Overview
- After a party-line House vote, the nearly $18 billion package heads to the Senate as Republicans say they are open to talks with Gov. Katie Hobbs.
- The plan spends about $800 million less than the governor’s proposal and adds policy shifts such as 5% cuts to most agencies, higher state-employee insurance premiums, and new quarterly checks for Medicaid and SNAP.
- Republican lawmakers folded full tax conformity into the plan by matching recent federal changes, including no state tax on tips and overtime and new or expanded deductions for families.
- Hobbs praised a few items such as help for school meals but opposes across-the-board cuts, has vetoed prior tax-conformity bills, and has signaled she would likely reject this budget.
- Arizona’s tax agency processed returns assuming full conformity, so failure to align could force amended filings for some taxpayers and add bookkeeping costs for small businesses.