are required to ink a plan into law by June 30. Exactly how brutal things get before then is the real question.

Here’s a rundown of highlights from the FY 2024 Executive Budget:

Education

The most controversial part of the entire budget proposal seeks to repeal the universal voucher program (or expanded “Empowerment Scholarship Accounts”), which, according to the governor, would save roughly $1.5 billion over 10 years. Other investments include:

• $332.2 million deposit in Building Renewal Grant funding to address crumbling and inadequate school infrastructure
• $198.6 million to retain critical education staff, increase the Base Support Level for schools by 3.04%
• $172.7 million in new school construction for three schools already in progress, construction of nine new schools, as well as land and site condition projects
• $40 million to expand the Arizona Promise Program and make higher education more accessible for an additional 10,200 students regardless of financial background or resources
• $40 million to establish a new tuition scholarship program for Deferred Action for Childhood Arrival (DACA) eligible students
• $20.5 million to establish a new Dual Enrollment support and advancement program
• $15 million to address the enrollment increase for the Arizona Teacher’s Academy
• $13 million to provide Free or Reduced Price Lunch at schools in low-income areas
• $10.9 million to adjust District Additional Assistance formulas for inflation and reinforce critical funding for classroom resources such as textbooks, materials and technology
• $10.3 million in restored STEM and workforce aid funding to Maricopa, Pima, and Pinal Community Colleges
• $14 million to double investment in rural community colleges
• $5 million to support the development of fast and reliable broadband service in schools
• $4.4 million to increase the state’s funding to students with a developmental disability, emotional disability, mild intellectual disability, or specific learning disability

Health and Welfare

• $463.5 million and $115.8 million in federal fund expenditure authority to utilize year three of federal funding given directly to AHCCCS and DES respectively for home and community-based services programs
• $257 million for AHCCCS program caseload growth and unwinding of federal COVID-19 policies
• $150 million deposit into the Housing Trust Fund to assist families and individuals who are currently or at risk of becoming unhoused
• $50 million General Fund set-aside for a refundable child tax credit for low-income families beginning tax year 2023
• $24 million to make feminine hygiene products tax exempt
• $20 million to expand the income eligibility cutoff for the KidsCare program from 200% of the federal poverty level to 300% of the federal poverty level
• $16 million to make permanent a TPT exemption for infant diapers
• $9.7 million to address an Arizona State Hospital staffing shortfall
• $11.5 million to fully fund the adoption subsidy for adoptive parents, backfill federal funding, and implement the Positive Parenting Program
• $6.1 million in ongoing funding to augment existing Title X dollars to provide expanded family planning services to low-income women, doubling the current amount provided to women in Arizona
• $14.6 million to reduce caseloads for Adult Protective Services
• $4.4 million to make permanent federal funds to increase Arizona Early Intervention Program (AzEIP) Provider Rates
• $2.5 million to expand the Healthy Families AZ program for voluntary home-visits to families that are at high risk of abuse or neglect, adding capacity for additional 300 families
• $2.7 million for Medicaid enterprise system modernization
• $200,000 in ongoing funding for pregnancy services that are inclusive of all options and support personal choice

“Government That Works”

