Battleground state Republicans hit with stark ultimatum from fed-up gov

Gov. Katie Hobbs says she won’t sign any more bills until Arizona’s Republican legislative leaders reveal their budget plan.

The Democratic governor paused budget negotiations three weeks ago after she said that the Republicans who control the Arizona House of Representatives and the Arizona Senate refused to negotiate on Proposition 123, a school funding measure that expired last year.

In response, Republicans said that Hobbs’s proposed budget was unserious and of “throwing a tantrum.”

At the time, Hobbs said her office would resume negotiations if the GOP leaders publicly released their own budget plan. Weeks later, they haven’t done so, and Hobbs is increasing the pressure.

“I know we can get big things done when we work together, but that isn’t possible when one side refuses to show us their plans,” Hobbs said in a Monday statement.

Hobbs revealed her own budget plan in January, which Republicans said was “based on fantasy revenue.”

Passing a budget by the June 30 deadline is the Arizona Legislature’s only statutory duty each year. Negotiations are always difficult since the budget requires approval from both Republican-led chambers of the legislature, as well as the Democratic governor, whose priorities often do not align.

Last year, the budget fight led to numerous late-night sessions, partly because of Republican infighting, with the budget finally passed and signed on June 27.

The dynamics of the negotiations this year are even more difficult because of cuts from the federal government that decrease available resources and election-year politics that are especially amplified because Hobbs is seeking reelection in November.

In her statement, Hobbs said that Republican leaders were focused on tax cuts for billionaires and taking away food and medical assistance for families who need it, instead of producing a balanced budget.

Senate President Warren Petersen placed the blame for the budget negotiation breakdown on Hobbs.

“The Governor’s blanket veto threat is an unserious approach to governing and puts politics ahead of progress,” he said in a statement to the Arizona Mirror. “In response, the Senate will focus on advancing amended bills that require final action while we continue working daily to reach a balanced budget. We’re ready to negotiate and get this done.”

Arizona House Speaker Steve Montenegro called Hobbs’s announcement “political theater.”

“Governor Hobbs quit the budget talks more than three weeks ago after it became clear her numbers did not add up, and now she is trying to distract from that failure with a bill-signing freeze,” he said in a statement to the Mirror.

At the center of Hobbs’s exit from negotiations was Republicans’ refusal to negotiate putting a renewal of Prop. 123, which expired last year, to voters.

Arizona voters narrowly favored Prop. 123 in 2016, a vital source of K-12 school funding that made up for the state’s failure to increase funding for public education to keep up with inflation. Its passage settled a lawsuit filed by public schools

The $300 million in funding came from an increase in the percentage taken from the state’s land trust to fund public schools, raising the distribution rate from 2.5% to 6.9%.

The rate reverted back to the lower threshold in June.

Republicans have tried for the past few years to create a plan to renew or revive Prop. 123, but none of those efforts gained traction, and while they agreed to use the state’s general fund to backfill the lost $300 million in education funding last year, there’s no guarantee they’ll continue to do so.

When Hobbs walked away from budget negotiations three weeks ago, gubernatorial spokesman Christian Slater blamed Republicans’ refusal to negotiate a Prop. 123 revival on Sen. Jake Hoffman, a Queen Creek Republican and head of the far-right Arizona Freedom Caucus.

“Rumors at the Capitol suggest that some Republicans may be tempted to cut a deal with Hobbs on Prop123,” Hoffman wrote in a March 12 post on the social media site X. “The only winner in a political drug deal like this is Hobbs If Republicans decide to surrender on 123, they will be effectively underwriting the Hobbs’ reelection campaign.”

On Monday, Hobbs criticised Republicans for their failure to publicly release their own budget proposal after they promised to create their own balanced budget “in the next several weeks” in a March 19 statement. In the same statement, GOP leaders claimed they had already shown Hobbs’s budget team a balanced budget that conformed the Arizona tax code with changes at the federal level.

GOP lawmakers want to fully conform to the federal adjustments, changes that would result in tax cuts totaling an estimated $441 million this year. Hobbs wants to partially conform to the new federal tax codes, which would result in a smaller reduction in state income tax revenues.

The two sides have already been fighting over this issue for months, with Hobbs vetoing their proposals to align the state’s tax codes with federal tax law changes created by President Donald Trump’s “One Big Beautiful Bill.”

Republicans have claimed that Hobbs’s own budget proposal is unbalanced because it relies on funding sources that might not materialize. That includes Prop. 123 funding that would depend on approval from voters in November and a $760 million reimbursement from the federal government for border-security related expenditures made by the state after Jan. 20, 2021.

Both Hobbs and Republican legislative leaders have requested more than $700 million from the State Border Security Reinforcement Fund, created by the “One Big Beautiful Bill.” But there’s no guarantee Arizona will receive that money, as the state must compete for funds with other border states, like Texas, which has asked for more than $11 billion in reimbursements from the $13 billion fund.

“Arizona needs a balanced budget built on honest numbers, not press stunts and invented revenue,” Montenegro said in the statement. “House Republicans are at the Capitol, doing the work and ready to govern. The Governor can end her sideshow anytime by coming back to the table, doing her job and dealing with reality.”

Hobbs said that Republicans were keeping their own plan under wraps so they could avoid the public’s scrutiny, and promised that until they revealed it, all of their bills would be dead on arrival.

“Arizonans deserve more than these political games,” she said. “They deserve a budget that cuts taxes for the middle class, funds our public schools and lowers costs for everyday Arizonans. I’m ready to negotiate. My door is open. The legislative majority needs to put forward their budget proposal and then join me at the negotiating table so we can pass a bipartisan, balanced budget just like we’ve done the past three years.”

Petersen said in his statement that the Senate will “respond accordingly” to the governor’s threat.

“We’re not going to pretend business as usual can continue under a veto threat,” he said.

Hobbs said she would make two exceptions to the veto moratorium for bills that would provide death benefits to first responders and would give $4.8 million to the Arizona Department of Public Safety to support state troopers and first responders.

In recent years, Arizona governors have resorted to bill-signing moratoriums as a way to strong-arm Republican legislators to compromise. In 2012 and 2013, Gov. Jan Brewer vetoed a series of bills after telling GOP lawmakers they needed to pass a budget, and Gov. Doug Ducey did the same in 2021.

This is the second year in a row Hobbs has vowed to veto bills to force Republican legislators to act: Last year, she employed the tactic to spur passage of emergency funding for programs that serve disabled Arizonans.

Arizona Mirror is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Arizona Mirror maintains editorial independence. Contact Editor Jim Small for questions: info@azmirror.com.