In an exclusive interview with AZ Free News, Speaker of the Arizona House of Representatives Steve Montenegro revealed that Republican legislative leaders had been warning Governor Hobbs of her potential budgetary failure as far back as January. He further revealed that a notice from the Hobbs administration was only sent to House leaders two weeks prior to the funding crisis deadline and was sent to an incorrect email address.
Montenegro called out Hobbs for her administration’s “incompetence,” and explained the purpose of the House Ad Hoc Committee on Executive Budget Mismanagement, which met for the first time last week.
🚨House Releases Additional Details on Ad Hoc Committee on Executive Budget Mismanagement
“We’re seeing a complete breakdown in basic budget planning. Governor Hobbs’ pattern is to overspend, under plan, and wait until the last possible moment to admit failure. House Republicans… pic.twitter.com/ZoHLpjBgjK
— Arizona House Republicans (@AZHouseGOP) March 26, 2025
Montenegro explained, “The purpose of the ad hoc was literally on executive budget mismanagement and the failures that the Governor has demonstrated from the start. I mean at some point we understand that there are shifting numbers. There’s sometimes you budget for a certain amount of caseload or you budget for a certain amount of students or you budget for a certain amount of individuals that are going to have need of services in the state and that can fluctuate a little.
“We’ve seen that throughout the year it fluctuates. But the mismanagement that’s coming from this Governor’s office is startling—to see that they’re not factoring certain budgeting items in, completely ignoring it from start.
“In January, we pointed out there were failures in her proposal failing to include certain budget items. But now we’re seeing that in, specifically this latest debacle where we get an email sent to the wrong place and when we finally are able to see the email, there’s less than two weeks left before the Congregate Care program goes bankrupt. Then, the letter that she emailed states almost as a demand, ‘If this happens, kids will be sleeping in offices.’
“It’s almost as if there’s, first of all, no care, and second, no understanding that she should have let us know early on specifics on where we would need supplementals. So asking the question, is this a level mal-intent or incompetence?
“This is sheer incompetence in mismanagement of budgets, not understanding how to manage a budget, and when you’re talking about kids and the most vulnerable individuals in the state, it’s gross incompetence. Arizonans deserve better.”
Asked about the possible perception of the Ad Hoc Committee as having a political intent, Montenegro answered bluntly, “There are no games here. I haven’t even sat to consider politics in this subject. When we receive a letter, when our team receives a letter that kids are going to be sleeping in offices, there’s a certain level of indignation that I can’t ignore, especially when you’re saying kids will be sleeping in offices. And then we find out that the reasoning is because we can’t manage a budget.“
When asked about the potential intent of the Governor, Montenegro was equally direct:
“When we’re talking about kids here, I don’t care about the politics. What we do care about is making sure that these kids are taken care of and holding this Governor accountable because it’s gotten to a point now that we can’t ignore it. We genuinely can’t ignore the fact that we’ve got kids that are gonna be affected.
“We’ve got a Governor that decided to raise rates on the same program earlier this year. We know there’s an ongoing investigation, so we’re not gonna get in the middle of the investigation by Kris Mayes or Rachel Mitchell, County Attorney, or even others higher.
“But we want to find out, we want to get to the bottom of the budget mismanagement so that as we proceed forward in how we make sure these kids are taken care of and these vulnerable communities are taken care of, that from the legislature’s perspective, we’re putting safeguards and ending up some reforms that don’t allow the Governor’s incompetence to hurt these kids.”
Asked what recourse the House will have against a recalcitrant Governor, Montenegro answered, “Well, to start, that is why we’ve had our Appropriations Committee from the beginning asking the questions. Right now, the Governor refuses to give us access to her staff, to her policy advisors, to the people that know the numbers in these agencies. She refuses to make them accessible for us to talk to them, to understand where these numbers are.
“So what we’re doing is, we’re going to turn up the heat on holding her accountable. The Ad Hoc committee is formed to say, ‘Look, for weeks, we’ve been asking for your staff to sit down with our policy advisors on the numbers, on finding out where things are.’
