Arizona Republicans, Gov. Hobbs reach budget deal 

Arizona’s Republican legislative leaders reached a budget deal with Democratic Gov. Katie Hobbs and Democratic lawmakers, they announced Tuesday, weeks away from the June 30 deadline to avoid a state government shutdown.

The $18.3 billion budget deal includes $1.45 billion in tax cuts that will bring the state’s tax code in line with changes made at the federal level via President Donald Trump’s “One Big Beautiful Bill” passed last summer, according to Senate Republicans. 

“By adopting President Trump’s tax cuts at the state level, expanding tax relief for families, and protecting educational freedom, we’re helping Arizonans keep more of their hard-earned money while ensuring our state remains economically competitive,” Senate President Warren Petersen said in a statement. 

The budget deal announcement comes after months of fighting with Republicans who control the Arizona Legislature pitted against Hobbs and legislative Democrats. To become law, the package of budget bills needs to pass both chambers of the legislature and to get a signature from Hobbs. 

“This bipartisan compromise shows what we can do when we put common sense before political games and focus on delivering real results for our communities,” Hobbs said in a written statement. “It will put money back in the pockets of Arizona families and lower costs, make our communities safer and protect the vital services that Arizonans rely on. In the coming days, I look forward to working with legislators in both parties to pass this bipartisan budget agreement that will make Arizona stronger, safer and more prosperous.”

Senate Republicans expected to introduce the new package of budget bills Tuesday, to discuss them in a Joint Senate and House Appropriations Committee hearing Wednesday and to take final votes on the bills Thursday. 

If both the Arizona Senate and Arizona House of Representatives vote to end this year’s legislative session after that, it would give legislators and other elected officials who are running for reelection or new positions more than a month to focus on their campaigns ahead of the July 21 Primary Election. 

Hobbs on May 5 vetoed a package of Republican-backed budget bills that passed both legislative chambers along party lines. Democrats attacked that budget proposal, saying it prioritized corporate tax cuts above the needs of working class people who struggle to make ends meet.

Republicans had plenty of their own criticism for Hobbs’s budget plan, which they panned for relying on money that the state might not ever receive, when she unveiled it in January. 

After Hobbs vetoed the Republican budget proposal, the House of Representatives took a monthlong break, while the Senate met once a week throughout the month of May, while budget negotiators worked behind closed doors to reach a deal.

Based on both Hobbs’ and Senate Republicans’ description of the newly negotiated budget, it contains many of the same provisions as the budget package that Hobbs vetoed. 

That includes the Trump tax cuts, as well as increased eligibility requirements for Arizonans who rely on Supplemental Nutrition Assistance Program, formerly known as food stamps, and for the Arizona Health Care Cost Containment System, the state’s Medicaid program. 

“This budget puts real teeth behind our commitment to accountability,” Senate Majority Leader John Kavanagh, R-Fountain Hills, said in a statement.

The negotiated budget includes some wins for Hobbs, including a three-year moratorium on new certificates for data center sales tax exemptions, a modification of a provision in Hobbs’ original budget proposal that would do away with sales tax exemptions for data centers. 

“This bipartisan, balanced budget agreement will put Arizona first and deliver opportunity, security and freedom to communities throughout the state,” Hobbs said in the statement. “With this agreement, we are delivering a $1.4 billion tax cut for working class families, investing in job creation, education and water security while tightening our belts, and securing a moratorium on the data center tax exemption so we can develop a responsible path forward that protects our water future and lowers utility bills for Arizona families.”