IN FOCUS - Jan. 3, 2025

State lawmakers will introduce over 1,500 bills and resolutions in a typical session, but they truly have just one primary job when they assemble at the Capitol on Jan. 13: to pass a budget.

That objective got a bit clearer in recent days as the Joint Legislative Budget Committee (JLBC) released its latest financial report, which shows the state with just over $230 million more in revenue, year to date, than was budgeted. The largesse is thanks to an Arizona economy that continues to chug along at basically full employment (the jobless rate is 3.7%).

The first marker for budget negotiations will be laid down Jan. 17, when Governor Katie Hobbs releases her executive spending plan for FY 2026. Any surplus will be helpful, but an extra quarter-billion dollars or so won’t go as far as you may think in the context of an approximately $18 billion General Fund.

The scheduled, July expiration of K-12 funding measure Proposition 123 further muddies the waters. If not referred to the ballot and extended by voters, Prop 123’s elimination would wipe roughly $300 million/year in revenue off state ledgers. You can expect the extension of Prop 123 will figure heavily in Governor Hobbs’ upcoming State of the State address. To this point, GOP legislators have not been nearly as enthusiastic.