by AZ Free Enterprise Club | Jun 20, 2026 | Opinion
By the Arizona Free Enterprise Club |
After months of vetoes and walking away from the table, Hobbs has finally signed a budget. A budget that looks pretty much the same as the one Legislative Republicans sent up to her desk at the beginning of May. A budget she vetoed, and that she and her colleagues in the Legislature bashed repeatedly. So, what changed?
There were two budget priorities our organization laid out before the session began. First, anything less than full conformity tax relief from Trump’s Big Beautiful Bill would essentially be a tax hike on Arizonans. Second, an extension of Prop 123 (the increased distribution from the state land trust to K-12 schools to the tune of $330 million a year) must be a nonstarter in budget negotiations. Before getting into the details, both of these objectives were accomplished.
The biggest item in this budget fight was undoubtedly tax cuts from tax conformity. After President Trump signed the Big Beautiful Bill into law on 4th of July 2025, states faced a decision: do they pass on the tax relief Republicans in D.C. delivered, or do they effectively increase taxes on their residents. Core planks of conformity included no tax on tips, no tax on overtime, an increased standard deduction, a new deduction for seniors, among several provisions for small businesses and corporations of all sizes, most importantly allowing them to deduct expenses in the year they are made, rather than depreciating those expenses over several years. In other words, the bulk of the business provisions weren’t even a tax cut. The question is not whether businesses deduct those expenses, only when they deduct them.
This question needed to be resolved quickly, as the legislature begins session the second week of January and Tax Day is in April. In the first week of session, Republicans in the legislature sent a package to her desk that delivered full tax relief. All democrats voted no. Hobbs vetoed it.
Again, in February, to prevent confusion and chaos for taxpayers beginning to file, Republicans in the legislature sent up another bill. It received a veto. At the beginning of May, they sent up a budget that included full tax conformity relief for the third time. Again, it met a veto.
Based on all of the votetoes, relentless opposition and endless rhetoric about “tax breaks for billionaires,” you would think that the agreed upon budget must have included significant changes to the tax package. But if you are thinking that, you would be very wrong.
So What did Hobbs and Democrats actually fight for in this budget that necessitated six months of chaos and tax season confusion?
>>> CONTINUE READING >>>
by Matthew Holloway | May 9, 2026 | News
By Matthew Holloway |
Arizona State Senator David Farnsworth (R-LD10) is pushing back against Democratic criticism of the Republican-backed state budget vetoed this week by Gov. Katie Hobbs. Farnsworth argues that the plan maintains core government services while reducing spending and providing tax relief.
In a statement released Wednesday, Farnsworth said claims that the Republican proposal would harm public safety, wildfire suppression, child welfare, and water protection efforts were “completely false.”
The Republican budget proposal would spend approximately $800 million less than Hobbs’ proposed budget while maintaining funding for K-12 education and public safety. Senate Republicans also said the proposal includes approximately $1.45 billion in tax relief over four years without raising taxes or defaulting on state financial obligations.
Arizona Senate Republicans said the proposal preserves funding for wildfire mitigation efforts and Colorado River protection programs, exempts the Department of Child Safety from a proposed 5% operating reduction, and supports law enforcement while focusing on reducing unnecessary spending and prioritizing relief for working families, seniors, and small businesses.
“The Republican budget proposal, which Hobbs vetoed on Tuesday, reflects a balanced approach,” Farnsworth said. “It protects essential services, supports public safety, and shows respect for taxpayers by focusing on responsible spending.”
The statement follows Hobbs’ veto of the Republican-backed budget proposal. Hobbs criticized the proposal as “unbalanced and reckless,” arguing it would jeopardize healthcare access, public safety funding, and services for vulnerable residents while prioritizing tax cuts.
Republican lawmakers have defended the proposal as a fiscally conservative alternative to the governor’s spending plan. Legislative leaders previously said the budget would reduce overall spending compared to Hobbs’ January proposal while implementing tax conformity measures tied to recent federal tax changes.
Farnsworth also said he had invited lawmakers from both parties and both legislative chambers to participate in budget discussions throughout the session and said that invitation remains open.
