Arizona’s legislators missed a unique opportunity this legislative session

Arizona’s legislators had a unique opportunity this legislative session. The pandemic did not result in state revenues falling to the $1 billion deficit that was expected. Instead, analysts projected there was more than $1 billion in ongoing, unobligated revenues plus nearly $3 billion in one-time cash. These funds could have been used to invest in Arizona’s future. From public schools to health care to state highways, many opportunities exist to make improvements that would have long-lasting impacts on our state. Instead, the legislature squandered this opportunity and passed record-breaking tax cuts that reduce revenue so much the tax cuts cannot be fully phased in until after fiscal year 2024.

Below is information about changes to General Fund appropriations for programs that benefit Arizona’s families. Included are some of the missed opportunities - what else could have been done for everyday Arizonans rather than the few that will receive significant tax increases. We also include information about the Department of Corrections’ budget not only because it has become the third largest state agency as far as General Fund dollars are concerned, but also because many Arizona families are impacted when a family member is incarcerated.

Note: This legislative session included a number of supplemental increases for fiscal year 2021. Because the budget wasn’t signed until June 30, it’s unlikely much, if any, of these additional funds will be spent in fiscal year 2021. However, agencies will be able to spend these funds in fiscal year 2022.

Debt Payoff - The budget pays off ahead of schedule $977 million in building project debt and $1 billion in pension payoffs for the Departments of Public Safety and Corrections.

Increased Federal Match Rate – Congress increased the federal match rate for Medicaid and related programs as part of the fiscal relief provided to states. This freed up $134 million in fiscal year 2021 and $267 million in fiscal year 2022. The budget assumes these increased rates will not continue into fiscal year 2023.

Salary Increases – The new budget includes more than $66 million for employee salary increases in six state agencies. In the Department of Public Safety, all employees will receive an increase; in the remainder, increases are restricted to certain classifications or positions. No funding is allocated for the more than 10,000 employees in other state agencies. The last general salary adjustment for all state employees occurred in fiscal year 2013, but this increase did not offset the pay cuts enacted in fiscal year 2011.