At a time when Arizonans are still struggling to recover from years of Biden-era inflation, Republican lawmakers acted swiftly to deliver on their Affordable Arizona agenda. On just the fourth day of the legislative session, they passed SB1106, a tax conformity package that delivered the full benefits of the One Big Beautiful Bill (OBBB) to Arizona taxpayers, families, and businesses. The legislation provided $1.1 billion in tax relief and, just as importantly, immediate certainty for millions of Arizonans heading into tax season.
The very next day, Governor Katie Hobbs vetoed it.
That veto leaves taxpayers facing a potential $1.1 billion tax hike and widespread chaos as filing season begins. This isn’t simply the typical tax policy fight between Democrat and Republican ideologies. But a full display of Katie Hobbs’ failure to lead.
From the outset, she has mishandled this critical issue of federal tax conformity with conflicting messages, unauthorized executive actions, and zero coordination with the Legislature or even apparently her own agencies. The result has been a self-inflicted mess, and Arizona taxpayers will be the ones to suffer the price.
The chaos began in November, when Governor Hobbs issued a truly unprecedented executive order instructing the Department of Revenue to prepare tax forms conforming to her so-called “Middle Class Tax Cuts” plan. The problem? Governors don’t write tax law. Lawmakers do. The other problem? Her package included only half of the conformity relief from the OBBB, which would leave Arizonans with a $220 million tax hike.
As tax season loomed, Republican lawmakers urged Hobbs to call a special session to fix conformity before millions of Arizonans began filing. She wouldn’t. And now chaos is unfolding. Hobbs then compounded the problem in her State of the State address by demanding immediate action on “middle-class tax relief,” even though she had done none of the basic work to make it actually happen. Not one Democrat had introduced her plan via an actual bill.
At the same time, Hobbs publicly suggested that tax conformity could be negotiated later as part of budget talks, which typically occur well after the height of tax season. These contradictory signals left everyone guessing what Hobbs actually wanted. Does she believe conformity is urgent, or can it wait months? Was her executive order meant to dictate tax policy, or was she relying on future legislative action after all? Perhaps Hobbs herself doesn’t really know.
To make matters worse, her own Department of Revenue even further highlighted her dysfunction. DOR testified to a joint committee of the House and Senate, hearing the Republican-conformity plan (an actual introduced bill), that it issued tax forms assuming full federal conformity because no law existed directing them otherwise. They warned that if the state does not fully conform, more than one million taxpayers will be forced to refile amended returns, requiring the agency to hire roughly 200 additional employees just to process the backlog.
Hobbs’ public response to this implicating testimony was erratic. She began distancing herself from her own Department once it became clear that DOR had followed precedence rather than her directive. The irony was hard to miss. The same governor who assumed legislative authority she did not have, tried to abandon executive responsibility altogether.
Republicans, by contrast, responsibly moved with urgency to resolve this very real and pressing issue. Their tax conformity plan, introduced as SB1106, delivered the full benefit of the OBBB, making permanent key provisions of President Trump’s Tax Cuts and Jobs Act, increasing the standard deduction, eliminating taxes on tips and overtime, and providing $1.1 billion in tax relief. The bill was also tailored specifically to Arizona. Because Arizona already exempts Social Security from taxes, the senior deduction was adjusted to begin at age 60 rather than 65. It included retirement savings vehicles such as IRAs and 401(k)s as well as pensions and allowed deductions for Roth IRA contributions, incentivizing young workers to save for the future. A 25-year-old who invested just $100 a month into a Roth IRA could retire with at least $1 million by age 65.
This package delivered affordability and certainty. Hobbs vetoed it anyway.
This disaster was easily avoided. Governor Hobbs refused to call a special session before tax season, despite Republican lawmakers pleading with her to do so. She issued an executive order directing actions she had no authority to enforce. She had no bill introduced by her own caucus. She had no support for her package. She sent contradictory messages about urgency and delay. Her own Department of Revenue issued tax forms that reflect neither her plan nor the Legislature’s alternatives. And when Republicans finally delivered a comprehensive solution on the fourth day of session, (which would have conveniently gotten her out of the mess she made), she vetoed it.
