Hobbs bets on federal border funds and online wagering fees for budget plan
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Gov. Katie Hobbs is pushing new fees on online sports wagering as part of her budget plan for fiscal year 2026. Photo: Norm Hall/Getty Images
Gov. Katie Hobbs is making some big bets on where she'll get the money for her budget plan, including some from the federal government and some from online wagering.
The big picture: The Hobbs administration on Friday unveiled the governor's $17.7 billion budget proposal for the 2026 fiscal year.
The intrigue: She's counting on several new revenue sources to achieve her goals, including some that are far from guaranteed. Among the most noteworthy are:
- $759.7 million from the federal government to reimburse Arizona for border-related expenses since 2021.
- $145.9 million from a major fee increase for the largest online wagering operators.
Zoom in: The one-time border reimbursement request is based on a provision in the "big beautiful bill" that President Trump signed last year.
- The bill includes $13.5 billion to reimburse states for border security and immigration enforcement efforts.
- Hobbs' border payback has support from legislative Republicans. Senate President Warren Petersen said last week he and House Speaker Steve Montenegro will meet with the Trump administration to request the money.
Yes, but: Passage of the state budget must happen by the time the fiscal year begins July 1, and it would be difficult to include the border reimbursements unless the U.S. Department of Homeland Security (DHS) has approved the request.
- "We feel extremely confident we're going to get the money," Hobbs spokesperson Christian Slater told reporters Friday.
Meanwhile, a less sizable but still significant infusion of revenue in Hobbs' budget plan would come from new fees on online wagering.
- Betting operators currently pay 10% fees on gross wagering receipts.
- Hobbs' proposal would allow the Arizona Department of Gaming director to impose fees up to 45% on large operators that have more than $75 million in monthly revenue.
- The administration doesn't believe the fee authority increase would require a two-thirds supermajority in the Legislature, which is needed for tax increases.
Between the lines: Slater said Hobbs has a "massive affordability agenda," as reflected in the budget. The plan includes proposals she touted in her State of the State address, such as utility and energy cost assistance, a housing acceleration fund and her tax cuts package, along with policies like:
- $44.8 million for child care assistance;
- $5.6 million for school meal grants and summertime grocery assistance;
- $2.2 million to help people pay for vehicle repairs if they fail emissions tests.
1 long shot: Hobbs' budget also includes a $250,000 household income cap for the state's K-12 voucher-style Empowerment Scholarship Account (ESA) program, which the administration estimates will save about $89 million.
- Legislative Republicans have consistently refused to support attempts to scale back the ESA program.
The latest: Hobbs on Friday vetoed a Republican tax cut plan that conflicts with her proposal.