On Monday, House Republicans put forth what they called a balanced budget of $17.9 billion.
By Tuesday, Gov. Katie Hobbs said the proposal was all but dead.
The leaders of both chambers characterized their budget as uniquely reflective of total conformity with federal tax law — no other states adopted the entire slate of tax cuts — which Hobbs doubted could be accomplished. They estimated tax relief would amount to $1.5 billion over the next three years, and Republicans claim working families would feel the most benefit from the cuts.
“Politics are easy; governing is harder. We chose governing,” said Sen. President Warren Petersen (R-LD14). “We’re moving a budget that cuts taxes, funds core services, shrinks government, includes priorities both sides have raised, and gives Arizona a full path to finish the session.”
As budget talks have failed to progress in a meaningful way, the legislature stagnates under the weight of a bill moratorium.
In a statement issued Tuesday, Hobbs did acknowledge Republicans for working with her to adopt certain components of her preferred budget like middle class tax cuts and reductions to childcare cost. However, she disputed Republican leaders on their claims of fiscal responsibility.
She accused Republicans of siding with “billionaires, data centers, and special interests” as well as “kicking Arizonans off their healthcare and taking food off their tables.” The governor said she won’t engage in negotiations further unless they adopt her preferred budget.
Contentious aspects of the Republican-proposed budget included cuts to state agency budgets, and SNAP and Medicaid program funding.
“Until they also engage in good-faith negotiations rather than attempting to force through a partisan budget, I will be closely monitoring the situation in the coming days to determine whether the legislative majority is willing to negotiate in good-faith bipartisan negotiations and have the bill moratorium lifted,” said Hobbs.
NEW: @GovernorHobbs reacts to the newly released Republican budget: “Just like in Washington, they’re paying for tax breaks for billionaires, data centers and special interests by kicking Arizonans off their healthcare and taking food off their tables.” pic.twitter.com/8UlFIqa5S1
Hobbs also discussed the budget talks during a press conference for a separate topic on Tuesday, Reentry 2030. Hobbs tentatively praised Republicans for some concessions on their part, but generally was critical of them for balking at her $18.7 billion spending plan. A key part of that plan Hobbs hopes to win through in budget talks concerns draining the public land trust to boost K-12 education funding.
“I’m glad to see the Republicans have shown their budget proposal, there’s some things I’m encouraged about in their proposal, but across-the-board agency cuts is not one of them,” said Hobbs. “I’m hopeful that we can get back to the table and start having real conversations about a budget that works for Arizona.”
Legislative leaders have said Hobbs’ proposal is a nonstarter because the Public Land Trust was intended for long-term funding. Hobbs’ plan intends to renew funding through the yet-approved Proposition 123. Senate President Petersen said Hobbs’ plan wasn’t feasible and would push the state $1.5 million further into debt.
“We’re spending about $800 million less than what the governor has proposed, and the governor has proposed to raise taxes,” said House Speaker Montenegro (R-LD29) in an interview with Fox News.
“[H]er math doesn’t work,” said Petersen.
Hobbs has vetoed tax conformity efforts and walked away from budget negotiations multiple times since the start of the year.
The legislature began hearing budget bills on Tuesday during a joint hearing of the Senate and House Appropriations Committees.
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With Arizona’s legislative session scheduled to close this week, small business owners are still left in a lurch over a lack of tax conformity.
Twice this year Gov. Katie Hobbs has vetoed legislation that would have provided full conformity in the tax code with the One Big Beautiful Bill Act passed last summer. The governor maintains that the best path forward would not be full conformity, but rather partial.
Gov. Hobbs wanted the Republican-led legislature to get on board with the Democratic minority’s Middle Class Tax Cuts Package.
The Arizona Free Enterprise Club, a free market policy organization, said Hobbs’ preferred conformity package would require Arizonans to file taxes twice and increase taxes by $200 million.
File your taxes twice. Pay more. Welcome to Katie Hobbs’ Arizona.
After vetoing two full conformity bills, Hobbs helped turn what should have been a routine tax update into a full-blown mess in the middle of filing season. Her administration issued forms based on full… pic.twitter.com/eS5n6tiWfm
That threat of double-filing, per Senate President Warren Petersen (R-LD14), has been mitigated because the tax forms sent out by the state aligned with what the Republicans brought to the table (and Hobbs rejected).
