In the Hobbs Budget Deal with Republicans, Help for Poor Children, Homeowners and Public Schools but No Cap on ESA’s

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To several objective political observers, the FY 2024 budget deal between Governor Katie Hobbs and Arizona Legislative Republican leadership should not be unexpected.

Please click here to view the latest budget documents.

In working out a budget deal with the still majority Republican Legislature (several of whom think compromise is a dirty word,) it should be no surprise that Governor Katie Hobbs had to give in to conservative demands that defunding of Empowerment Scholarship Accounts (E.S.A.’s) or vouchers would be off the table in order to move forward with securing a bipartisan budget that also secured several Democratic goals.

In a statement from Governor Hobbs’s Communication Director, Christian Slater to Blog for Arizona, he pointed out what Democratic goals the Governor achieved and what was included in the budget deal, writing:

“Governor Hobbs is a leader who isn’t afraid to work with Democrats and Republicans to get things done for the people of Arizona. She negotiated a budget that makes historic investments in housing, education, infrastructure, and child healthcare in a divided government while winning critical accountability measures for ESAs. We believe everybody, regardless of party, can support these critical policies that will directly help everyday Arizonans and call on members of the legislature to join together and pass this budget.
Some of the big funding wins we got:
  • $150 million investment in the Housing Trust Fund
  • A $300 million one-time infusion in K-12 spending, along with $341.9m for school facilities
  • $88.6m new, ongoing K-12 funding
  • Over $650m in funds invested in roads, bridges, broadband infrastructure, and public transit throughout the state
  • An increase in KidsCare eligibility to expand access to health insurance for approximately 9,500 children in FY24, and over 12,000 in FY25″

Mr. Slater is right. These are all positive items in the budget that will help lift people up and move the state forward.

However, in the deal, the Governor and her team fashioned with the Republican Legislative Leadership, with apparently no Democratic legislators at the table,  there is much rejoicing among the plutocrats and the rich who are siphoning taxpayer dollars at a level that now eclipses the size of the largest public school district in Arizona (Mesa Unified,) because while the deal contains many strong elements that Democrats can support the measure being presented to the State Legislature contains no cap on ESA growth and major accountability mechanisms other than agreed upon demographic census reporting like:

“The number of ESA Program students, disaggregated by:
i. eligibility category;
ii. for students eligible through the universal category, the number of students who
attended an Arizona public school in the school year immediately preceding the first
year of each student’s enrollment in the ESA Program;
iii. grade level;
iv. if applicable, the school district or charter school that each student attended in the
school year immediately preceding the first year of enrollment in the ESA Program;
v. English language learners;
vi. students enrolled in the ESA Program as a student with a disability; and
vii. the zip code of each student’s permanent residence;
b) the annual award amount associated with each ESA; and
c) the amount of approved expenses, disaggregated by type of expense according to the
statutory categories of permissible expenses.”

While census reporting changes would be a welcome change (the Blog has been getting the run around from the Horne Arizona Department of Education team for about a month on the numbers of ESA scholarship recipients coming from existing private school programs as opposed to traditional and charter public schools,) it is a far cry from capping the growth and stronger accountability measures like making sure these schools are not brainwashing these children to become little MAGA Nazi’s.

At a press conference on the expiration of Title 42 yesterday (May 8, 2023,) the Governor was asked about the ESA inclusion in the budget without caps.

She said:

“I think that we can agree that the voucher program is a drain on resources that should be directed at public education but I didn’t say we’re going to end it (which is true; she never has said that.) It is a goal, certainly and we put that in our executive budget as the goal knowing that we would be in a place where we were going to have to negotiate and that’s what we’re doing…”

Later, the Governor said:

“We’ve been meeting with Republican leadership and Democratic leadership for a couple of months now to negotiate what you’ll see in the bills that are introduced this afternoon. I knew from day one that to get a budget over the finish line, it had to be bipartisan. We are going to have to give some things up. The Republicans are going to have to give some things up and I think you’ll see that in the bills that come out this afternoon.”

