What the GOP budget does to Tucson

Southern Arizonans can learn a lot from the state budget proposal that Republican lawmakers put out this week, even if Gov. Katie Hobbs is all but certain to veto it.

The package includes a grab-bag of cuts to Rio Nuevo and the University of Arizona, as well as other local institutions and projects.

It’s worth keeping an eye on — even though Hobbs has already signaled that she plans to veto it — because it tells you a lot about GOP lawmakers’ priorities, and some of those cuts might find their way into a compromise budget later on.

Plus, it’s an election year, so the proposal should give voters some idea of what would happen if they decide to replace Hobbs with a Republican governor this November.

And the budget gives us a chance to peer into the guts of Arizona government and see all the decisions, big and small, that end up in the state budget. For example, did you know there’s an “Arizona Navigable Stream Adjudication Commission”? How about a “Failing Schools Tutoring Fund”?

So today, we’re peeking into the budget docs to see what’s what, and how the plan would affect Southern Arizona.

Broadly put, Hobbs is pushing for a $18.7 billion budget that includes some middle-class tax cuts.

GOP leaders at the Legislature proposed a $17.9 billion budget that they say includes one of the largest tax cuts in state history. It’ll cost the state around $1 billion over the next three years, as we conform to the tax cuts outlined in the federal “One, Big Beautiful Bill.”

Pima County Supervisor Andrés Cano, a Democrat who served in the state Legislature, said the cuts are short-sighted and will hurt the state and local economy in the long-term.

Local Democrats in the Legislature say the GOP’s proposal pays for its massive tax cuts by instituting draconian cuts to programs that low-income Arizonans need as inflation rises, like the Meals on Wheels program for seniors.

And at least one Tucson Democratic lawmaker, Rep. Alma Hernandez, says the state’s school voucher program should be on the chopping block, instead of programs like Meals on Wheels.

Among the several Southern Arizona specific hits, the GOP proposal would cut $19 million in sales tax diversion to Rio Nuevo.

The taxpayer-approved district skims a share of the state’s sales tax generated downtown and along the Broadway corridor — which diverts about $19 million a year into Rio Nuevo’s coffers.

Edmund Marquez, the chairman of Rio Nuevo, said about $8 million of that is used annually to pay back roughly $80 million in debt the taxing district had on its books from various economic deals that include numerous legally enforceable contracts with existing economic development deals.

The loss of $19 million in funding would likely have a domino effect beyond how the state would handle Rio Nuevo’s commitments, leading to canceled or delayed projects and, in some cases, legal fights that could cost more than the contracts themselves are worth.

Marquez said the group is exploring all of its options, including whether state lawmakers have the legal ability to interfere with a voter-approved district.

We’ll note that even at its peak of being unpopular for pie-in-the-sky projects like the downtown aquarium and “Rainbow Bridge,” lawmakers weren’t able to shut down Rio Nuevo.

Rio Nuevo apparently has an ally in Gov. Katie Hobbs, who says the district is too important for Tucson’s economy to terminate, per KGUN’s Craig Smith. Hobbs says she’ll make sure Republican lawmakers know she supports the district.

But Republicans seem set on cutting the funds.

The way Rio Nuevo works is some of the state’s portion of the sales tax generated within the district gets returned to Rio Nuevo to invest in infrastructure projects.

So Kavanagh’s assertion is technically true — people “all over the state” do fund it, but only if people all over the state shop in downtown Tucson.

The University of Arizona would take a huge hit under the GOP budget proposal, which cuts 5% from most state agencies, including the entire university system.

UA’s portion of that cut alone is more than $14.4 million between the main campus and the Health Sciences campus.

But the state would also stop paying nearly $5 million for the Yuma Center for Excellence for Desert Agriculture, Geological Survey, Extractive Modular Metallurgy Facility, On-Farm Irrigation Fund Deposit.

And the proposed budget would end about $500,000 of one-time funding from the UA’s AZ REACH program, a collaborative project between the Pima County Health Department, the American Indian Research Center for Health, and the Mexican American Studies Department at the University of Arizona.

We reached out to the University of Arizona a few times this week to get their thoughts on the budget, but the UA wasn’t willing to comment.

Beyond the Southern Arizona-specific hits, the budget takes a chainsaw to agencies that serve the region.

For example, The Office of Tourism, which markets Tucson as a destination, would be completely zeroed out.

And nearly every other non-law-enforcement agency would see an across-the-board 5% cut.

We could go down the list, from the Department of Education’s $7 million cut, which will surely hurt Southern Arizona schools, to AHCCCS, the state Medicaid program that covers a huge share of Pima County residents, which would take a $10.6 million lump sum cut.

Not to mention, the budget repeals solar energy tax exemptions worth tens of millions, which would ripple through Southern Arizona’s solar industry.

But perhaps the bigger long-term hit comes from the fund sweeps that GOP lawmakers use to help balance the budget.

The proposal would sweep $25 million from the Arizona Board of Regents’ Technology and Research Initiative Fund, which is a major source of research funds for the UA. It would also sweep more than $26 million from the SMART Rural Transportation Fund, which helps pay for rural transportation projects from Sierra Vista to Yuma.

And it would cut about $12 million from the State Parks revenue Fund, which Southern Arizona State Parks rely on — think Kartchner Caverns and Catalina State Park.

The GOP budget proposal won’t become law. Hobbs has already made that much clear.

But if Republican lawmakers continue to insist that the nearly $350 million in tax cuts this year are non-negotiable, those tax cuts are going to have to be paid for somehow.

So keep a close eye on the final version of the budget. Because as the two sides sit down to continue negotiating the budget, Southern Arizona’s funding will be on the table.

And if a Republican wins the Governor’s Office in November, this budget is a pretty good preview of what will be on the chopping block next year.