Prior to the first veto, the Arizona Department of Revenue issued its advice on filing under the new changes to federal tax law.
Republican leadership in the legislature urged Arizonans to file their taxes, promising to not support any conformity package that would effectively “punish Arizona taxpayers” and require refiling.
“For tax year 2025 we will not support anything that forces Arizonans to refile,” said Petersen.
“Any outcome that requires you to amend your return or pay more is a nonstarter,” said House Speaker Steve Montenegro (R-LD29).
Gov. Hobbs justified her vetoes under the claim that Trump’s One Big Beautiful Bill would require poorer Arizonans to shoulder more of the tax burden.
“We should not hold tax cuts for over 88 percent of Arizonans hostage in order to force through tax breaks for special interests,” said Hobbs. “Other questions of tax conformity must be decided through budget negotiations, following the precedent set by Governor Ducey.”
Sen. Petersen rejected Hobbs’ view of the federal tax changes.
Petersen dismissed Hobbs’ claim as “a nice talking point” that ignored what he says is the reality of how the federal legislation impacts an overwhelming majority of the state’s business transactions.
“That’s just not true,” said Petersen. “We’re talking about tax on tips, we’re talking about tax on car interest loans, we’re talking about no overtime. These are not rich people. These are small business owners. 90 percent of business transactions are small business owners.”
“It’s a nice talking point, but it’s really not true.”
Arizona Senate President Warren Petersen joined @AZMorningNews to push back on Gov. Katie Hobbs after she vetoed Arizona tax conformity and tax-cut bills tied to federal changes.
Chad Heinrich, Arizona director of the National Federation of Independent Business (NFIB), toldThe Phoenix Business Journal that the lack of conformity will cause increased taxes on over 700,000 small businesses in Arizona. Heinrich blamed Hobbs.
“Not conforming with the key business provisions is, in practical effect, a tax increase on the Arizonans who can least absorb it — those who own and operate Arizona’s small businesses,” said Heinrich. “The Legislature has done its part. Governor Hobbs should finish the job, now, before one more small business owner has to guess about their future.”
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Gov. Katie Hobbs offered a false justification for her veto of legislation to rename a freeway after conservative activist and Turning Point USA (TPUSA) founder Charlie Kirk.
After backlash over her formal justification for vetoing Senate Bill 1010, Hobbs offered another explanation: she falsely claimed that renaming part of the Loop 202 freeway after Kirk would replace the part of the freeway honoring another individual: the late congressman Ed Pastor.
Pastor, a Democrat, served in the House of Representatives for nearly 25 years, from 1991 to 2015. Pastor died in 2018. His daughter, Laura Pastor, serves on the Phoenix City Council.
Contrary to what Hobbs claimed, the bill had a specific carveout to preserve Pastor’s portion of the freeway.
“That the underlying segments of the Charlie Kirk Loop 202 would retain their names and designations and those underlying segments are the Red Mountain Freeway, the Santan Freeway, and the Congressman Ed Pastor Freeway,” stated the bill.
Arizona Senate President Warren Petersen, a Republican candidate for attorney general, sponsored the bill. Ahead of her veto, Petersen urged Hobbs to continue Arizona’s tradition of honoring legacy by awarding recognition based on impact and not politics.
“Charlie Kirk called Arizona home and built a national movement rooted in free speech, civic engagement, and American values. He inspired millions, especially young people, to get involved and speak up,” said Petersen. “If the governor vetoes this bill, she’s sending a clear message: recognition now depends on political agreement.”
Six years after founding TPUSA in 2012, Kirk moved its headquarters to Phoenix in 2018. Since 2021, the organization has held its annual conference, AmericaFest, in the city.
TPUSA’s student and lifetime membership total runs in the millions, and they have impacted millions more in America and nationally. The organization also manages thousands of college and high school chapters.
Kirk was assassinated last September while speaking at a TPUSA event at Utah Valley University.
The campaign for Republican gubernatorial candidate Andy Biggs, currently congressman, issued a press release on the matter accusing Hobbs of misleading Arizonans intentionally.
