Republican lawmakers in the Arizona House are continuing their investigation into Gov. Katie Hobbs over an alleged pay-to-play scheme.
On Monday, House Speaker Steve Montenegro (R-LD29) announced the House advisory team obtained outside counsel from out of state to investigate the connection between Hobbs and a Glendale group home, Sunshine Residential Homes, independently.
Montenegro said in a statement that the connection between the governor and the group home constituted special treatment derived directly from political donations. The lawmaker said that the addition of outside counsel was necessary to achieve the full independence an investigation of this significance needed.
“The advisory team has done serious, disciplined work, and their recommendation to bring in independent counsel is the right next step,” said Montenegro. “The House will not look the other way when taxpayer dollars and vulnerable children may have been used as leverage in a political scheme. We will follow the facts, consider the findings, and ensure transparency and accountability in state government. Arizonans deserve nothing less.”
The outside counsel is Justin Smith with the Missouri-based James Otis Law Group. The law group was founded by Trump’s solicitor general, D. John Sauer.
Smith is the listed counsel in President Donald Trump’s lawsuit against a woman, E. Jean Carroll, alleging battery and defamation. Carroll sued Trump for defamation after he publicly denied her 2019 claims of him sexually assaulting her in the 1990s.
According to Montenegro, Smith will conduct records review and interviews. All findings will go directly to the advisory team and House leadership.
Advisory team members are State Reps. Selina Bliss (R-LD1), David Livingston (R-LD28), Matt Gress (R-LD4), Quang Nguyen (R-LD1), and Neal Carter (R-LD15).
Last November, that advisory team was created to follow up on 2024 media reporting alleging the pay-to-play scheme within the Arizona Department of Child Safety under Hobbs’ direction.
In the summer of 2024, the Arizona Republic reported that Sunshine Residential Homes received a unique 30% rate increase following a donation exceeding $400,000 to Hobbs and the Arizona Democratic Party.
Much of 2024 was spent attempting to determine who, if anyone, was fit to conduct an investigation into the allegations against the governor.
One of the earliest requests came from Republican State Sen. T.J. Shope, who asked Attorney General Kris Mayes to investigate. Mayes complied initially, but was immediately hit with other Republican lawmakers and state leaders asking her to recuse herself due to an alleged conflict of interest.
State Rep. Matt Gress asked Maricopa County Attorney Rachel Mitchell and Auditor General Lindsey Perry to investigate.
All three leaders are investigating. Mitchell and Perry are coordinating on one investigation, while Mayes will conduct her own investigation.
As reported last November, the work of the House’s advisory team will coordinate with these parallel investigations by the auditor general and county attorney, and the attorney general.
In February 2024, Sunshine Residential Homes owners Elizabeth and Simon Kottoor maxed out their donations to Hobbs’ reelection campaign. Each gave the maximum $5,400 contribution amount.
In October 2022, the Kottoors gave Hobbs’ initial gubernatorial campaign $10,000.
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Arizona House Speaker Steve Montenegro has formed a new advisory team to investigate allegations that Governor Katie Hobbs’ administration awarded a lucrative contract increase to a politically connected group home provider, raising fresh questions about influence and accountability inside the Department of Child Safety (DCS).
The move follows reporting by The Arizona Republic that Sunshine Residential Homes received a 30% rate increase after contributing more than $400,000 to Hobbs and Democratic political committees. According to documents cited in the reporting, other group home providers seeking similar adjustments were denied. Internal communications reportedly show DCS staff discussing the provider’s political connections to the governor and suggesting the increase be kept quiet from competing organizations.
The revelations come as DCS faces a budget shortfall and has been under pressure to reduce reliance on group home placements, making the agency’s decision to grant a significant rate hike particularly notable. Speaker Montenegro said the advisory team will conduct a legislative investigation to assemble facts, coordinate with law-enforcement agencies, and evaluate possible actions the House may take to prevent preferential treatment in state contracting.
“The facts reported raise serious questions the House cannot ignore,” Montenegro said in a statement. “Arizona’s children, families, and taxpayers deserve a system that is clean, fair, and focused on care, not political access or donations.”
The speaker also directed state agencies and contractors to preserve all relevant records and to cooperate fully with the Legislature. The advisory panel includes several senior lawmakers including Rep. Selina Bliss, Chair of the House Health and Human Services Committee; Rep. David Livingston, Chair of House Appropriations; Rep. Matt Gress, Chair of the Joint Legislative Audit Committee; Rep. Quang Nguyen, Chair of House Judiciary; and Speaker Pro Tempore Neal Carter.