Now Arizonans are filing taxes using forms that assume full conformity. Unless Chaos Katie changes her mind, many of those taxpayers will be forced to refile, incurring additional costs, delays, and frustration.
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Over the past month, Minnesota has been hard at work to set the gold standard for jaw-dropping fraud scandals under the watch of Democrat Governor Tim Walz. The Somali daycare scandal has turned the state into a national punchline—hundreds of millions in taxpayer dollars stolen in plain sight while Kamala Harris’ favorite “masculine” governor looked the other way.
Now, with Walz stepping aside from this reelection bid, a new contender for “most scandal-plagued governor on the 2026 ballot” has emerged: Arizona Governor Katie Hobbs. While Minnesota’s scandals have dominated headlines, Hobbs has been busy compiling a rap sheet that rivals what happened in the Land of 10,000 Lakes. But unlike Walz, Hobbs and her administration are under active criminal investigation.
A Pay-to-Play Scheme Engulfs the Hobbs Administration
The list of Hobbs’ scandals is a mile long and begins at the start of her tenure as governor. At that time, Hobbs set up a shady slush fund to provide donors with a conduit to buy political favor from her administration. While setting up and managing the fund, Hobbs illegally used public resources—like the state’s website—to solicit money for her inauguration. And she also tried to stop the disclosure of the names of those who donated to her inaugural fund.
After immense political pressure, Hobbs finally released the names of the donors. One of the names of the groups on the list was Sunshine Residential Homes Inc., a for-profit company that contracts with the State of Arizona. Sunshine Residential donated $100,000 to the secret fund, which was suspicious enough. But after some additional digging by local reporters, an even deeper level of corruption was revealed—an alleged pay-to-play scheme between Hobbs and the group home.
According to the report, it turns out Sunshine Residential Homes doled out $400,000 to the Arizona Democratic Party, Hobbs’ gubernatorial campaign committee, and her aforementioned inaugural fund. Hobbs and her campaign finance manager even arranged a dinner with the government contractor to meet with the CEO in private.
After making the large donations, Sunshine was granted a 30 percent increase in their rates at a time when the Arizona Department of Child Safety cut loose 16 providers! On top of that, no other standard group home provider received a rate increase. This arrangement ensured that Sunshine Residential would receive millions in additional revenue at the taxpayers’ expense.
Hobbs’ is currently under three separate criminal investigations for this pay-to-play scheme, but it’s not the only financial scandal we’ve seen during her reign as governor.
Agency Fraud Runs Rampant Under Katie Hobbs
Earlier this year, one of the largest Medicaid fraud scandals in state history came to light when it was discovered that the Arizona Health Care Cost Containment System (AHCCCS) had been rocked by more than $2 billion in fraudulent billing.
Reports tied the abuse largely to Residential Treatment Facilities—often called “sober living homes”—where patients were allegedly exploited in schemes designed to maximize profits rather than provide care. Investigators allege that some facilities bribed individuals to attend certain programs, then billed Medicaid for services that were medically unnecessary—or never provided at all.
One of the most prominent cases involved Farukh Jara Ali and occurred under the watch of Katie Hobbs. Ali—the Pakistan-based owner of ProMD—was indicted in June for submitting more than $650 million in fraudulent Medicaid claims. Not only does that money come directly from taxpayers, but the whole scheme exploited Arizona’s healthcare system at the expense of people who need real help.
Arizona’s Medicaid program isn’t the only agency that Hobbs has let turn into a playground for fraudsters. In 2023, the Arizona Department of Housing wired $2 Million to a fake NGO claiming to be providing affordable housing. A scathing report from the Auditor General found that the department lacked basic security protocols, failing to develop any wire transfer procedures that would have stopped the fraud. As of today, none of the scammers that ripped off Arizona taxpayers have been caught.
Sweetheart deals and a Jobs Program for Insiders
In addition to the agency fraud and her pay-to-play favor factory, Hobbs has developed a reputation that sweetheart deals await close friends and family members of the administration. In 2024, Governor Hobbs shelled out $700,000 for a new state logo. And who do you think received that contract? Urias Communications—a firm owned by the brother of the (at the time) Office of Tourism Director Lisa Urias.