“Not only was Katie Hobbs’ decision to veto the Charlie Kirk Loop 202 bill petty and callous, she’s now shamefully misleading Arizonans about why she did it,” said Biggs campaign senior advisor Drew Sexton. “This was a dishonest, partisan act by a weak and ineffective governor who has consistently failed to rise to the moment and lead our state.”
Hobbs’ initial justification for the veto, the one she gave formally, said that lawmakers needed to avoid politicized individuals when choosing who to honor.
The veto letter was a regurgitation of her previous veto letter for another bill seeking to honor Kirk’s legacy.
The governor also vetoed legislation that would have enabled Arizona drivers to purchase a specialty license plate honoring Kirk’s memory.
“I will continue working toward solutions that bring people together, but this bill falls short of that standard by inserting politics into a function of government that should remain nonpartisan,” wrote Hobbs.
Hobbs expressed sorrow over Kirk’s assassination, but said that wasn’t enough to overshadow his political background.
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Attorney General Kris Mayes is pushing a false narrative about Gov. Katie Hobbs’ leadership prowess, says Senate President Warren Petersen.
Mayes criticized Petersen over his recent interview remarks revealing the governor has refused to meet with legislative leadership to continue budget negotiations.
“Short memory,” said Mayes in a post with a picture of a 2021 headline describing former Republican governor Doug Ducey’s refusal to sign bills until a budget was approved.
The Republican representing LD14 retorted that Ducey continued to negotiate pending approval of the budget.
Unlike Ducey, Petersen said Hobbs hasn’t been willing to meet with the leaders of the Republican-led legislature at all unless they conform to her plan.
“Ducey didn’t walk away from the negotiating table like Hobbs did,” said Petersen. “We continued to meet with him even though he implemented a bill moratorium. Not the same.”
On Monday, Hobbs said she would veto all bills until Republicans publicized their budget plans.
“I’m ready to talk, but I can’t negotiate with politicians who refuse to show the public their plans,” said Hobbs. “The legislative majority needs to put forward their budget proposal and then join me in good faith negotiations so we can pass a bipartisan, balanced budget like we’ve done the past three years.”
Today, I promised to veto all bills that come to my desk and again invited legislative Republicans to show their budget plans to the people of this state. I’m ready to talk, but I can’t negotiate with politicians who refuse to show the public their plans.
Petersen explained in a Wednesday interview with KTAR that Hobbs wanted to balance the budget based on potential future funding to be accrued from the renewal of Proposition 123 — when, if ever, that comes to pass.
The proposition, passed by voters in 2016, pulled $300 million in annual revenue for K-12 funding from the State Land Trust Permanent Fund. It expired last summer, and the legislature still hasn’t agreed on a replacement renewal plan to put before the voters.
“[Hobbs] basically wanted us to balance something off of Prop 123, something that would have to pass later. We said that was irresponsible, and so she threw a temper tantrum and walked away from budget negotiations,” said Petersen.
Last month the Arizona Senate President and Arizona House Speaker issued a joint statement accusing the governor of “distorting the facts” on budget negotiations.
Part of Hobbs’ plan would “dramatically increase” the funds pulled from Arizona’s Public Land Trust, halving it over the next 20 years and jeopardizing the trust’s intended function to fund K-12 education in the long-term.
“This is not a solution. It is a long-term raid on a critical resource,” said the pair. “We’ve put forward a responsible plan that cuts taxes for working families and funds schools without gimmicks. She walked away from the table because her math doesn’t work.”
What’s more, the president and speaker said the governor’s proposed budget would add $1.5 million more in debt.
Hobbs’ communications director, Christian Slater, offered a different view of their budget plan. He claimed the governor’s proposed budget would lower costs, invest over $1.5 billion in public education, cut taxes for the middle class, and end tax breaks for data centers.
“[Republicans] know [their budget proposal is] unbalanced, unserious, and puts billionaires and special interests ahead of everyday working families,” said Slater. “Legislative Republicans must come clean with the people of Arizona and stop hiding their partisan and unbalanced budget from public scrutiny.”
Public education should be bipartisan, but @AZSenateGOP and @AZHouseGOP are putting their partisan political agenda ahead of Prop 123 in budget negotiations. Budget negotiations are off until they show the people of Arizona their budget.
