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Arizona legislature passes budget for fiscal year 2025

Arizona’s legislators worked all day Saturday to get the budget done. It will now head to Gov. Katie Hobbs’ desk for her signature.

PHOENIX — Arizona, we have a budget. 

The Arizona State House and Senate have approved a new state budget after an all-day work session on Saturday. The budget will now head to Gov. Katie Hobbs’ desk to be signed. 

The legislators worked throughout the day to hammer out details over issues like school funding and mental healthcare.  

The final version of the budget, which was passed at 9:43 p.m. on Saturday, features a series of compromises from both sides of the aisle.  

Most agencies will see cuts of around 3% as the state looks to make up a $1.8 billion deficit. 

A statement from Gov. Hobbs’ office says the $16.1 billion budget: 

  • Has resources for the Department of Health Services to protect “vulnerable Arizonans, hold bad actors accountable and enforce new standards created under the bipartisan Long Term Car reform bill” 
  • Does not cut basic aid to public schools 
  • Provides for 1.5 million meals for working-class children through the Healthy School Meals program 
  • Secures $12 million to expand access to affordable childcare for state workers 
  • Includes an Aggregate Expenditure Limit to give public schools more certainty in their budgets 
  • Caps School Tuition Organization spending and includes new standards for schools receiving Empowerment Scholarship Accoounts 
  • Protests the $150 million Housing Trust Fund deposit and commits $15 million more to build affordable housing 
  • Funds the SAFE (Stopping Arizona’s Fentanyl Epidemic) initiative, which includes: 
    • $1 million to ADHS to “distribute and equip first responders with lifesaving overdose reversal medication” 
    • $3 million to the Arizona Department of Emergency and Military Affairs to fund the Counter Drug Task Force 
    • $1 million additional and $4 million one-time deposit to the Arizona Department of Public Safety to support border communities fighting drug trafficking   

Gov. Hobbs also released a statement, which reads: 

Arizonans can rest assured that their state has a balanced budget. I’m thankful for members of the legislature who came together, compromised, and passed this bipartisan agreement. By working together, we made responsible choices that protected critical services that everyday Arizonans rely on while closing a $1.8 billion deficit. Despite that deficit, we made important investments in delivering childcare to working families, combatting the fentanyl epidemic and securing our border, and protecting critical health and human services for vulnerable Arizonans. 

But I know we still have more work to do. While this bipartisan budget delivers reforms to the ESA program, they are not enough. I stand committed to bringing much needed accountability and transparency to the unsustainable ESA program that significantly contributes to the state’s budget deficit.   

The Arizona State Senate Republican Party Caucus says the budget reduces state spending by $1.7 billion, did not pull any dollars from the rainy-day fund, reduces ongoing funding of state agencies by 3.5% — which includes $23 million in cuts to state universities — and protects school choice programs, such as ESAs and STOs.  

Arizona Senate President Warren Petersen (R – Dist. 12) released a statement, which reads: 

Following last year’s state budget, where Republican lawmakers provided inflationary relief to everyday Arizonans through $274 million in tax rebates distributed to struggling families, as well as a ban on the tenant-paid rental tax taking effect this January, Republicans are again successfully supporting our hardworking citizens while simultaneously reining in spending. In this year’s budget, we defended more than $520 million allocated last year for much-needed transportation projects statewide. We also cut fees for Maricopa County drivers on emissions testing by 5%, and we banned fee increases on Arizonans from state boards for the next two years.  

And here is a statement from House Speaker Ben Toma (R – Dist. 27): 

At a time when Arizonans are having to tighten their financial belts, so is state government. The Arizona House of Representatives has passed a fiscally conservative, structurally balanced state budget that solves the nearly $1.5 billion deficit, without touching the rainy-day fund or using budget gimmickry. The budget trims government and protects conservative priorities. It increases funding for local border support operations and assists fentanyl interdiction efforts by law enforcement. It funds transportation and infrastructure and maintains our state’s commitment to water security. 

I’m most proud of the fact that this budget fully protects the state’s universal Empowerment Scholarship Account (ESA) program which provides educational freedom for Arizona families. Democrats have long vowed to dismantle the program. As the sponsor of the universal expansion of ESAs, I was never going to let that happen. Eligibility for the program is unchanged and we have included several smart, commonsense reforms that improve this popular school choice program and increases accountability.  

