The Damage From Katie Hobbs’ Illegal Housing Moratorium Is Only Beginning

by admin | May 26, 2026 | Arizona, News and Updates

For decades, Arizona has been a national model for how to responsibly manage and develop water resources. As a result, our state has enjoyed years of economic growth while welcoming millions of new residents to live and work here. 

Then, Governor Katie Hobbs came along. 

In 2023, the Hobbs administration imposed sweeping new water rules that effectively halted new home construction across much of the Valley, under the guise that it was needed to “save water.” 

Now, a court has struck down the policy, ruling that state regulators ignored the law when creating the rules behind it. But the fallout from this disastrous decision is only beginning. And Arizona taxpayers could soon be forced to pay more than $1 billion for the damage. 

Arizona Is Not Running Out of Water 

Despite the alarmist rhetoric coming from Hobbs and the Arizona Department of Water Resources (ADWR), our state is not running out of water.  

In fact, our state uses less water today than it did in 1990—even though our population has doubled to more than 7 million residents. That’s not a typo. Over the past three decades, Arizona has welcomed millions of new residents while reducing total water consumption. 

How is that possible? Through better water management, technological advancements in conservation and reuse, and the gradual conversion of agricultural land to residential development. The result is a system that has allowed Arizona to grow responsibly while protecting its long-term water supply.  

But instead of building on this successful model, Hobbs declared a sweeping housing moratorium—halting new single-family housing construction across much of the Phoenix metropolitan area.  

A Manufactured Crisis With Real Consequences 

In addition to destroying billions in economic activity and further exacerbating the housing shortage crisis, Hobbs’ moratorium created a number of additional problems.  

Her rule did not halt development across the board. Instead, it targeted the construction of much-needed single-family homes while allowing all other forms of development—including apartments, condos, and data centers—to continue moving forward. 

This makes zero sense from a water policy standpoint. Prior to the Hobbs’ moratorium, single-family housing in Arizona was already required to demonstrate a 100-year assured water supply before construction can begin. Commercial and industrial has no such requirement, despite consuming substantially more water per acre than residential subdivisions.   

Even more absurdly, Hobbs’ moratorium blocked one of the very activities that actually reduces water consumption in Arizona: converting agricultural land into residential communities. 

In most cases, farmland uses significantly more water than single-family housing developments. When agricultural land is converted into neighborhoods, overall water usage can decline dramatically. Yet Hobbs’ moratorium stopped precisely the kind of development that lowers water use while creating a perverse incentive for landowners to pursue water-intensive commercial and industrial projects that bypass both the 100-year certification requirement and the moratorium.  

In effect, Hobbs figured out a way to implement a policy that will likely increase water usage in Arizona, not decrease it.  

Hobbs Loses in Court — Taxpayers Could Be on the Hook for More Than $1 Billion 

Last month, a Maricopa County Superior Court judge struck down the Hobbs administration’s housing moratorium, ruling that state officials failed to follow Arizona law when creating the new water rules. 

It’s another in a long line of embarrassments for Katie Hobbs. The court made clear that her administration attempted to impose sweeping new regulations without going through the legal process required under state law. 

But the consequences of her failed policy may not end there. 

Because Hobbs’ moratorium stopped or delayed major housing projects across the Valley, Arizona taxpayers could now be forced to compensate property owners harmed by the policy. Developers have already filed claims seeking hundreds of millions of dollars in compensation. And if additional lawsuits are filed, total taxpayer costs could exceed $1 billion. 

That’s right. At a time when Arizona families are already struggling with higher housing costs, inflation, and budget pressures, taxpayers may be forced to clean up another mess created by Katie Hobbs.  

This should serve as a warning to every person in our state.  

For decades, Arizona successfully balanced economic growth with responsible water management. But instead of trusting that proven system, the Hobbs administration chose fearmongering, unlawful regulations, and an anti-growth agenda that harmed homebuilders, squeezed working families, and may now leave taxpayers with a billion-dollar bill. 

