Hobbs’ Office Prepares for Budget Cuts

(The Center Square) – Arizona Gov. Katie Hobbs’ office is ordering some budget cut exercises to prepare for the state’s projected deficit. In a letter to agencies on Friday, the governor’s office Director of Operations Ben Henderson is asking agencies to do a “new budgetary savings exercise” to submit by Wednesday. As a budget is not yet signed into law, nothing is necessarily finalized and it is meant to be a practice to garner suggestions.

“Over the next 2 years, we have to find more than $1.2 Billion in savings,” Henderson wrote. “I know how painful this is, and I know that you have all been asked to “do more with less” for many years. Nonetheless, it is our responsibility to the people of Arizona to live within our means while still enabling your agencies to continue the important work you do every day.”

According to the Joint Legislative Budget Committee April update, the shortfall is expected to be $1.3 billion but needs $1.8 billion in “shortfall solutions.”

The operations director outlined specific guidance for proposed cuts.

“Your scenario must include a list of proposed cuts to your FY 24 total General Fund appropriation that collectively totals an annualized 4%,” he told the agencies, saying that a minimum of 2% is needed to go toward saving.

“Each agency shall also include proposals that reduce your operating appropriation by 2%. This is IN ADDITION to the General Fund reductions, and is required of every agency, regardless of fund source,” he added. Notably, he said that the agencies should not make proposals that were already included in the proposed budget, as they say, the goal is to get “ideas that have yet to be captured.”

The Office of the Governor said they are also abiding by the guidelines such as the budgetary exercise and getting a rubber stamp from leadership on out-of-state trips.

“We are participating in every part of the letter, including the headcount cap and out-of-state travel,” Christian Slater, spokesman for Hobbs, told The Center Square in a message.

In the Executive Budget proposal earlier this year, Hobbs’ office suggested 1% cuts to the Executive and Legislative branches, which applies to agencies. The Arizona Republic reported in February that its own office increased its staffing by 40% since the Democrat came into office in January 2023.

Henderson added there will be a “new statewide cap on agency headcount for all executive agencies, boards, and commissions.”

Some Republican lawmakers have welcomed the proposed spending cuts.

“Finally, Governor Hobbs is talking about real budget cuts,” House Appropriations Chairman David Livingston tweeted.

The last day to get a budget passed is June 30, which is the end of the 2024 fiscal year. Budget talks have been underway in recent weeks among a tight-knit group including Republican leadership from the legislature and senior Hobbs staff.

As the budget talks continue the legislature is on a once-weekly schedule, and those floor sessions have garnered national media attention as Democrats and some Republicans hope to get a law banning nearly all abortions repealed before it presumably takes effect on June 8.

Cameron Arcand for The Center Square