“We get a letter two weeks out. We have been asking for weeks to sit down with them for numbers, to understand where these are. So, the whole purpose of this is now to take a deep dive in understanding where these numbers are so that Republicans can execute our plan. We are going to make sure that she’s using funds from her executive budget to fulfill these needs. And we’re going to make sure that, as we start stepping into the budget, we have the right reforms and we have the right safeguards for these kids.”
Referring back to the work of the Joint Legislative Budget Committee, he added, “If you go back and see the JLBC committee hearing that we had, that’s a preview of what we expect to happen with this Ad Hoc Committee on Executive Budget Mismanagement that I put together.
“Because by forcing them to come to talk to us, to finally get somebody to speak, which I’ve told you before, she’s been preventing her staff from coming to speak with our staff about numbers. But by her folks having to come to the committee, we’ve learned a lot, specifically, by learning how they’re mismanaging DCS. We’ve learned a lot, and the goal is through the Ad Hoc to expose the rest of what’s happening in other areas of either DCS, or DDD, or in general DHS on the mismanagement.“
The Joint Legislative Budget Committee (JLBC), led by Representative David Livingston (R-28), convened on Thursday to address what it described as a financial mismanagement crisis within Governor Katie Hobbs’ administration. The focus of the meeting was the Department of Child Safety’s (DCS) Congregate Care program, which is reportedly facing imminent financial collapse.
The JLBC directed DCS to use existing funds within its budget to maintain services for vulnerable children without seeking additional taxpayer dollars. According to Chairman Livingston, Governor Hobbs’ approach to budgeting has resulted in repeated financial emergencies.
“Governor Hobbs’s repeated failures to manage the budget responsibly have pushed agencies into crisis after crisis. Her administration’s approach is to overspend, ignore reality, and then demand a last-minute bailout. That’s not leadership—that’s recklessness,” Livingston stated.
Republican legislators accused the Governor’s team of failing to disclose available federal funds that could have been used to stabilize the Congregate Care program. Instead, they said that those funds were redirected to a separate Kinship Support Services initiative that had not previously received state funding.
“That decision by the Governor is stunning,” Livingston said. “Instead of prioritizing the program on the brink of insolvency, she chose to send federal dollars elsewhere. This raises serious questions about her administration’s priorities and decision-making.”
Beyond the immediate concerns with DCS, lawmakers also raised alarms about the Developmental Disabilities (DDD) program, which they claim is on track to run out of funds by April. Speaker of the House Steve Montenegro announced the formation of a House Ad Hoc Committee on Executive Budget Mismanagement to investigate what Republicans see as a pattern of fiscal irresponsibility under Governor Hobbs’ administration.
“We care deeply about the children in DCS’ care. That’s why we acted quickly today,” Livingston stated. “The Legislature will not reward fiscal irresponsibility by throwing more taxpayer dollars at a crisis of the Governor’s making. Moving forward, the Governor must be more transparent and accountable about her agency budgets.”
The coming weeks will likely see further debate as lawmakers seek answers regarding the state’s financial outlook and agency funding priorities.
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
On Monday, Arizona House Republicans revealed that the Department of Child Safety’s (DCS) Congregate Care program is bound for bankruptcy in a week’s time and announced the creation of a House Ad Hoc Committee to investigate the responsibility of Democrat Governor Katie Hobbs for a series of fiscal failures.
Arizona House Speaker Steve Montenegro, joined by Majority Leader Michael Carbone, Majority Whip Julie Willoughby, Speaker Pro Tempore Neal Carter, and members of the House Republican Majority called out the governor directly. “This is not a simple oversight—it is gross financial mismanagement at the highest level,” said Speaker Montenegro. “Governor Hobbs has made a habit of overspending, ignoring reality, and then sounding the alarm only when disaster strikes. The difference here is that Arizona’s children will be the ones to suffer for her failures. That’s why I’m taking immediate action.”