“While there may be disagreements about priorities, it is crucial that our discussions are based on facts rather than fear,” Farnsworth said. “Although the governor walked away from budget discussions, we look forward to renewing good-faith negotiations to ensure that Arizona families, communities, and critical services are supported both now and in the future with a responsible state budget.”
Budget negotiations between the Republican-controlled Legislature and the governor’s office remain ongoing as lawmakers work toward passage of a final spending plan before the end of the legislative session.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by AZ Free Enterprise Club | May 8, 2026 | Opinion
By the Arizona Free Enterprise Club |
Less than an hour had passed from when Republicans delivered a budget to Katie Hobbs desk yesterday to when she stamped it with a ‘veto.’ No one is surprised, since from the moment she walked out of negotiations six weeks ago and “challenged” Republicans to show their budget hand, she had already made up her mind about vetoing it. She just needed them to do all the work first.
Hobbs has grown far too comfortable being the only one setting conditions on budget negotiations, considering every condition she has set has been unreasonable, unworkable, or erratic.
She tried to anchor the entire budget to an unprecedented raid of the state land trust, speculative revenue requiring voter approval that could never functionally bridge her reckless spending. She wanted to deliver only half the conformity relief Arizona taxpayers are entitled to under the One Big Beautiful Bill, in direct contradiction to tax forms her own Department of Revenue already issued, creating tax filing chaos. She tried to “trade” not forcing that tax hike on Arizonans for kicking kids off the ESA program (insane). And when Republicans said no to all of it, she flipped the table and stormed off, openly admitting she was out of ideas, and demanding Republicans produce a budget on their own.
While the veto from Hobbs was largely expected, Hobbs’ explanation for her veto was such brazen hypocrisy that it raises the genuine question of whether she is being ironic or fails to see the numerous contradictions in her opposition to the GOP budget…
>>> CONTINUE READING >>>
by Matthew Holloway | May 6, 2026 | News
By Matthew Holloway |
Arizona Gov. Katie Hobbs vetoed the Republican-backed state budget proposal Tuesday, calling the plan “unbalanced and reckless,” while Republican gubernatorial candidate Andy Biggs sharply criticized the decision and accused Hobbs of blocking tax relief efforts.
In a statement issued by the Governor’s Office, Hobbs said the GOP proposal would “default on our debt obligations, endanger vulnerable children, slash critical public safety funding, and pay for tax breaks to billionaires, data centers, and special interests by kicking Arizonans off their healthcare and taking food off their tables.”
The Republican proposal, passed by the Legislature largely along party lines, included tax cuts tied to federal tax conformity measures, reductions to agency spending, and changes to several state programs. The proposal would have implemented major portions of federal tax cuts adopted in last year’s federal legislation and reduced spending across most state agencies.
Legislative Republicans said the proposal spent roughly $800 million less than Hobbs’ January budget proposal.
The veto follows weeks of tension between Hobbs and Republican legislative leadership over budget negotiations and education funding. On April 13, Hobbs announced she would veto nearly all legislation sent to her desk until Republican lawmakers produced a budget proposal and returned to negotiations.
Following Hobbs’ veto on Tuesday, Congressman Andy Biggs’ (R-AZ05) gubernatorial campaign circulated a statement accusing the governor of repeatedly rejecting tax relief measures.
“The Veto Queen is at it again,” a graphic released by the campaign stated. “Katie Hobbs has now vetoed over $1 billion in tax relief for Arizona workers, families, and small businesses for the 3rd time in 5 months as our state’s affordability crisis deepens.”
Biggs also said he had previously worked on multiple state budgets during his tenure as president of the Arizona Senate.
“As a former State Senate President, I’ve written multiple state budgets and worked with different governors to put forward structurally sound and responsible budgets that protect public safety and allow Arizonans to keep more of their money,” Biggs stated.
“It takes patience, leadership, and a commitment to good-faith work between the governor and the Legislature. Katie Hobbs has shown she has none of those attributes, which is why she keeps falling back on simply vetoing bills and budgets. Arizonans deserve a leader with a vision, not vetoes. In November, we’ll make that change.”