The Governor is right. In a compromise-bipartisan budget, both sides have to give a little in order to achieve some of their goals.

The problem, in this case, is that the continued permitting of ESA expansion with both no caps and the lack of strong fiscal accountability could bankrupt this state within a year thanks to the demands of fiscally unsound Republican policies that never learned from the mistakes of their conservative colleagues who adopted similar plutocratic and irresponsible tax cutting measures in Kansas and nearly destroyed the economics of that state.

Legislative Democrats and SOS Leaders are Not Happy with the Released Budget.

Democrats in the legislature, some of whom feel they were left out of the process and public school activists like the Save Our Schools Arizona organization vented their displeasure before the budget was publicly broadcast.

In a statement the day before the budget was released, Senate Democratic Leader Mitzi Epstein posted in an email to constituents:

“If Republicans want to fund private schools that have no accountability to taxpayers, they must either increase taxes or stop the growth of the expansion. Our students with special needs of many kinds need their ESA program to work for them again.

One parent “described the system as ‘unusable’ and needs to be investigated and wants the Attorney General’s office to investigate.” Reams of complaints are being submitted to the Department of Education about how the program is not working for families because it is not managed well. It was designed for around 12,000 students, but it is heading toward FIVE TIMES that size 60,000 students soon and onward to even more!”

Today (May 9, 2023,) Senator Epstein and House Democratic Leader Cano issued a joint statement on social media, blasting the noninclusion of a cap on vouchers, equating it with the alt-fuel vehicle tax rebate program from 2000. Calling the current situation, “the Republican’s Alt-Schools ESA voucher program,” Epstein and Cano wrote:

“The reality is due to irresponsible tax cuts, our state revenue is not keeping up with our growth and economy. No responsible lawmaker from either party should be willing to bankrupt our state, neglect the homeless, let our rural areas run out of water and fail to raise teacher salaries or even keep public school funding on pace with inflation in order to give wealthy families in the richest zip codes a government subsidy to reduce their children’s private school tuition. Republicans 23 years ago acted quickly to address the Alt-Fuels fiasco, another misguided subsidy for the purchase of SUVs and luxury vehicles. That program quickly grew out of control and was halted when the projected cost to the state grew to nearly $700 million. A Republican Governor and Legislature wisely approved a moratorium and imposed new eligibility requirements to reduce the state’s expenses. Alt-Fuels, like the Republican’s Alt-Schools ESA voucher program was supposed to cost a tiny fraction of what it actually cost.”

Legislative House Democrats were further incensed later in the day when the Republicans on the Appropriations Committee, in their normal undemocratic fashion, cut off debate and response to the proposed budget bills (the ones introduced only hours before) and merged all the measures into one, forcing Democrats to vote against items they support on a single line vote.

Please watch State Representative Athena Salman’s protest against this undemocratic Republican move by clicking below.

The Save Our Schools (SOS) organization, which successfully fought to prevent voucher expansion in 2017 but failed to gain enough signatures to prevent the latest ESA growth last year, also voiced their displeasure with the budget, issuing several statements and holding an afternoon press conference today at the Capitol Rose Garden.

Among their comments was a request for the Governor and the Legislature to rethink the budget they have drafted. In a letter to the Governor and all four legislative leaders, SOS Director Beth Lewis wrote:

“As education policy experts and advocates, we urge you to negotiate a budget that includes a significant cap on universal ESA voucher growth. Failing to cap the growth of this off-the-rails program now threatens the future of public education in our state. Universally expanded ESA vouchers with no-cost containment measures threaten to bankrupt our state, and ultimately the children of Arizona will suffer as a result. The ESA voucher program is spiraling out of control at 54,566 students (and growing at a rate of over 1000 students per week). Last week, the ESA voucher program officially surpassed the size of the largest school district in the state, Mesa Unified School District, without any of the financial oversight, transparency, and academic accountability required of local school districts…”

