Log in


Hobbs’ budget letter points to cuts, hiring freeze for Arizona government

Posted 4/22/24

PHOENIX - Arizona Gov. Katie Hobbs has ordered what is essentially a hiring freeze for new state employees and instructed her department heads to send her a plan this week to cut $1.2 billion in …

You must be a member to read this story.

Join our family of readers for as little as $5 per month and support local, unbiased journalism.

Already have an account? Log in to continue.

Current print subscribers can create a free account by clicking here

Otherwise, follow the link below to join.

To Our Valued Readers –

Visitors to our website will be limited to five stories per month unless they opt to subscribe. The five stories do not include our exclusive content written by our journalists.

For $6.99, less than 20 cents a day, digital subscribers will receive unlimited access to YourValley.net, including exclusive content from our newsroom and access to our Daily Independent e-edition.

Our commitment to balanced, fair reporting and local coverage provides insight and perspective not found anywhere else.

Your financial commitment will help to preserve the kind of honest journalism produced by our reporters and editors. We trust you agree that independent journalism is an essential component of our democracy. Please click here to subscribe.

Charlene Bisson, Publisher, Independent Newsmedia

Please log in to continue

Log in
I am anchor

Hobbs’ budget letter points to cuts, hiring freeze for Arizona government


PHOENIX - Arizona Gov. Katie Hobbs has ordered what is essentially a hiring freeze for new state employees and instructed her department heads to send her a plan this week to cut $1.2 billion in spending out of their current and coming year budgets.

The move is a major admission that the state's budget shortfall is going to require big belt-tightening, and fast. The details were outlined in a Friday letter to state agency heads from Hobbs' operations director obtained by Capitol Media Services.

The letter sets out a "headcount cap'' that will allow agencies to replace employee losses but not to fill currently vacant posts, at least in most cases. It also limits moving spending to contracted workers to avoid shifting expenses off regular state books.

Pay raises are also off-limits.

The letter directs agency heads to present plans to trim 4% from their current-year spending and plan for ongoing 2% cuts in the budget year that starts July 1. And the letter specifies that Hobbs is looking to add to cuts already outlined in her state budget proposal, which was released in January.

With just months remaining in the current budget year, and a constitutional ban on deficit spending, the cuts must come fast. 

Negotiations between Hobbs staffers and leaders in the Republican-controlled Legislature on a state budget package started in the past week. The initial meetings came after an April 11 update on state finances from the Legislature’s budget analysts that showed a slightly better forecast than was expected in January.

The new forecast shows the state faces a $1.8 billion shortfall in the current and coming fiscal years – a $400 million improvement, but still a major hole in the governor’s planned $16.2 billion state spending plan. Hobbs' January budget plan included 1% in agency spending cuts and slashing more than $1 billion from already-budgeted spending for roads, IT and other projects to make up some of the shortfall.

Her plan also anticipated a $244 million cut to the state’s universal school voucher plan, a non-starter for Republicans but one that Hobbs spokesman Christian Slater declined to acknowledge on Saturday.

That clearly isn’t enough

 Republican Senate President Warren Petersen declined to comment on the governor’s new moves or budget negotiations on Saturday. But he did say that GOP lawmakers have presented Hobbs with a plan to cut $2 billion in spending.

Slater said the move to seek additional cuts from state agency heads is a needed step, but he called it an "exercise'' that is not set in stone.

"This isn't, for example, a done deal,'' Slater said.

"It is not giving up that (voucher cut) proposal from her executive budget but is asking agencies to find us some efficiencies, find those places where state government isn't running efficiently.'' he said. "And that is important information for when we're discussing the budget and when we’re trying to plan out a couple of years ahead as well.”

Hiring freezes - whether set in stone or "headcount caps''  as Hobbs' Operations Director Ben Henderson called them in his letter - are not unheard-of in state government.

Former Govs. Doug Ducey and Jane Hull, both Republicans, used them to crimp state spending. So did Democrat Janet Napolitano. But they do have a negative impact on state services and adding work to state employees.

Any variation from the cap on new hires will need approval from Henderson, Chief of Staff Chad Campbell and Budget Director Sarah Brown, according to the letter.

The measures set out in Henderson's letter could get worse, depending on how budget negotiations develop. But the bottom line is that whatever agencies propose to meet the guidelines are likely to become fact.

"Please note that these cuts will need to be realistic, feasible, and agencies should expect that most items on your list will be reasonably proposed as part of this year’s budget negotiation,'' Henderson wrote.

Strictly speaking, the governor cannot order other elected state officials to cut their spending. But Henderson is urging them to see if there are places they can save.

There's another complicating factor.

While the state has an $18 billion state budget, much of that is off-limits to cuts.

That starts with state aid to education. That is driven by a formula that includes both the number of students and inflation. And that totals more than $7 billion.

Add to that the Arizona Health Care Cost Containment System, the state's Medicaid program. This, too, is formula driven and runs about $2.5 billion.

And there may not be much flexibility within the Department of Corrections, with its $1.5 billion budget, which already has been ordered by a federal judge to spend more to provide adequate health care for inmates.

We’d like to invite our readers to submit their civil comments on this issue. Email AZOpinions@iniusa.org.