Arizona budget deal cut, but Republican opposition remains

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(Source: 3TV/CBS 5) (Source: 3TV/CBS 5)
PHOENIX (AP) -

An agreement between Republican leaders in the Arizona Legislature and Gov. Doug Ducey on a $9.8 billion spending plan for the budget year beginning July 1 includes cash allowing the state's three universities to make payments on a $1 billion bonding program and a bigger pay raise for K-12 teachers than Ducey originally proposed.

But the agreement in legislation introduced Tuesday still faces opposition from some majority Republicans who oppose the university bonding and who could delay passage, unless some Democrats decide to support it.

The agreement uses general fund cash for university bonding instead of sales taxes, a key sticking point for many lawmakers. It also includes $30 million in highway funding for cities and counties that was not included in the Republican governor's plan and is a key issue for rural lawmakers from both parties.

[RELATED: House budget plan has more teacher pay, bigger tax cut]

For K-12 schools, most of the $114 million in new education spending the Republican governor wanted is included, plus an extra $100 million over two years for new school construction that Ducey did not seek. A planned 2 percent teacher raise over five years has been increased to 2 percent over two years. For an average teacher, that would be about $1,000 more a year.

Passage of the budget would be a big win for the governor and GOP lawmakers, who are trying to overcome a perception that they have consistently underfunded education.

Teachers in the state are among the lowest-paid in the nation, and many have mocked a Republican lawmaker who said last week that teachers take second jobs so they can buy boats.

Republican Rep. John Allen of Scottsdale said his comments were taken out of context. On Monday, a group of school districts and education groups sued the state, saying districts have been shortchanged at least $2 billion in building and other capital funding.

"It's been described as a K-12 home run," Senate President Steve Yarbrough said of the budget in an interview. "I would say that it's probably not a solo home run, it could be at least a two-run home run. And if we can make the bonding happen it becomes a home run for the universities as well."

The university bonding proposal faces a serious challenge. In the Senate, just two GOP lawmakers are needed to block package if no Democrats support the legislation. In the House, it would take five Republican no votes to defeat the legislation.

Those numbers were easily met on Tuesday, although they could change as the week progresses. Two Republican senators said they were flatly opposed, and another who previously said he did not like the university bonding plan was undecided.

"On the university bonding I'm currently a no," said Sen. Warren Peterson, a Republican from Gilbert. "As far as I can tell I would say most of the Republican caucus opposes the bonding proposal. I think where we have some support is on some one-time money."

Republican Rep. Anthony Kern of Glendale said he also opposed that part of the budget and said many other GOP House members did as well.

"I appreciate what the Speaker and the President and the governor are doing, they've worked hard on it, but I'm still a no," Kern said. "I would say there's probably a good six to eight of us I think (that are no votes) on the bonding, maybe more."

[RELATED: Arizona House Speaker follows through on budget promise]

Ducey wants to provide the universities with a consistent stream of cash to help make payments on the bond package, which would be used for new research facilities and deferred maintenance. Initially, that was $37 million a year in sales tax money, but the deal cuts that to $27 million in general fund cash over 25 years, with annual inflation increases.

If nothing changes, Ducey will need some Democrats to support the plan. In return for backing the bonding plan, Democrats are asking for a 4 percent teacher raise, preferably immediate, plus a full restoration of a two-year limit on welfare payments for the very poor.

Ducey backed legislation in 2015 limiting lifetime welfare payments to one year, the shortest in the nation. He has proposing a partial restoration.

"I don't know why he is fighting, because he could run for re-election based on those two things," said Democratic Sen. Steve Farley. "Democrats are solidly, 100 percent, willing to go to the wall on this one."

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