Arizona voters cannot afford to forget it this November. 

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Arizona’s Real Budget Problem? Too Much Spending, Not Too Little Taxing 

by admin | May 21, 2026 | Arizona, News and Updates

A recent op-ed in the Arizona Republic by the Arizona Center for Economic Progress argued that the legislature’s budget “doesn’t add up” and that Arizona needs a “reality check.” We agree a reality check is in order, but definitely not the kind being offered. 

The argument, which has become the standard refrain from the Left on tax policy, is that Arizonans have enjoyed too many tax cuts over the years (the fault of Republican lawmakers), and that this has left the state anemic in revenues and starved of the ability to provide essential government services. 

But the average middle-class, tax-paying resident would probably scratch their head at this. They still have roads to drive on. The police still come when they call (except maybe if they live in Tucson). There are still bureaucrats employed to receive their tax filings and permit fees.  

No matter how much the Left likes the story that government is running on fumes, people don’t believe it – and their intuition is right, because none of the actual data supports it. The reality is the very opposite. Arizona’s state budget has been ballooning for years. Our welfare programs have never been more riddled with fraud. And governments of every size in the state just keep sizing up. But most concerning about the myth that state government is poor and taxpayers are too rich is that it belies a philosophy that every Arizonan should find alarming. 

Revenue Is Growing, Not Shrinking 

The op-ed claims Arizona is “shrinking the very revenue needed to sustain” essential systems and has “lost nearly $11 billion to tax cuts.”  

This is simply false.  

Since the 2.5 percent flat tax took effect in 2022, state general fund revenues and state shared revenues have both grown. In fact the State’s General Fund has doubled in a decade – from roughly $9.1 billion in FY2016 to over $18 billion in FY2026. Total state spending now exceeds $60 billion. The state is sitting on a $1.63 billion rainy day fund. Revenue did not shrink, it grew immensely. Lower tax rates made Arizona a more attractive place for job creators and productive people in general – in other words, it grew the economy. 

And if anyone is genuinely concerned about pressure on state revenues, instead of looking at the taxpayers who generate that revenue (the goose that lays the golden egg), they may want to look to the other layers of government draining it. When the flat tax was adopted, the legislature increased the share of state income tax collections passed onto local governments from 15 to 18 percent to “hold cities harmless.” This turned out to be the biggest lie since “you can keep your doctor.”  

The result has been a massive windfall in revenue for municipalities. According to the Common Sense Institute, cities have pocketed $7 billion in excess revenue from the state since 2021, a figure projected to reach $11 billion by 2028. The state has overpaid municipalities by roughly $3 billion through FY2029. And city budgets have grown by 67 percent in just five years, according to the Arizona Tax Research Association.  

The state is effectively subsidizing a slush fund for municipal government, which they use to go out and buy things like a $2 Million dollar sign along Mill Avenue, which is a far bigger drain on the treasury than letting families keep more of what they earn. 

Waste Is Everywhere You Look 

With massive increases in government spending, and the scandal that broke on USAID, no one is surprised to hear that the government doesn’t spend every dollar responsibly. Arizona’s AHCCCS system lost an estimated $2.8 billion to a single sober living fraud scheme – what the U.S. Department of Justice called the largest fraud targeting a single demographic group in American history. Total questionable behavioral health billing exceeded $3.1 billion between 2021 and 2023 alone. Only $139 million has been recovered. These programs are crying out for a line-by-line audit, something Republican lawmakers may ask voters to approve in the form of a ballot measure in November since Governor Hobbs and Attorney General Mayes have shown little interest in addressing the problem. 

Then there’s the governor’s own ledger. Her Office of Tourism blew $700,000 on a hideous and unnecessary logo rebrand, a project so tainted by cronyism that the tourism director had to resign. Her Arizona Commerce Authority violated the state’s gift clause, spending $2.4 million in taxpayer money on Super Bowl tickets and CEO cocktail parties. Her housing department wired $2 million straight to overseas fraudsters because no one bothered to write a wire transfer policy. And her illegal housing moratorium, struck down in court for violating private property rights, may have put taxpayers on the hook for over $1 billion in legal liability.  