However, not everyone approved of the results that came out of the state budget. Arizona Attorney General Kris Mayes (D) disapproved of opioid settlement funds being used to backfill the prison budget in a statement, which reads: 

I am extremely disappointed our Democratic Governor, along with GOP leadership at our State Legislature, would put our $1.14 billion, 18-year opioid One Arizona Agreement at risk by attempting to sweep opioid funds to backfill budget deficits caused by GOP policies. Though I repeatedly warned them this is an unlawful use of these funds, they proceeded with moving forward anyway. I am beyond thankful to the legislators who spoke up on this issue and who understand the dire need to use these funds in the manner and intent they are meant to be used for. I have stated publicly and very clearly that I refuse to release these funds in this way as it would violate the agreement, and I stand by those words today. This is an egregious grab. I will do everything in my power to protect these opioid settlement funds for all Arizonans. 

Let’s start off by remembering how we got here. A number of pharmaceutical companies grossly misrepresented the dangers and addictiveness of their drugs – opioids – to blatantly enrich themselves. They created marketing ploys, pushed prescriptions and caused death and chaos. This terrible scandal has killed more than a million Americans since the epidemic started. Mothers, fathers, daughters, sons, colleagues and friends. Communities and families ripped apart, hearts crushed, a public health crisis that has wreaked havoc in every corner of every state across our country – including Arizona, which is now in the bullseye of our fentanyl crisis. 

Nearly all of us know someone who has died, someone who has become addicted, someone who has had an overdose from these lethal drugs over the course of this many-year public health crisis. Arizona has seen more than 11,500 opioid overdose deaths since 2017, more than 26,000 non-fatal opioid overdose events since 2017 and more than 98,000 emergency room visits for suspected drug overdose since 2020. 

The One Arizona Agreement was created to effectively distribute $1.14 billion in opioid settlement funds over 18 years. The state, counties, cities and towns reached this agreement to disburse funds based on population and severity of harm, with the State receiving 44%  of the total – $502 million, and the counties set to receive 56%, or $639 million, to distribute to cities and towns within the region. As the legal and fiduciary steward responsible for these funds, it is my duty to ensure they are legally spent, that the process is transparent and that these funds are spent according to the agreement – focusing on prevention, education and treatment within our communities. 

There has been national scrutiny and attention on how these monies are being spent, with many comparisons being drawn to big tobacco settlements of our past. If there is one thing I can applaud my predecessor on, it is the fact that our opioid settlement agreements were crafted thoughtfully to include clear guidelines for disbursement and transparency. Having traveled across our state holding listening sessions on our fentanyl crisis, I know there is a dire need for resources in every community, with different needs across these communities. 

I look forward to the day when we can put politics and power plays aside to better protect public health, get these funds out into the communities who so desperately need them and save Arizona lives. Until then, I will continue to do what I was elected to do – be the lawyer for the people of our great state and protect these opioid settlement funds that too many people lost their lives for.  

Save Our Schools Arizona, a community-based organization that lobbies for Arizona’s public schools, released a statement showing disappointment that no additional funding was given to Arizona’s schools. It reads: 

Today is a sad day for Arizona students, parents and educators. The budget passed today keeps Arizona’s schools funded at 49th in the U.S., robbing our students of educational opportunities in service of an irresponsible and unpopular voucher scheme. 

Because Republican lawmakers refused to rein in the runaway ESA voucher program — which drove fully half of the budget deficit — no new dollars were allocated to public schools, leaving Arizona’s public schools far behind our neighbors and states across the country. Now, there is zero funding for schools to hire more teachers, offer teacher pay raises, or provide the classroom resources our students desperately need. 

Failing to touch Gov. Ducey’s unaccountable ESA voucher giveaway is an incredibly irresponsible use of taxpayer funds. Refusing to limit the voucher funding that is being used as a coupon for the rich is a slap in the face to every one of the 90% of Arizona families who choose and rely on their local neighborhood schools. Despite some minor reforms, Arizona’s voucher program remains the most expansive and least accountable in the entire U.S. 

This budget makes the path forward abundantly clear: No progress can be made for Arizona public schools until the balance of power is shifted at the legislature. To this end, Save Our Schools Arizona is committed to knocking hundreds of thousands of doors by November 5 to flip the legislature to one that will protect and prioritize our public schools. We have 142 days to get the job done — join us! Please don’t sit on the sidelines while we hurtle toward this consequential election. 

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