Mayes clears Hobbs in pay-to-play investigation
Add Axios as your preferred source to
see more of our stories on Google.
Gov. Katie Hobbs at the Arizona House of Representatives on Jan. 12. Photo: Jeremy Duda/Axios
The Attorney General's Office on Friday cleared Gov. Katie Hobbs in an investigation into pay-to-play allegations involving a group home company that got a massive rate increase from the state after making major contributions to the governor and the Arizona Democratic Party.
Why it matters: The bribery allegations surrounding Sunshine Residential Homes have loomed over Hobbs for the past two years and threatened her reelection campaign.
- Hobbs and Mayes are both Democrats seeking reelection in November, and the allegations have long been a major Republican talking point in the governor's race.
Catch up quick: The Arizona Republic reported in 2024 that the Department of Child Safety granted a rate hike to Sunshine Residential Homes after the group home provider gave $400,000 to Hobbs' inauguration fund and the Arizona Democratic Party.
- Mayes launched a criminal investigation at the request of state Sen. T.J. Shope (R-Coolidge).
State of play: Attorney General Kris Mayes said the two-year investigation "has not uncovered any evidence of the necessary quid pro quo to support a bribery charge."
- The governor denied any involvement — her attorneys provided written statements but she refused to sit for an interview — and DCS officials told investigators that they never discussed the request with the governor's office.
- Since 2019, Sunshine has been "by far the largest provider" of group home beds for DCS, per an internal analysis, and then-DCS director David Lujan told investigators that it was one of the few providers willing to keep siblings together.
- Lujan said DCS approved the rate hike after CEO Simon Kottoor said he was facing financial challenges and that the federal government was offering him more money than the state.
The intrigue: Hobbs' campaign attorneys disclosed to investigators $150,000 in previously unknown contributions that Sunshine made to the governor's legal defense fund between Nov. 2023 and May 2024.
- The attorneys said the campaign sought the funds to help pay for litigation with Hobbs' 2022 Republican opponent Kari Lake, who challenged the election's results.
What they're saying: "As has been publicly reported multiple times and the Attorney General's report now confirms: Governor Hobbs was not involved in, did not direct and did not instruct any member of her administration regarding the rate increases the Department of Child Safety approved," Hobbs spokesperson Christian Slater said in a statement.
Yes, but: Mayes said the case shows a need for greater transparency regarding political donations by state contractors, and called on Hobbs and the Legislature to take action.
- Twice since the investigation began, Hobbs vetoed bills sponsored by Shope that would have required bidders on state contracts to disclose contributions to a governor.
- Hobbs called the 2026 bill a "political stunt that applies only to one elected official."
What's next: An investigation from the Arizona Auditor General and the Maricopa County Attorney's Office, along with another from an outside firm hired by Arizona House Republicans, are pending.