The Speaker continued, “This is a pattern. Congregate Care is set to go bankrupt next week. The Governor’s mismanaged Developmental Disabilities program will collapse by the end of April. Her administration failed to budget for formula growth in AHCCCS for two years straight—racking up hundreds of millions in unaccounted costs. The list goes on. This is not leadership. This is incompetence.”
“The people of Arizona didn’t elect us to stand by while the Governor manufactures crisis after crisis. House Republicans will ensure accountability and enforce responsible budgeting, but we expect the Governor to take ownership of her failures. That starts with making her staff available to the Legislature so we can fully understand the depth of this mismanagement and pursue the right solutions. Governor Hobbs may be comfortable with chaos, but we are not.”
As reported by AZ Free News in February, Treasurer Kimberly Yee reported on the allegations against the Hobbs administration in a letter to Chairman of the Arizona House Appropriations Committee, Rep. David Livingston.
In a statement at the time, Livingston said, “I appreciate Treasurer Yee’s clarity in addressing the financial mess Governor Hobbs has created. The issue isn’t ‘missing money’—it’s blatant mismanagement.”
“Under the Governor’s feckless leadership, state agencies are making massive spending decisions with zero legislative oversight, ballooning costs, and expecting taxpayers to foot the bill. This kind of incompetence cannot stand.”
The release from Montenegro detailed that the House Ad Hoc Committee on Executive Budget Mismanagement will examine “how the Governor has consistently mismanaged the budget, ignored financial reality, and allowed critical services to reach the brink of collapse before taking action.”
The Speaker also directed the Chairman of the Joint Legislative Budget Committee to summon the Committee to order and instruct Governor Hobbs to redirect existing funds to handle the crisis and prevent harm to the children in DCS custody noting, “The Governor’s administration failed to spend wisely, and it is their responsibility to fix this situation—not the Legislature’s job to bail them out.”
Arizona legislative Republicans are readying the wheels of accountability and oversight after a bombshell report concerning a state department under the governor’s purview.
This week, the Arizona Republic reported on the Arizona Department of Child Safety “approv[ing] what amounts to a nearly 60% increase in the rate that Sunshine Residential Homes Inc. charges to care for a child for a day, meaning potentially millions of dollars more going to the company at taxpayers’ expense.” This action was taken as “DCS has denied pay increases to home operators and cut loose 16 providers during the contract renewal process.” The Republic asserted that “no other standard group home provider was approved for any rate increase during Hobbs’ tenure.”
The report highlighted that this organization “has undertaken a new six-figure spending campaign benefiting Hobbs and Democratic politics in Arizona.” According to a release issued by Senate Republicans, the donations from Sunshine Residential Homes totaled “approximately $400,000, going towards the Arizona Democratic Party, Hobbs gubernatorial campaign, as well as her inauguration fund.” The Republic also stated that Sunshine’s CEO “was on Hobbs’ inaugural committee.”
Senate President Warren Petersen vowed to hold the Governor’s Office accountable for this action from DCS. He wrote, “Arizonans deserve to know how their elected officials are spending their money, and this case raises a major red flag with what’s happening behind closed doors on the ninth floor. With the state in the middle of a budget shortfall, and with what appears to be a pay-for-play scheme now exposed, the Legislature has a lot of questions we will be seeking answers to from both the Governor’s office and DCS. Our citizens deserve better. Rest assured, we will continue to serve Arizonans as the check and balance against any abuse of power displayed by our Executive and the agencies under her administration.”
🚨FOR IMMEDIATE RELEASE: Senate Republicans Condemn Katie Hobbs for Rewarding Dysfunctional Group Home Millions in Taxpayer Dollars After Receiving Campaign Donations
Former State Legislator David Lujan serves as the Cabinet Executive Officer of DCS. He was not confirmed by the Arizona Senate to serve as a “director” after Hobbs pulled his name – and many others – from the nomination process after several of her appointments faced intense scrutiny by Republicans in that legislative body.
