After months of vetoes and walking away from the table, Hobbs has finally signed a budget. A budget that looks pretty much the same as the one Legislative Republicans sent up to her desk at the beginning of May. A budget she vetoed, and that she and her colleagues in the Legislature bashed repeatedly. So, what changed?
There were two budget priorities our organization laid out before the session began. First, anything less than full conformity tax relief from Trump’s Big Beautiful Bill would essentially be a tax hike on Arizonans. Second, an extension of Prop 123 (the increased distribution from the state land trust to K-12 schools to the tune of $330 million a year) must be a nonstarter in budget negotiations. Before getting into the details, both of these objectives were accomplished.
The biggest item in this budget fight was undoubtedly tax cuts from tax conformity. After President Trump signed the Big Beautiful Bill into law on 4th of July 2025, states faced a decision: do they pass on the tax relief Republicans in D.C. delivered, or do they effectively increase taxes on their residents. Core planks of conformity included no tax on tips, no tax on overtime, an increased standard deduction, a new deduction for seniors, among several provisions for small businesses and corporations of all sizes, most importantly allowing them to deduct expenses in the year they are made, rather than depreciating those expenses over several years. In other words, the bulk of the business provisions weren’t even a tax cut. The question is not whether businesses deduct those expenses, only when they deduct them.
This question needed to be resolved quickly, as the legislature begins session the second week of January and Tax Day is in April. In the first week of session, Republicans in the legislature sent a package to her desk that delivered full tax relief. All democrats voted no. Hobbs vetoed it.
Again, in February, to prevent confusion and chaos for taxpayers beginning to file, Republicans in the legislature sent up another bill. It received a veto. At the beginning of May, they sent up a budget that included full tax conformity relief for the third time. Again, it met a veto.
Based on all of the votetoes, relentless opposition and endless rhetoric about “tax breaks for billionaires,” you would think that the agreed upon budget must have included significant changes to the tax package. But if you are thinking that, you would be very wrong.
So What did Hobbs and Democrats actually fight for in this budget that necessitated six months of chaos and tax season confusion?
Subsidies and Tax breaks for large corporations.
That’s right. For every $1 in tax breaks for corporations that Democrats claim they removed from the Republican budget, Hobbs and her cronies added back in $3.67 in additional subsidies for her corporate friends.
Hobbs eliminated a $45.5 million deduction that all corporate entities receive with a $150 million targeted subsidy program that will primarily benefit out of state and foreign owned corporations.
Hobbs is bragging about a three-year moratorium on a data center tax credit (a credit that she supported when in the legislature) that saves $57 million over three years, but leaves out that she demanded $167.7 million in subsidies for massive solar and wind farms. These are the projects spamming our grid and land (in fact her own Land Department put out a map of state trust land prioritizing solar farms over housing) kicking multigenerational ranchers off their land to line the pockets of multibillion dollar foreign solar developers.
If that wasn’t enough, she fought to get an additional $58.5 million for the Arizona Competes Fund, a slush fund for Hobbs to give handouts to her corporate friends. A slush fund that unconstitutionally spent $2.4 million for Superbowl tickets and alcohol for out of state corporate executives.
You add it all up, and it turns out the only change Hobbs made to the budget was to increase corporate welfare spending by $274 million, essentially the entire dollar difference compared to the Republican budget she vetoed.
Outside of that, every other change is a rounding error. Instead of a 5% budget cut to agencies, it became 2.5%. And then there were $500,000 appropriations here, a million there, out of an $18 billion budget. Basically, the same spreadsheets. And wildly different from her proposal in January.
Months of gridlock, chaos and confusion. And for what? So Pay to Play Katie could extract hundreds of millions in handouts for her politically connected friends. That is what a budget “win” looks like to Governor Hobbs.
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