“At its current rate of growth, the ESA voucher program is projected to double by next fiscal year, meaning it will cost the state $1 billion. This means a new, massive unbudgeted cost to the general fund at a time when surpluses are projected to dry up. There are no other programs in this state that have unfettered, unregulated growth at taxpayer expense. A growth cap must be instituted now as a basic measure of fiscal stewardship on this unaccountable government subsidy. We are facing a point of no return. If its growth is not significantly capped this year, the universal ESA voucher program will balloon entirely out of control, siphoning desperately needed funds from local public schools and dismantling public education in our great state.”

In a separate op-ed to AZ Mirror, Director Lewis wrote:

“At a cost to Arizona taxpayers of over $500 million this year alone, vouchers will soon cost a budget-busting billion dollars at a time just when state revenues are expected to dry up. The prospect is terrifying for the 92% of Arizona families that rely on and choose local public schools. For Hobbs and legislative Democrats, this budget is a must-win game that will decide the future of public education in our state. Will they rise to the challenge and play full-court press, or will they fail to deliver on their campaign promises to public education? We’ll know soon.”

While Director Lewis is correct in all of her assertions, it is also fair to point out again it was her organization that largely erred in the petition signature-gathering drive to place the ESA expansion on hold.

Attorney General Mayes and Secretary of State Fontes are not Happy with the Budget either.

There is also little to no growth for the budgets of the Arizona Attorney General and Secretary of  State’s office which has both Kris Mayes and Adrian Fontes understandably frustrated because they need the funding to go after consumer fraud predators (including those connected with the ever-expanding ESA’s) and ensure smooth elections: two issues that are kryptonite to largely Republican-leaning donors and MAGA-Plutocratic voters.

Attorney General Mayes issued several social media posts, condemning the budget for failing the needs of the majority of Arizonans and compromising her office’s ability to go after senior citizen consumer predators and drug dealers. These posts include:

Secretary Fontes issued several posts after his office reviewed the budget, decrying what he feels will hamper his efforts to run smooth elections in 2024. His posts included:

Is this the best budget deal as it is given the current MAGA Republican stranglehold on the legislature and their political base in the state?

Maybe but many like Attorney General Mayes, Secretary Fontes, Democrats at the Arizona Legislature, and public school activists would, at least momentarily, disagree.

Could the Governor have played this more like Bill Clinton did in 1995 with the budget showdown with Newt Gingrich and Bob Dole?

Maybe but then again, this group of Republicans (especially when compared to the late Senator Dole) does not seem too interested in fiscal prudence and sound long-term investments.

That said, the situation is still in flux and, according to a source on background, both parties are working on possible last-minute compromises to achieve a higher Democratic vote count.

Stay tuned. More to follow.

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2 thoughts on “In the Hobbs Budget Deal with Republicans, Help for Poor Children, Homeowners and Public Schools but No Cap on ESA’s”

  1. It stinks to high heaven these terrible unaccountable vouchers. And shame on the State Supreme court for allowing money laundering to create a loophole over the Constitutional requirment to only fund real public schools. Hobbs was in a terrible box if she insisted on zeroing out money laundering for religious schools. The Constitution ignoring Repubs couldnt even put a cap on expenditures for this fiscal nightmare. A one vote Democraric majority in the Legislature would put a stop to this nonsense. I would laugh my rear off if a “great leader”, like Leo Uselessugi cant come up with 31 votes in his caucus. Especially with his ambitions to be Speaker. Let them pass this mess with only Repub votes, if they can. Whatever happens, Hobbs will be blamed.

    • I’m deeply disappointed that a butt-covering committee to “investigate” ESAs was the best we could do. If our caucus and the Governor hung together, we could have blocked ANY budget until our demands on ESA were met. We own this budget now, completely negating our ability to campaign against universal ESAs in the future.

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