Yet after three years of fiscal malfeasance and her own problems with pay-to-play bribery allegations, Hobbs’ big “solution” is to launch a Trump-inspired “efficiency initiative” promising $100 million in savings. The governor doesn’t need an efficiency initiative, she actually just needs to stop being the source of waste, fraud and abuse.  

Your Paycheck Is Not the Governments to Lose 

But the most disturbing element of the Left’s argument is the premise hiding beneath it: that The State of Arizona has “lost” $11 billion. Lost it to whom? To the families and businesses that earned it. This framing is a stunning admission. In this worldview, all wealth generated by productive and free people belongs to the government first. Whatever the state doesn’t confiscate in taxes is a “loss.” Whatever it allows private citizens and businesses to keep is a generous gift. 

If you start from that premise, then the government is entitled to 100 percent of everything, and no one should balk at high taxes. But as Thomas Sowell observed, “I have never understood why it is ‘greed’ to want to keep the money you have earned but not greed to want to take somebody else’s money.” The flat tax didn’t rob Arizona of a dime. It let workers, families, and small businesses keep more of what they earned, and revenues grew anyway, because that is what happens when you let free people build things. 

Critics of the legislature’s budget say budgets are built on math. They’re right. And the math shows revenues growing, billions vanishing to cities and fraud, a governor whose own budget was built on a hope and a prayer, and waste everywhere you look. The legislature’s budget spends only the revenue the state actually has and delivers the full tax conformity relief Arizonans are owed under the One Big Beautiful Bill. 

Arizona doesn’t need a reality check on tax relief. It needs a reality check on spending, on fraud, and on the belief that your paycheck belongs to the government before it belongs to you. 

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No Means No: Why Tucson Voters Should Reject TEP’s Repackaged Climate Deal 

by admin | May 12, 2026 | Arizona, News and Updates

This November, Tucson voters are being asked (again) to approve a 25-year franchise agreement between Tucson and Tucson Electric Power (TEP). Franchise agreements are generally standard arrangements that allow utilities to use public rights-of-way for poles, wires, and infrastructure. But there is nothing standard about this deal. Bundled with it is an “Energy Collaboration Agreement” that will quietly embed climate policy into Tucson’s governance for the next quarter century. Voters should read the fine print (and the price tag) before checking the box. 

If Tucson voters are having déjà vu reading this proposal, it’s because it is awfully similar to what they have already said no to. In May 2023, Proposition 412 put a nearly identical TEP franchise agreement before the public, and voters rejected it by a 55-45 margin. That deal included a new 0.75% “community resilience fee” on top of the existing 2.25% franchise fee, with proceeds earmarked for undergrounding utility lines as well as funding the city’s Climate Action Plan. Despite voters already telling the city they don’t want it, city leaders and TEP have assumed residents really just want a more expensive version of the same thing – rebranding and trying to ream through for a second time the same agenda but at a cost of $64 million instead of $56 million.  

What the franchise agreement really does is help TEP maintain infrastructure, expedite permitting, and improve outage response. But TEP can still operate without a franchise agreement, meaning this vote is not about whether Tucson continues receiving electricity. Instead, it creates the legal foundation for a broader political partnership between the city and the utility.  

The $64 million Energy Collaboration Agreement tied to the franchise deal would funnel TEP money to the city starting at roughly $2 million annually and escalating over time, bankrolling climate-related projects under Tucson’s Climate Action and Adaptation Plan, branded as “Tucson Resilient Together” (TRT). The wish list includes expensive decarbonization mandates, a push for “100% clean, renewable citywide energy supply by 2045,” EV charging infrastructure, transportation electrification, rooftop solar, battery storage, home energy retrofits, and a grab bag of other Green New Scam initiatives that would make Alexandria Ocasio-Cortez proud. 

