Hobbs blasts GOP budget as ‘dysfunctional’ Washington copycat but signals room to deal

PHOENIX – Arizona Gov. Katie Hobbs on Tuesday delivered a critique of the Republican budget proposal unveiled at the state Capitol, calling it a copy of “dysfunctional” Washington policies even as she applauded several initiatives included in the plan.

The statement came a day after GOP lawmakers released their budget proposals, and while the Republican-led appropriations committee debated details of the proposal.

The Democratic governor said she was pleased to see some of her championed budget items included, like nearly $800 million in middle-class tax cuts, continued funding for her Bright Futures childcare affordability program and money to school lunch programs.

“There’s some things I’m encouraged about in their proposal,” Hobbs told reporters Tuesday. “I think we need to make these cuts strategically and smartly, and not slash and burn with just across-the-board cuts like we’re seeing come out of Washington, D.C.”

Still, she is frustrated by the continued GOP resistance to a Prop 123 renewal. This, Hobbs said, was a key factor in her decision to halt bill signings.

“That is incredibly concerning and it was part of the reason that triggered the bill moratorium,” Hobbs said. “Quite honestly, we have a once-in-a-decade opportunity to direct a billion dollars into public education without raising taxes by a dime. This is something that the public is incredibly supportive of.”

Hobbs instituted her bill moratorium April 13, a move meant to pressure Republicans, who control both chambers of the Legislature, to reveal their state budget plan. The governor said she would keep the moratorium in place for now.

“I will be closely monitoring the situation in the coming days to determine whether the legislative majority is willing to engage in good-faith, bipartisan negotiations and have the bill moratorium lifted,” she said.

The Republican budget plan

Senate President Warren Petersen and House Speaker Steve Montenegro on Monday rolled out a budget they say delivers $1.45 billion in tax relief, one of the largest tax cuts in state history, while spending about $800 million less than Hobbs’ proposal.

The plan would align Arizona’s tax code with the federal tax cuts signed into law as part of President Donald Trump’s One Big Beautiful Bill Act. It would eliminate state taxes on tips and overtime pay, expand tax relief for parents with dependents, create a new childcare expense deduction and boost tax breaks for retirees.

As the GOP budget proposal worked through the state appropriations committee, representatives gave more context for their support.

“I’m voting yes on this budget because of its huge tax cuts which increase affordability,” said state Rep. John Kavanagh. “It also has no tax increases, which are the enemy of affordability. … This budget is about affordability and not big government. It puts people over government.”

Republican leaders say the budget funds core services such as education, public safety and child welfare, and is built on what they describe as realistic revenue projections.

“Arizona Republicans are delivering one of the largest tax cuts in state history, and our proposal has the votes to pass both chambers,” Petersen said.

He accused Hobbs of walking away from negotiations and using the bill moratorium as a “stunt” to deflect from the breakdown in talks.

“In divided government, responsible leadership means facing the math, making hard choices and protecting taxpayers,” Montenegro said in the statement. “Republicans have done that.”

Hobbs, however, signaled she is prepared to reject the GOP plan if it reaches her desk in its current form.

“We will see if they have the votes to pass it. I don’t know that that’s the case,” Hobbs said. “And I’ve been clear that I want a budget that’s negotiated and that I’m not going to support a budget that prioritizes special interests and billionaires over everyday Arizonans.”

What comes next in the budget debate?

The Republican budget package passed the appropriations committee along party lines Monday. GOP leaders signaled they intend to push it to the floor for a full vote in the coming days.

Arizona’s fiscal year ends June 30, giving lawmakers and the governor roughly two months to reach a deal before the new budget cycle begins.

“I’m hopeful that we can get back to the table and start having real conversations about a budget that works for Arizona,” Hobbs said.

KTAR News 92.3 FM’s Kevin Stone and Shira Tanzer contributed to this report.