Gov. Katie Hobbs on Thursday signed a breakthrough bipartisan measure to fund services for tens of thousands of disabled Arizonans that had run out of cash and led to a months-long fight between her and Republican lawmakers.
The move came just hours after the Senate, with only one dissenting vote, approving the compromise $122 million package. And that came a day after they had pushed through an all-Republican proposal over the objection of Democrats.
But that plan was rejected by the House, which instead voted late Wednesday on a deal that gained the backing of 49 of the 60 representatives. And it was that plan that the Senate ratified Thursday.
Without legislative action, the funds to pay parents to care for their disabled children would have run out next week.
"Now, Arizonans with developmental disabilities and their families can feel some relief knowing services that allow them to maintain their independence and dignity with continue,'' the governor said in a prepared statement.
Senate Majority Leader Janae Shamp said the whole idea of the Legislature is to have both sides sit down "and come up with the best possible solutions for the citizens of Arizona.''
"That's exactly what we did,'' said the Surprise Republican. "Everyone was able to come together and do what was best for some of the most vulnerable in our society.''
And Senate Minority Leader Priya Sundareshan said that while it's not everything Democrats wanted "we are not allowing the perfect to be the enemy of the good.''
At the center of the fight is the Parents as Paid Caregivers program. It was started by the federal government during the coronavirus pandemic because it became impossible to find private caregivers and is hugely popular.
But some of those federal dollars ran out last year. Hobbs then simply absorbed the cost into the state budget—a move that GOP lawmakers said was done without their knowledge until the governor disclosed half way through the budget year that she did not have enough money to run through the end of the fiscal year on June 30.
Parents packed the legislative chambers to pressure lawmakers to keep funding the program in recent weeks.
"This has not been easy, but we will help save lives,'' said Rep. David Livingston, R-Peoria, who chairs the House Appropriations Committee. "There will be disabled families that will be able to continue the (Parents as Paid Caregivers) program.''
And he noted that the additional dollars in the legislation will ensure that others get state services, saying that those in nursing homes can be assured "that their rent will be paid in May and going forward.''
Hobbs had requested the funding in January to keep paying parents to care for their children with Down syndrome, cerebral palsy and developmental disabilities like severe autism.
But Republicans balked, spending months accusing her of overspending without authority and demanding that any fix come with major strings. Those included extensive oversight of the state's Medicaid program, and that the funds come from money already allocated to boost low-income housing and homeless services, business development and from the source she eventually identified: a pot of money from prescription drug rebates.
That was the plan approved with only Republican backing by the Senate at midday Wednesday. Hobbs then accused Republicans of playing "political games'' and putting other important policies at risk to score political points.
Amid the looming deadline the House voted down that plan.
That led to a furious few hours of negotiations where many House Republicans worked with Democrats to come up with the compromise.
Rep. Julie Willoughby, R-Chandler, was given credit for leading the charge to get a compromise. She had earlier negotiated a deal with Democrats, one that had been blocked by Livingston and Republican House leaders.
Rep. Matt Gress, R-Phoenix, was one of the top critics of Hobbs but in the end praised the deal, saying that while GOP lawmakers gave ground and continued funding they put important new "guardrails'' on the system.
"I think there are a lot of strong wins here for not only ensuring that our developmental disabilities program doesn't go bankrupt next week—we can address that issue right here on this floor, right now, right here—but it also ensures that we have accountability for these dollars,” Gress told House lawmakers Wednesday evening.
Rep. Nancy Gutierrez, D-Tucson, a member of the minority party's leadership team, praised the final package.
"`This is a bipartisan plan, and it will protect care and lifesaving services for our most vulnerable Arizonans with disabilities,'' Gutierrez said. "And it does it without harmful effects to other folks (by) taking away from homelessness or affordable housing.''
The fight was over more than where to find the $122 million.
What Republicans also demanded was more restrictions on the AHCCS requiring that any time it seeks federal "waivers'' to start or even renew existing programs it would first have to be approved by the GOP-controlled Legislature. There are at least 27 waivers in place for AHCCCS that require re-approvals over time.
Senate Democrats called the waiver approvals a "poison pill'' that would allow Republicans to scale back medical care for the poor. They also criticized the funding plan as pitting one vulnerable population against another by taking money from the Housing Trust Fund.
"It’s unnecessary and it's just mean,'' said Sen. Lela Alston, D-Phoenix.
"We have known about this from the beginning of the year,'' Alston said. "It is gravely concerning to me that we have fooled around, not taken it seriously and perhaps the worst part is leaving all those children and their parents hanging in fear, literal fear, for all these months.''
The final deal takes all the needed dollars from the drug rebate fund, money Hobbs said is "readily available ... and not currently serving a purpose.''
As to more legislative oversight, Republicans got only some of what they sought.
Existing programs can continue and be renewed without having to get their approval.
But the governor and AHCCCS can no longer on their own seek to expand eligibility for current programs or add new categories of covered services or benefits unless they first get a majority vote of the House and Senate.
That goes to the issue of lawmakers not wanting to be surprised—again—with demands for cash.
It was precisely this kind of waiver that led to the Parents as Paid Caregivers program in the first place, which initially was paid for with federal dollars. And when some of those funds went away, that led to hundreds of parents bringing their children to the Capitol to demand state lawmakers now pick up the difference.
Hobbs said she was grateful to see the bipartisan compromise.
"This deal ensures critical services for disabled Arizonans will continue, delivers reasonable guardrails for the Parents as Paid Caregivers program, and protects funding to respond to Arizonans' housing needs,” she said in a statement issued late Wednesday.
There are other changes to the program.
HB 2495 bars payments to parents between 10 p.m. and 6 a.m. and puts a cap of 40 hours per week on pay to parents, something Hobbs pledged to do last year but delayed until July 1, adding more costs. There there also are restrictions, like forbidding parents from billing the state when the child is at school and denying payment for services like preparing meals and housekeeping that would normally be done by a parent of a child who does not have a disability.
Republicans also added language requiring the state Auditor General to conduct a special review of the Parents as Paid Caregivers program by Aug. 1, 2026 and earmarking $355,000 for the task.
Shamp said she was particularly glad lawmakers ordered that review, something she said "will start to give some analytics out of this so we can decipher if we actually possibly have something bigger going on.''