Tucson leaders have acknowledged this funding would pay for programs that otherwise may not be funded because of budget constraints. Rather than debating these spending priorities publicly year after year, the city would effectively lock them in through what is presented as a routine utility deal.  

TEP claims the funding will come from “corporate resources” rather than customer rates. This is a distinction without a difference. TEP is a regulated monopoly. Every dollar it spends ultimately flows through a system funded by ratepayers. Tucson residents already pay a 2.25% franchise fee on their electric bills, and the failed Prop 412 would have tacked on another 0.75%. The fact that they dropped the explicit fee hike this time around does not mean customers are off the hook, it just means the cost is better hidden. Money is fungible. Whether directly or through the back door, ratepayers will be subsidizing these Green New Scam projects if this agreement passes in November. 

Implementation would also involve Tucson’s Climate, Energy and Sustainability Commission, handing additional influence and power to unelected boards and bureaucracies over energy policy and spending priorities. These are not officials accountable to voters at the ballot box. They are appointees who will help steer tens of millions of dollars toward ideological objectives with little public oversight. 

This is not the simple, routine utility agreement that local leaders and TEP want you to believe. It is a 25-year political alliance between local government, a monopoly utility, and climate policy advocates. Rather than focusing on what ratepayers actually need, affordable and reliable electricity, the agreement expands the utility’s reach into transportation, housing, energy consumption, and broader social engineering designed to force residents to live according to the ideological preferences of the activist class in Tucson. 

Strip away the branding and buzzwords and what remains is a 25-year commitment, $64 million directed toward climate initiatives voters never approved, and a formal partnership tying TEP to the city’s long-term climate agenda. The question for voters is not whether Tucson should continue receiving electric service, because that was never in doubt. The real question is whether you want unelected bureaucrats and a monopoly utility deciding how you live, what you drive, and how you power your home for the next quarter century. 

Tucson voters saw through this con once before and rejected it. In November, they need to do it again by rejecting this 25-year Green New Scam masquerading as a utility contract, and tell TEP and city hall that the answer is still no! 

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Republicans Produced their Budget Plan. Now Hobbs Needs to do the Same. 

by admin | May 7, 2026 | Arizona, News and Updates

Less than an hour had passed from when Republicans delivered a budget to Katie Hobbs desk yesterday to when she stamped it with a ‘veto.’ No one is surprised, since from the moment she walked out of negotiations six weeks ago and “challenged” Republicans to show their budget hand, she had already made up her mind about vetoing it. She just needed them to do all the work first.  

Hobbs has grown far too comfortable being the only one setting conditions on budget negotiations, considering every condition she has set has been unreasonable, unworkable, or erratic. 

She tried to anchor the entire budget to an unprecedented raid of the state land trust, speculative revenue requiring voter approval that could never functionally bridge her reckless spending. She wanted to deliver only half the conformity relief Arizona taxpayers are entitled to under the One Big Beautiful Bill, in direct contradiction to tax forms her own Department of Revenue already issued, creating tax filing chaos. She tried to “trade” not forcing that tax hike on Arizonans for kicking kids off the ESA program (insane). And when Republicans said no to all of it, she flipped the table and stormed off, openly admitting she was out of ideas, and demanding Republicans produce a budget on their own.  

While the veto from Hobbs was largely expected, Hobbs’ explanation for her veto was such brazen hypocrisy that it raises the genuine question of whether she is being ironic or fails to see the numerous contradictions in her opposition to the GOP budget. 

She rails against “tax breaks for billionaires,” a line that would land better if the bulk of what she’s opposing weren’t no taxes on tips, overtime, and the depreciation schedules thousands of Arizona small businesses use to offset investments. The one provision that skews toward higher earners is the SALT deduction, which is only in play because Hobbs: 

1. Vetoed an earlier Republican conformity bill in January that replaced the SALT deduction with a child tax credit; 

2. Included the SALT deduction on this year’s tax form, which means she was in favor of the deduction before she was against it. 