The investigation builds on earlier legislative efforts to probe the relationship between Sunshine Residential Homes and the Hobbs administration. In 2024, Rep. Matt Gress requested investigations by the Maricopa County Attorney and the Auditor General following the first reports linking the provider to political contributions and favorable treatment. Rep. David Livingston separately urged Attorney General Kris Mayes to recuse herself, citing concerns about conflicts of interest involving the governor and the Democratic Party.
The House advisory team is expected to begin its work immediately and will coordinate with any parallel investigations by the Auditor General, the Maricopa County Attorney’s Office, or the Attorney General. Montenegro said lawmakers will “secure the records, ask the hard questions, and, if necessary, change the law to ensure it never happens again.”
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
Arizona House Republican leaders are demanding answers after learning that the Chief Medical Officer of the state’s Medicaid program, AHCCCS, has been serving with an expired medical license.
According to records from the Arizona Medical Board, Dr. Theresa Costales, a psychiatrist appointed as Chief Medical Officer in January 2025, failed to renew her license, which was due April 9. The statutory grace period ended on August 9, leaving the license fully expired. Despite this, Dr. Costales continues to advise on state health policies that impact more than 2 million Arizonans.
House Speaker Steve Montenegro called the lapse “a failure of oversight” by Governor Katie Hobbs’ administration. “A lapse like this should never happen in a healthcare agency responsible for millions of people,” he said. “The public deserves accountability when even the most basic standards aren’t met.”
House Majority Leader Michael Carbone echoed the concern, noting that license verification is a simple process. “Any citizen can look this up in minutes. That it slipped through the cracks at the highest level of medical leadership is completely unacceptable.”
House Majority Whip Julie Willoughby, who is also a healthcare professional, questioned whether key policy decisions were made without proper credentials in place. “You cannot have a Chief Medical Officer without an active license—it’s that simple,” she said. She raised particular concern about the recent rollout of the controversial Home and Community-Based Services (HCBS) assessment tool, asking whether decisions tied to the program were made under expired authority.
Republican leaders also pointed to other state agencies, such as the Department of Corrections, that explicitly require valid medical licenses for their top medical positions. They argue AHCCCS should be held to the same standard, given its role in overseeing care for vulnerable populations.
Speaker Pro Tempore Neal Carter said the situation undermines public confidence. “Governor Hobbs’ administration has failed once again to ensure competence and accountability in state government. This isn’t a small oversight—it undermines trust in one of Arizona’s largest healthcare agencies.”
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
The Arizona House of Representatives passed a structurally balanced, conservative budget on Thursday, advancing a financial plan that focuses on strengthening public safety, reducing costs for families, and increasing government accountability.
Speaker Steve Montenegro (R-LD29) called the budget a reflection of voter priorities. “This budget delivers safe communities, strong families, and a government that works for the people — not the other way around,” he said. “It cuts tuition, raises pay for law enforcement, fixes critical roads, and reins in waste — all without raising taxes.”
Key components of the budget include a 5% pay raise for Department of Public Safety and corrections officers, $94 million for repairs to major highway infrastructure, and a 2.5% in-state university tuition reduction alongside a freeze for the subsequent two years. The budget also fully funds school choice programs and clears a backlog of Empowerment Scholarship Account applications.
Additional funding is designated to keep voter rolls accurate and up to date, fully fund payments for parents acting as caregivers, and provide developmental disability services. An expanded adoption tax deduction is also included.
“The House-passed budget puts the House Majority Plan into action,” Majority Leader Michael Carbone said. “We’re protecting opportunity by lowering costs for students and parents. We’re backing public safety with strong support for our law enforcement officers. And we’re holding government accountable by cutting waste and demanding better results — this is the kind of leadership Arizona voters asked for.”
Proud to negotiate a package of conservative wins like this for the @AZFreedomCaucus
I’m blessed to have the most conservative members of the legislature alongside me in this caucus
They’re fearless & willing to put everything on the line to serve the people of Arizona well 🇺🇸 https://t.co/Nhok25KzLH
Speaker Pro Tempore Neal Carter stressed the budget’s potential for boosting small business. “The House-passed budget gives long-overdue relief to Arizona’s small businesses by eliminating the administratively burdensome business personal property tax under the $500,000 threshold,” Carter said. “This helps local job creators grow, hire, and invest in their communities — and makes Arizona a more competitive place to do business.”
The budget package — HB2945 through HB2961 — now moves to the Senate for consideration.
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.”