“This is a disgusting abuse of taxpayer dollars to further her political career, and our hardworking citizens deserve answers as to how she got away with this,” said Senate President Pro Tempore T.J. Shope, Chairman of the Senate Committee on Health & Human Services. “Knowing Arizona’s Governor and the Arizona Democratic Party are providing preferential treatment to a facility alleged to have engaged in negligence leading to the death of a child is unconscionable. Our children are our most precious population, and the state should be doing everything in its power to discourage abuse and neglect, not reward it. How can we trust Hobbs, Democrats, and DCS after these disgraceful transactions that wreak of corruption? This is a prime example of why I sponsored SB 1571. The public has a right to know who is donating to Hobbs, and what favors those entities are receiving in return.”
SB 1571 “instructs candidate committees for statewide candidates to file campaign finance reports during each calendar quarter comprising the forty-eight-month period before the general election,” according to the overview from the Arizona House of Representatives. After receiving overwhelmingly bipartisan support in both the state House and Senate, it was signed into law by Hobbs in April.
Arizona State Treasurer Kimberly Yee weighed in on the shocking news from the Hobbs’ administration, saying, “This is highly concerning and raises more questions than it answers. ‘Pay to Play’ and special favors have no place in state government.”
This is highly concerning and raises more questions than it answers. "Pay to Play" and special favors have no place in state government. https://t.co/48VEDlswr0
A Republican law to protect missing children in Arizona has been signed into law.
This week, State Representative Barbara Parker championed the success of her bill HB 2479, which will “provide for the establishment of a Missing, Abducted and Runaway Children Unit within the Arizona Department of Child Safety (DCS) if DCS fails to comply with statute; [and] revises various other requirements related to the recovery efforts for a child who is missing, abducted or runaway (disappeared)” – according to the overview provided by the Arizona House of Representatives.
✅State Representative Barbara R. Parker Celebrates New Law Improving Safety & Recovery Efforts for Missing Children in Arizona
“I couldn’t be prouder that HB 2479 has been signed into law. When I came to the legislature, I didn’t have any idea I would focus on this issue. Yet,… pic.twitter.com/B4gXpHlBGM
— Arizona House Republicans (@AZHouseGOP) May 15, 2024
Governor Katie Hobbs signed the bill into law on April 10.
In a statement to accompany her announcement about the bill signing, Parker said, “I couldn’t be prouder that HB 2479 has been signed into law. When I came to the legislature, I didn’t have any idea I would focus on this issue. Yet, two young women who went missing were eventually found dead in my district leaving members of our society shell-shocked and necessitating stronger interventions immediately. These tragic incidents make me determined not to forget or abandon even ONE child while serving in office since I have seen their heart wrenching consequences at close range.”
The Republican State Representative added, “The new statute will promote children’s welfare by holding its child safety systems accountable and significantly enhance our efforts at avoiding such misfortunes as well as assisting those affected families. I’m so grateful to my colleagues, Senator Farnsworth, and the foster care community who were involved in perfecting the legislation along the way. Thank you!”
Parker noted that her newly enacted bill “builds upon another law that she wrote last year, HB 2651, aimed at changing DCS’ reporting obligations when children go missing or are abducted or run away.”
Back in February, the bill passed the Arizona House with a bipartisan vote of 37-20 (with two members not voting and one seat vacant). After it was transferred to the state Senate, it was amended and passed with a 27-0 result (with three members not voting). The state House then concurred with the Senate’s changes with an overwhelming 46-12 tally (with two members not voting).
On the Arizona Legislature’s Request to Speak system, representatives from the EPIC Group and Arizona National Organization for Women signed in to support the proposal, while representatives from the Arizona Department of Child Safety and Arizona Association of Chiefs of Police indicated their neutral standing on the bill.
HB 2479 will go into effect 90 days after the conclusion of the 2024 Arizona Legislative Session.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