She positions herself as an opponent of data center tax carveouts, despite voting for them as a state legislator, while seeking to protect millions in solar and wind subsidies. She derides sweeping excess funds from the Arizona Commerce Authority, an agency that under her watch was found to have violated the state’s gift clause by blowing $2.4 million on Super Bowl tickets and lavish CEO forums. For Hobbs, hosting cocktail parties for wealthy executives apparently is a worthy taxpayer expense.  

The bottom line is that Republicans did the job she walked away from and told them to complete. And now she thinks she can sit back and lazily redline their work from the sidelines. That is not how this works. Criticizing is not the same thing as governing. “Budget for All” platitudes are not the same thing as a real budget.  

It’s time she put her budget cards on the table. 

Governor Hobbs needs to produce an actual budget now. 

She wants to pretend the “executive proposal” she unveiled in January was a real budget. It was not. It was a political document riddled with budget sins. The proposal relied on a $760 million federal border reimbursement that no one expects to materialize. She proposed raiding a voter-protected education fund and added $1.5 billion in new debt. It included fake budget cuts that will never happen. This isn’t just about fundamental disagreements in priorities, Katie Hobbs “budget” was a bunch of fabricated revenues and phantom savings designed to paper over a structurally broken spending plan. 

But perhaps the most reckless component was her “solution” on tax conformity; the capstone of a months-long parade of failures since the One Big Beautiful Bill passed last July.  

Just to recap, last year when Republicans called on Hobbs to convene a special session to conform Arizona’s tax code, she refused. Hundreds of thousands of Arizona families were left hanging, uncertain whether their tips, overtime, and higher standard deductions would survive on their state return. Then in November, she apparently decided the whole thing was actually a great idea, if she could just get away with taking credit for it. She issued an executive order branding Trump’s tax relief as her own “Middle Class Tax Cuts Package,” after spending months trashing the One Big Beautiful Bill as “devastating” and “dangerous,” a hypocrisy so bold not even the legacy media gave her a pass. 

Her knockoff plan had another problem: it was a half-measure. Full conformity would guarantee Arizonans $420–440 million in tax relief. Hobbs’ cherry-picked version added up to about $215 million, meaning her plan would still leave Arizonans with a net tax hike of over $200 million compared to full conformity. Then she tried to torpedo her own proposal by recasting it as a bargaining chip to defund school choice, proving she was never serious about delivering the relief in the first place. The executive order in question was also a legally dubious power grab, directing a tax collection agency to effectively rewrite tax law. Her own Department of Revenue resolved the conflict by issuing 2025 filing season forms assuming full conformity. Arizonans filed on that basis. Hobbs’ “budget” would pull the rug out from under all of them, forcing hundreds of thousands to refile and pay more.  

She simply won’t say that plainly (or put it in an actual budget), because saying it plainly would end her political career. 

Hobbs knows her fake plan is an unworkable mess that will raise taxes and create filing chaos. That is why she will push to retreat into secret negotiations to avoid a public debate and further exposure of her bungling of the whole affair.  

That is a request Legislative Leadership should flatly reject. 

Instead, Republicans should not lift a finger until Katie Hobbs produces an actual budget. They should allow the minority party the latitude of late introductions and drop actual budget bills. Then let it be scored by the Joint Legislative Budget Committee, receive public hearings and testimony, be debated on the floor, and evaluated in full public view, which is exactly the standard she applied to Republicans. If she has a better way, she should show us. 

Arizonans deserve to know what their governor’s actual plan is. A real Hobbs budget would end the fog, put her priorities on paper alongside the Republican plan, and let Arizonans draw their own conclusions. That transparency is good for Arizona and deeply inconvenient for a governor whose strategy is to never be pinned down. 

Critiquing is not leading, and vetoing is not governing. Show us your plan, Governor. For real this time. 

TAKE ACTION NOW

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

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