Hobbs vetoes ‘unbalanced and reckless’ Republican budget, calls for negotiations to resume

Arizona’s Democratic governor on Tuesday vetoed a Republican budget plan after it passed both chambers of the state legislature on party line votes, saying it would bring “chaos and dysfunction” to the Grand Canyon State. 

Republicans, who have a majority in both chambers, introduced their $17.9 billion budget plan on April 23 and quickly put it up for a vote. It passed the Arizona House of Representatives April 29 and the Arizona Senate on May 4. 

The Arizona House of Representatives sent the budget to Gov. Katie Hobbs on Tuesday, and she swiftly vetoed it, as expected. 

“This budget is unbalanced and reckless. With it, Arizona 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,” Hobbs said in a written statement. “Arizonans cannot afford chaotic and dysfunctional Washington-style budgeting in our state government.”

The GOP budget “has a long list of problems,” Hobbs said, including more than $600 million in tax cuts for the wealthy and data centers while at the same time kicking an estimated 200,000 Arizonans off of Medicaid and food aid.

“While forcing devastating cuts on Arizonans, the legislature has refused to sweep their own $28 million slush fund, including $6 million that may be used to replace their carpets, upgrade their media studio, and renovate their offices,” the governor said. 

She called on Republican lawmakers to negotiate a spending plan with her. 

“Let’s get back to the negotiating table and get serious about delivering for Arizonans. I am ready when you are,” Hobbs said.

When exactly that might happen is unclear: Lawmakers on Tuesday adjourned for the remainder of May and won’t return to work until June 1. 

Republicans touted the $500 million in tax cuts in their budget plan, which conforms with many of the changes made at the federal level by President Donald Trump’s “One Big Beautiful Bill,” as well as the continuation of existing funding for K-12 education and public safety. 

It would sweep money from numerous funds and make 5% cuts to most state agencies to pay for the tax cuts, as well as increase the portion that state employees contribute to their health insurance by 20% over the next three years. 

Democrats criticized the Republican budget for its cuts to state government, as well as its increased restrictions on the Supplemental Nutrition Assistance Program, formerly known as food stamps, and for the Arizona Health Care Cost Containment System, the state’s Medicaid program. 

But Democrats mostly focused on the Republican tax cuts that they said would benefit the wealthy, describing the Republican budget as “corporations first, Arizonans last.” 

The Republican budget maintains tax incentives for the data centers needed for generative artificial intelligence, but cuts tax breaks for renewable energy providers. 

Hobbs’s budget proposal includes about $800 million more in spending than the Republican plan, and would cut data center tax breaks and tax lucrative sports betting operations at a higher rate. 

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

That includes $300 million in Proposition 123 funding for K-12 education that would need to be approved by voters in November and more than $760 million from the federal government to reimburse the state for its work securing the border that could go to other states. 

Voters approved Prop. 123 in 2016, to increase the amount of money set aside from the state’s land trust for public schools. After Prop. 123 expired, the legislature voted to use the general fund to backfill the lost $300 million. 

Hobbs walked away from budget negotiations more than a month ago after Republicans said that sending an extension of Prop. 123 to voters this year was off the table. If voters approved it, the continuation of the proposition would alleviate the state’s budget woes for this year, according to the governor’s budget staff. 

House Minority Leader Oscar De Los Santos urged his GOP colleagues to begin working with Hobbs immediately to hammer out a budget deal now that their partisan spending package has been vetoed.

“We must stay here and pass a budget to make life affordable for Arizona who are struggling to stay afloat with Donald Trump’s economic chaos and failing presidency,” he said in a written statement.

Following the veto, legislative Republicans and Democrats, alongside Hobbs, will have to work together to create a negotiated budget that can pass both chambers with bipartisan support and get a signature from Hobbs by the June 30 deadline. 

Democrats have said they can get behind some pieces of the Republican budget, including middle class tax cuts, funding for free school lunches, no taxes on tips and child care tax credits.