• $250 million one-time deposit into the Rainy Day Fund, bringing the estimated FY 2024 ending balance to $1.6 billion, the highest level in state history
• $200 million one-time from the General Fund for employee retention pay in FY 2024, included in this amount is funding for an assessment of state employee market ranges
• $114 million in one-time funding for building renewal throughout the ADOA building system, including Department of Corrections, State Fair, Game and Fish, Pioneers Home and the State Lottery Commission
• $66.8 million in one-time funding from the General Fund to continue upgrading HVAC systems in DOC facilities
• $50 million from the General Fund one-time to fortify the balance of the Health Insurance Trust Fund
• $50 million one-time deposit into the newly established Rural Broadband Accelerated Match Fund
• $48.7 million in one-time funding from the General Fund for the DOC to complete critical fire and life safety projects at the Douglas, Globe, Perryville, Tucson, Winslow and Yuma prison complexes as well as and the correctional officer training academy
• $25 million one-time deposit into the State Match Advantage for Rural Transportation (SMART) Fund to help ensure that Arizona remains competitive in drawing down federal transportation grants
• $20.6 million to continue replacing the state’s human resources system that serves 36,000 employees
• $16 million in one-time funding to enhance broadband infrastructure at State facilities in rural Arizona
• $15 million in one-time funding to install electric charging and advanced-fuel infrastructure to support the conversion of the fleet to a sustainable operation
• $6.8 million as part of a 10 percent pay raise designed to recruit and retain nursing positions within state agencies
• $6.3 million in one-time funding to upgrade the Corporation Commission’s eCorp system and fund the writing of application programming interfaces (APIs)
• $3.9 million in ongoing funding to implement a 15% raise to fill vacancies and address high caseload in the Department of Child Safety unit
• $3.5 million in one-time funding for the Department of Health Services (DHS) to finish replacement of the video security system for the Arizona State Hospital
• $3.3 million in one-time funding for additional software as a service and staff costs associated with a new probation case management system
• $3.1 million in ongoing funding to provide monthly litter removal services on selected stretches of interstate highways and highly visible routes statewide that do not receive regular litter removal
• $585,000 to protect the state’s cyber infrastructure and create a more effective threat response
• $442,700 in one-time and ongoing funding to replace the critical Arizona Department of Transportation computer-aided dispatch system

Natural Resources

• $333 million one-time General Fund deposit into the Long-Term Water Augmentation Fund, the second of three equal installments totaling $1 billion spanning fiscal years 2023-2025
• $15 million in one-time funding for a grant program to help rural, Latino, and Indigenous communities secure certified well drillers to access safe drinking water
• $10 million one-time deposit into the State Parks Heritage Fund for park development, historic preservation, non-motorized trails, and outdoor education
• $9.3 million in one-time funding for multiple agencies to support an enterprise approach aimed at increasing the water resiliency of State facilities and property
• $7.5 million in one-time funding to install the needed public infrastructure for electric vehicles at state facilities including State parks, Motor Vehicle Division offices, Department of Child Safety and Department of Economic Security customer facing offices, and other highly used locations
• $7.5 million in one-time funding to serve as a catalyst to partner with local entities in securing federal support and funding to restore interstate passenger rail service to Phoenix, which has not had interstate passenger rail service since 1996
• $5 million in one-time funding from the General Fund to clean up perfluoroalkyl and polyfluoroalkyl substances (PFAS) chemicals
• $5 million in one-time funding to increase capacity at the Department of Water Resources to provide water resource management planning to local governments statewide and to identify groundwater shortages and set up Active Management Areas

Public Safety

• $69.2 million, of which $56.7 million is one-time, to support operations at DOC
• $17.1 million reallocation to the DPS patrol program for law enforcement duties in areas of greatest need
• $12.2 million reallocation, of which $11 million is one-time, to provide grants to law enforcement in border communities to conduct border-related activities
• $11.7 million in one-time funding to ensure Department of Public Safety vehicles meet recommended replacement benchmarks
• $7 million in additional funding for the Major Incident Division (MID), which will conduct independent investigations of critical force incidents
• $3.1 million to establish a body-worn camera (BWC) program for 200 officers within the Enforcement and Compliance Division (ECD) at the Arizona Department of Transportation
• $3 million in one-time funding to upgrade DPS’s Master Site that houses servers that control all radio traffic within the digital system
• $2 million to conduct a systems assessment of the Department of Corrections to examine contracts, staffing levels, retention issues, and identify opportunities for improvement and reform
• $1.3 million increase to the Governor’s Emergency Fund for mitigation activities that will eliminate or reduce disaster impact and/or damage to public and private property
• $514,100 in ongoing funding to backfill court fine revenue and Victims of Crime Act (VOCA) grant funding, so that the ACP can continue to provide services to survivors of domestic violence, sexual assault or stalking
• $494,500 in one-time funding to extend the Concealed Weapons Tracking System project

To download the Executive Budget Summary, click here.

Just in case you missed this in our last edition of The Navigator:

Governor Hobbs has built her team (for the most part) on the Ninth Floor and has announced her cabinet picks. We’ve put together a full rundown of key players that you can download by clicking here.

We’ve also put together an overview of legislative leadership, committee assignments and deadlines. To download the document, click here.