U.S. Attorney Timothy Courchaine said statements by Arizona Attorney General Kris Mayes and Secretary of State Adrian Fontes regarding a federal election investigation raise “valid concerns of obstruction of justice and witness tampering” in response to a referral from Arizona Senate President Warren Petersen.
In a letter dated April 14, Courchaine wrote that he had received Petersen’s correspondence and shared the Senate president’s desire “to work together across all levels of government to ensure fair and free elections.” Courchaine added that his office was “carefully reviewing the facts” surrounding communications from Mayes and Fontes regarding the investigation.
U.S. Attorney Timothy Courchaine responds to Arizona State Senator Warren Petersen's recent letter to the U.S. Attorney's Office.
“I share President Petersen’s desire to work together across all levels of government to ensure fair and free elections. In my experience, working… pic.twitter.com/erJLW1qZpm
Courchaine wrote that statements from the attorney general and secretary of state “undermine the federal grand jury’s constitutionally enshrined right to investigate violations of federal law or ensure no such crime occurred.” He said the federal investigation is aimed at confirming that “only lawful citizens are registered and voting in federal elections” after state election officials disclosed registration errors that predated the 2024 election. Courchaine also wrote that the actions of the two state officials “raise valid concerns of obstruction of justice and witness tampering under Title 18 of the United States Code.”
Petersen first referred Mayes and Fontes to the U.S. Attorney’s Office on April 7, alleging that both officials attempted to interfere with a federal grand jury investigation tied to election records from the Arizona Senate’s 2021 review. Petersen accused the officials of obstruction of justice and witness tampering after they warned county election officials against complying with federal requests for election records.
Today I referred Kris Mayes and Adrian Fontes to the Department of Justice for obstruction of justice and tampering with a witness. It is disturbing to see their resistance to an election integrity investigation.https://t.co/pRJ3mJgsuEpic.twitter.com/MwOS1wQBwB
According to Petersen’s referral letter, the Arizona Senate complied with a federal grand jury subpoena served by the FBI in March seeking records related to the 2020 election. Petersen said the Senate produced the records after obtaining a legal opinion from the law firm Snell & Wilmer, concluding that compliance with the subpoena was required under federal law. The legal opinion stated that refusing to comply with the subpoena could have exposed the Senate and state officials to sanctions and that attempts to interfere with compliance could potentially constitute obstruction of justice.
The Snell & Wilmer opinion cited by Petersen argued that federal grand jury subpoenas carry broad investigative authority and supersede conflicting state privacy laws under the Supremacy Clause of the U.S. Constitution. The opinion also stated that state laws cited by Mayes and Fontes did not excuse noncompliance with a federal subpoena and that federal courts have routinely compelled compliance despite state confidentiality statutes.
Also today in Arizona: the Arizona Attorney General and Secretary of State sent a letters to county recorders, imploring them to notify them immediately if their offices receive federal grand jury subpoenas demanding voter information. “I implore you to fulfill your oath.”… https://t.co/geCkpN56drpic.twitter.com/6gTyVsKUwF
— Yvonne Wingett Sanchez (@yvonnewingett) March 11, 2026
Petersen has argued that a March joint letter sent by Mayes and Fontes to county recorders, warning that compliance with certain federal requests could violate state and federal law, amounted to an attempt to interfere with the federal investigation. In those letters, the attorney general and the secretary of state advised county officials that disclosing certain voter registration records could be illegal under privacy protections in Arizona law.
Mayes previously responded to Petersen’s referral in a written statement, statingthat he “inexplicably remains an election denier six years later.”
Petersen is running in the Republican primary for Arizona Attorney General and, if nominated, would face Mayes in the 2026 General Election.
A Gray House poll of 400 likely Republican voters and 450 likely general election voters found that a majority of those polled for the primary are undecided, with Petersen leading at 15%, but when the sample group was briefed on candidate backgrounds, Petersen becomes the clear leader at 57% compared to single-digits for other GOP contenders.
In the general election, Petersen trails Mayes by just 2 points at 42% to 44%, bringing the race well within the poll’s 4.6% margin of error.
