Ducey proposes $14.25 billion in spending for final year of tenure, boosted by federal funds

January 14, 2022

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Arizona Gov. Doug Ducey on Friday released his final proposal for how the state should spend its money, a $14.25 billion plan that includes a tax credit for low-income families, raises for many state employees and education funding tied to school rankings.

The governor calls for spending $1 billion more than what’s in the current budget. Yet the bulging spending plan doesn’t account for billions of dollars from the federal government that will support some of Ducey’s big-ticket priorities for his last year in office, including $100 million for a summer school camp to help kids who suffered learning loss during the pandemic.

The plan is based on $1.3 billion in surplus tax revenue for the current year that ends June 30, a strong financial position heading into Ducey’s final year in office. Ducey announced his spending proposal Friday afternoon, teeing off a months-long process of negotiations with the Legislature, which must approve the final spending plan by June 30.

Fueled by the state’s flush financial position, the governor’s plan includes $1.38 billion in new spending on education, public safety and tax programs, according to administration officials who briefed reporters on the budget earlier Friday.

The governor proposes a $425 million deposit into the state’s rainy day fund, an emergency account of sorts that will balloon to $1.4 billion if the Legislature approves the governor’s plan. The governor wants to end the next budget year leaving $1 billion on the table.

The bulk of the budget — $10.9 billion — funds Arizona’s education system. Of that, nearly $120 million is tied to school performance, $20 million more for a transportation program that supports Ducey’s school choice agenda and a $5 million pool of funding tied to students’ performance in civics, another Ducey priority.

The governor’s budget does little, relatively speaking, to put resources behind the state’s ongoing battle against COVID-19, even though it comes a day after Arizona deaths attributed to the virus passed 25,000. Nearly $26 million will help expand a nursing academy partnership with Creighton University, aimed to get hundreds of more nurses to work following the 12-month program, according to the governor’s proposal.

Tax reduction part of plan, again

In each year of his time in the Governor’s Office, Ducey pledged to lower taxes on Arizonans. His final budget would do that via a new earned income tax credit and a $58 million program to aid businesses that expand or relocate to Arizona. Few details were immediately available about the business aid.

The earned income tax credit would help low-income households that include children and parents who are employed, according to materials provided by the Governor’s Office. Families with more children will receive a larger credit, which will average to $128 a year for approximately 577,000 families.

The Ducey administration’s final budget also takes into account an atmosphere of tax uncertainty in the state.

The spending plan assumes Ducey’s keystone policy achievement last year — a phased-in flat tax that will benefit many high-income taxpayers — survives a test from voters in November, or that the Legislature passes a workaround. It also does not count on revenues from Proposition 208, a 2020 referendum in which voters levied a higher tax rate on higher earners to fund schools, but which the state Supreme Court recently suggested was unconstitutional. The court challenge is ongoing.

In other proposals, Ducey wants to add $60 million for border security issues, including expanding his Border Strike Force and law enforcement measures, and sets aside nearly $31 million for employee raises at the Department of Public Safety. The funding seeks to curb a high, 11% annual turnover rate among state troopers. According to budget materials provided by the Governor’s Office, nearly 20% of funded jobs within DPS are vacant.

Those raises are part of a $248 million investment to increase state employee salaries, which primarily goes to public safety agencies including DPS, Department of Juvenile Corrections, Department of Corrections, Rehabilitation and Reentry, and Department of Liquor Licenses and Control.

The governor’s spending plan also reveals his over $1 billion investment in water resources, announced Monday during his final State of the State address, will be spread over three budget years. Ducey administration officials say that money is not earmarked for a specific project, but to look at technologies like desalination to make more water available.

And the governor wants to spend $400 million to widen a 20-mile stretch Interstate 10 south of Phoenix, with the possibility of drawing on additional federal funds to help expedite the project.

Reach reporter Stacey Barchenger at or 480-416-5669. 

View the Arizona FY2023 Executive Budget Presentation.