AZCenter Releases New Analysis Highlighting Major Budget Pressures Lawmakers Must Confront in Upcoming Session
‘Karma’s a Budget’ outlines formula-driven needs, one-time funding gaps, federal shifts already coming due
PHOENIX — The Arizona Center for Economic Progress today released a new analysis showing that lawmakers will face significant and unavoidable budget pressures this session — pressures driven by past policy decisions, such as the short-sighted switch to a flat individual income tax, rising costs in essential programs, and federal changes already underway.
The new report, “Karma’s a Budget: Arizona’s Past Decisions Are Catching Up Fast,” outlines three major categories of cost pressures that far exceed the state’s limited available balance, especially given how tax cuts over the past 30 years have hollowed out the available revenues.
While the Finance Advisory Committee recently confirmed the state has only $67 million available this year, the AZCenter’s analysis focuses on why that matters — and what’s driving the strain.
“Arizona’s budget outlook is more than just a number,” said Geraldine Miranda, assistant director of fiscal policy at the AZCenter. "Our analysis shows that current health care, K-12 education and other service needs — combined with years of tax cuts and new federal requirements — mean lawmakers must provide long-term policy solutions beyond the usual unsustainable onetime fixes.”
The report highlights three forces shaping Arizona’s fiscal trajectory:
- Rising formula-driven needs across programs like the Arizona Long-Term Care System, AHCCCS/Medicaid, and SNAP as well as the continuing and increasing cost of an unnecessary and expensive universal private school voucher program
- One-time dollars masking ongoing needs in school facilities, child care, school meals, and state employee health insurance
- H.R. 1 changes that shift over $1.2 billion in Medicaid and SNAP costs to Arizona while pressuring the state to adopt costly federal tax cuts
“These are not surprise expenses — these are predictable obligations coming due,” Miranda said. “Arizona families, schools, and health systems are depending on lawmakers to address these pressures responsibly.”
The AZCenter urges policymakers to avoid further tax cuts, prepare for federal cost shifts, stabilize core services with ongoing funding, and pursue long-term revenue solutions.