Arizona House Speaker Steve Montenegro (R-LD29) also criticized Hobbs following the veto, accusing the governor of pursuing higher spending priorities.
“Once again Gov. Hobbs creates fiscal chaos for Arizona as she fights for her California-style budget,” Montenegro wrote in a post on X. “This budget focuses on what matters most to Arizona families, higher take-home pay, lower costs.”
“What we will not do is allow this governor to raise taxes and spend more for her programs on the backs of every family in Arizona,” Montenegro added.
Despite the veto, Hobbs’ office indicated negotiations could resume. According to KJZZ, the governor’s office said Hobbs had reached out to legislative leadership seeking additional budget meetings this week.
The Legislature adjourned after passing the proposal, with lawmakers expected to return in June unless leadership calls them back sooner. However, Arizona Senate President Warren Petersen (R-LD14) pushed back on claims that Republican lawmakers were taking an extended break following passage of the budget proposal.
Responding to a social media post by journalist Craig Harris stating that “The GOP-controlled Arizona Legislature is taking a one-month paid vacation,” Petersen wrote on X, “This is false, the Senate will be back on Monday and many members, myself included will be there every day this week.”
“The governor placed a moratorium on bills and we delivered a budget. There is no floor work to do,” Petersen added.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Matthew Holloway | May 5, 2026 | Economy, News
By Matthew Holloway |
Arizona Senate Republicans announced on Monday that they passed a $17.9 billion budget for fiscal year 2027 that includes $1.45 billion in tax relief over four years and spends approximately $800 million less than Governor Katie Hobbs’ proposal.
The budget, approved by the Legislature and sent to Hobbs, is based on updated April revenue projections that showed a $200 million decrease in available resources.
According to Senate Republicans, the plan includes a series of tax changes intended to provide cost-of-living relief, including eliminating state taxes on tips and overtime pay, increasing the standard deduction, allowing full deductions for child-care expenses, increasing the dependent tax credit by $25, and creating a $6,000 deduction for seniors age 60 and older with retirement or pension income.
The proposal also includes conformity with federal tax policy changes associated with Donald Trump’s tax cuts, which the Senate said would ensure Arizona taxpayers do not need to refile their 2025 state tax returns.
“This is a serious, disciplined budget that puts Arizona families first,” Senate President Warren Petersen (R-LD14) said in a statement. “We cut taxes, protect essential services, and base every decision on real April revenue projections — not wishful thinking.”
He added, “In divided government, we faced the math, eliminated waste through targeted reforms, and delivered real results without raising taxes or growing government.”
The budget maintains current funding levels for K-12 education and public safety, preserves the voter-protected K-12 State Land Trust, and limits overall spending growth to 1.9 percent.
To address the projected shortfall, Senate Republicans said the plan includes policy changes aimed at reducing spending, including enhanced eligibility verification in public assistance programs such as the Arizona Health Care Cost Containment System (AHCCCS) and the Supplemental Nutrition Assistance Program (SNAP), a 5% reduction in agency operating budgets excluding public safety and child welfare agencies, and the repeal of certain tax credits and subsidies, including solar incentives.
The budget does not reduce base pay for Arizona Department of Public Safety troopers or firefighters and does not modify existing data center incentives previously signed into law.
The plan also includes $4.75 million in emergency funding for the Department of Public Safety, which Senate Republicans said the agency had requested and that the governor had previously vetoed as a standalone bill.
The Arizona Senate Republican Caucus said the budget reflects the constraints of divided government and relies on no new taxes or fees.
“This budget reflects the reality of divided government,” Petersen said. “While Democrats were on the floor today saying we need to raise taxes, we are instead delivering historic tax relief without burdening taxpayers. Your business and your wallet are on the ballot this fall. Vote wisely.”
The proposal now awaits Hobbs’ action.
House Speaker Steve Montenegro (R-LD29), Petersen, and other legislative Republican leaders are scheduled to hold a press conference on Tuesday at 1 p.m., according to a media advisory, to highlight the budget and urge Hobbs to sign the legislation.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
