Hobbs halts budget talks and calls for Republicans to negotiation on Prop. 123
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Gov. Katie Hobbs halted budget negotiations with Republican leaders. Photo: Jeremy Duda/Axios
State budget talks are at an impasse after Gov. Katie Hobbs halted negotiations with Republican legislative leaders over disagreements on education funding and taxes.
Why it matters: Hobbs and Republican lawmakers have until June 30 to decide how to spend around $17 billion next fiscal year, and their budget blow-up suggests it could take them until then to reach an agreement.
- Sen. J.D. Mesnard (R-Chandler) told Axios he doesn't expect an agreement until late June.
The big picture: Budget agreements between the Democratic governor and Republican-controlled Legislature have proven difficult to reach in recent years.
- The state came uncomfortably close to a government shutdown last year.
Driving the news: Hobbs on Friday announced the suspension of talks until GOP lawmakers present a budget plan. She also criticized them for refusing to discuss the continuation of Proposition 123, a 10-year education funding program that provided several hundred million annually, and that expired in 2025.
- The governor's office also accused Republicans of having no way to pay for their tax conformity plan.
The other side: Senate President Warren Petersen (R-Gilbert) and House Speaker Steve Montenegro (R-Goodyear) accused Hobbs of "political theater" and said she ended negotiations "despite a path forward being within reach."
- They said they'll spend the next several weeks crafting a budget.
The intrigue: Hobbs wants discussions over Prop. 123, which she has little leverage over, to be part of budget negotiations, where her role is critical.
- The two sides have repeatedly clashed over how much money Prop. 123 should take from the state land trust and how the money should be spent.
Between the lines: Sen. John Kavanagh (R-Fountain Hills), who chairs the Senate Appropriations Committee, told Axios the budget and Prop. 123 are separate issues and shouldn't be negotiated together.
- There isn't a GOP consensus on Prop. 123 — some Republicans want to include protections for school choice, including the controversial Empowerment Scholarship Account program — and Kavanagh was skeptical there are enough votes to put it on the November ballot.
