By Jonathan Eberle |

A bill aimed at increasing transparency and accountability in Arizona’s Medicaid contracting process has been vetoed by Governor Katie Hobbs, prompting strong criticism from Republican lawmakers who say the governor is shielding her administration from scrutiny.

The legislation, SB 1612, was sponsored by Senate President Pro Tempore T.J. Shope and would have implemented a series of oversight measures affecting how the Arizona Health Care Cost Containment System (AHCCCS) — the state’s Medicaid agency — awards contracts and handles procurement.

In a statement released late Friday, Hobbs vetoed the bill without an accompanying public explanation, though her office has generally opposed what it characterizes as politically motivated legislation. Shope, however, called the veto “an alarming example of the fox guarding the henhouse.”

“I drafted this legislation in response to potential wrongdoing revealed from a probe on how the Hobbs administration provided an unfair advantage when awarding $15 billion worth of state Medicaid contracts,” Shope said. “She appears to be providing favoritism to her friends, allies, and donors using taxpayer dollars.”

The legislation comes in the wake of a 2023 ruling by an administrative law judge that found AHCCCS had improperly awarded contracts related to the Arizona Long Term Care System (ALTCS), which provides care for roughly 26,000 elderly and disabled Arizonans. The judge cited violations of procurement statutes, flawed bid evaluations, and evidence that contract decisions were made based on the interests of the agency rather than the public. Compounding concerns, a June 2023 local media investigation revealed that Sunshine Residential Homes, a state-licensed group home with a record of deficiencies, received millions in contracts from the Arizona Department of Child Safety (DCS) after making campaign donations to Governor Hobbs and the Arizona Democratic Party.

SB 1612 would have removed a statutory exemption allowing AHCCCS to use its own procurement code, requiring adherence to statewide rules; prohibited destruction of internal documentation during request-for-proposal (RFP) evaluations; and required vendors responding to RFPs or applying for state-administered grants to disclose political donations made to the governor or associated campaign committees.

Critics of Hobbs say these measures were a direct response to growing concerns about transparency in her administration. “Had she signed this bill into law, she would have given the citizens of Arizona greater confidence in state government acting in their best interests — not the best interests of political campaign coffers,” Shope said.

Hobbs’ veto is one of more than 100 since taking office in 2023. With Republicans controlling both chambers of the Arizona Legislature and Democrats holding the governorship, partisan tensions over issues like procurement, immigration, and education have dominated the political landscape.

Supporters of SB 1612 say it was a common-sense effort to address documented problems in contract awards that affect the lives of thousands of vulnerable Arizonans. As scrutiny intensifies over both AHCCCS and DCS procurement decisions, it remains to be seen whether lawmakers will revisit the bill in another form or pursue an independent investigation into the allegations.

Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.