As we noted back in March, Chaos Katie ran away from negotiations after Republicans refused to anchor the entire state budget to her reckless Prop 123 scheme, a plan that would have ratcheted state trust land distributions to 10.9%, a raid on the trust that would have cut the corpus nearly in half over two decades.
When she concluded that she couldn’t get her trust land gimmick over the finish line, she passed the mantel of leadership to Republicans, demanding they needed to publicly release their own budget plan before she would reengage. “I know we can get big things done when we work together,” she said, “but that isn’t possible when one side refuses to show us their plans.”
By daring Republican leadership at the legislature to produce their own budget, Hobbs was gambling that they would either be unwilling or unable to produce their own spending plan.
It was a very poor bet.
This week, Republican leadership sent their budget to the Governor’s desk, one that exposes her lack of ideas and complete inability to lead.
The Republican Plan: Trump Tax Cuts for All
The Republican budget delivers over $1 billion in tax relief over the next three years by fully conforming to President Trump’s federal tax cuts while tailoring it to Arizona’s unique needs. It eliminates state taxes on tips and overtime pay, expands relief for childcare expenses, increases the dependent tax credit, and extends additional relief to retirees on fixed incomes.
And it does all of this while spending roughly $800 million less than Hobbs’ own proposal. The $1 billion+ in relief is afforded through real reductions in spending, not accounting tricks or fake revenues as Hobbs has proposed; primarily by eliminating corporate welfare and “DOGEing” government.
The corporate subsidy cuts include eliminating $76 million in solar tax credits and green energy scam incentives, including the sweetheart property tax treatment that lets large utility-scale wind and solar projects (owned mostly by out-of-state corporations) get assessed at just 20% of depreciated value, meaning a wind farm worth $100 million on paper pays property taxes as if it were worth $20 million. The budget also cuts funding to the Arizona Commerce Authority, the state’s economic development slush fund that Hobbs has used to dole out corporate favors, and zeroes out Tucson Rio Nuevo, a tax increment financing district that has long operated as a piggybank for politically connected interests. Together those two cuts save another $86 million. Cutting corporate carveouts to deliver tax relief to middle-class Arizona families is a great tradeoff.
The rest of the shortfall is addressed by DOGEing government by actually demanding that the state tighten its belt so families can get a little relief. That means a 5% across-the-board cut to agency budgets, which is especially necessary given that the Hobbs administration has operated less like a state government and more like a patronage network, handing out high-paying, benefit-loaded jobs like candy to her friends.
And Republicans proved they can put together a responsible, functional budget without relying on a nonsensical scheme like Prop 123, and they must keep holding that line.
Hobbs Should Sign This Budget
Katie Hobbs came to budget negotiations with exactly one (unworkable) idea: Prop 123. When that fell apart, she had nothing left. So, she flipped the table, stormed out, and shoved the whole problem into Republicans’ laps, daring them to do the job she couldn’t. And they did. The Republican budget delivers real affordability – over a billion dollars in tax relief, full conformity to end the filing season chaos, a 5% government efficiency cut, and the elimination of corporate tax carveouts to fund relief for middle-income Arizonans instead. It’s fiscally responsible, honestly paid for, and exactly the kind of plan Hobbs claimed she wanted but couldn’t produce herself.
Hobbs has no credible standing to criticize from the sidelines since she’s the one who walked away. She has no competing plan, and no better deal coming. This budget is her escape hatch, the cleanest exit from a mess entirely of her own making. The longer she holds out, the worse it gets for her. Which is why she should just sign it.
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