That same year, it was discovered that Hobbs had turned her office into a jobs program for her political friends—expanding her staff by a whopping 40 percent over the previous administration. And then she followed that up this year with a handout of nearly $600,000 in taxpayer money to a former Democrat politician and her assistant for two newly created jobs.
Altogether, Katie Hobbs’ various scandals paint a damning picture of a governor who has blurred the line between public service and personal politics at every turn. While Tim Walz’s fraud crisis may have shocked the nation, the controversies surrounding Katie Hobbs cut closer to the governor’s office itself—donor favoritism, insider deals, massive fraud, and an alleged pay-to-play scheme currently under criminal investigation.
With Tim Walz pulling out of his gubernatorial race, Hobbs stands alone as the most scandal-plagued governor on the 2026 ballot. Arizona voters can’t afford to tolerate another four years of her corruption.
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Arizona has hardly had an opportunity to recover from the aftershocks of Biden-omics. The trillions of dollars injected into the economy through the so-called Inflation Reduction Act continue to work their way through the system in the form of higher prices and eroded purchasing power. Open-border policies that expanded the labor supply at the lower and middle ends of the wage scale have depressed wages. And the Biden Administration’s unprecedented regulatory burden on industry, a nearly $2 trillion drag on the economy, will take far longer than a year to unwind and correct.
Unfortunately for Arizona, efforts to fix these problems at the federal level cannot be fully realized here at home because Katie Hobbs remains our Governor.
Hobbs has harmed Arizona’s recovery, overseeing a massive fall from 4th in the nation in job growth to 47th. She inherited a booming local economy after a Republican legislature and Governor ushered in a 2.5 percent income tax, incentivized entrepreneurs and small businesses, prioritized deregulation, and expanded choice and freedom in education. Yet Hobbs has managed to squander that opportunity. In fact, it takes a special skill set to be perfectly set up for success and then drive a working model into the ground.
And Hobbs knows she’s to blame. That’s why she’s now desperately trying to reinvent herself by pushing Trump-esque tax cut rhetoric while clinging to the same big-spending, high-tax policies that caused the damage in the first place. At her core, she remains a California-style Democrat who would rather govern Newsom-style than embrace the Republican solutions that actually work. That’s why, despite a Republican legislature that has delivered tax relief bills, more disciplined budgets, and common-sense deregulation, she has earned a reputation as the veto queen.
As a result, Arizonans are dealing with real affordability woes, and they best not hinge their hopes on Hobbs.
Despite responsible budgeting and repeated tax relief efforts by Republican lawmakers, affordability pressures continue to mount. Taxes are creeping higher at every level of government. Utility bills have surged. Housing costs are outpacing wage growth. And programs intended to help struggling families are losing billions to fraud, waste, and mismanagement.
That is why the 2026 legislative session must focus on Affordable Arizona. And Republican lawmakers already know how to confront the true drivers of cost, restore economic growth, protect taxpayers, and ensure Arizona remains a place where families can afford to live, work, and build a future.
Deliver Real Tax Relief, Not Hobbs Window Dressing
President Trump delivered historic tax relief for working families through the One Big Beautiful Bill. Arizona now has a choice: conform to the whole amount and pass that relief through to taxpayers or allow Hobbs to water it down and quietly raise taxes.
That means this session Republicans must unify behind a plan that delivers at least $420 million in meaningful tax relief, is tailored to Arizona’s needs by prioritizing workers, families, small businesses, and fixed-income retirees and ultimately avoids bad policy gimmicks like the SALT deduction, which benefits high earners in high-tax states.
Governor Hobbs has tried to rebrand herself as a tax cutter, but her conformity proposal doesn’t come close to covering the full impact of federal tax changes. Anything short of the full conformity box means Arizonans pay more in state taxes, even if they get a federal tax cut.
Stop the Local Tax Creep
Even as the Legislature has cut taxes, cities and towns across Arizona have been quietly raising them. Sales taxes, use taxes, fees, rates – local governments are stacking them year after year, erasing the gains families were supposed to feel from conservative reforms.
This local tax creep isn’t accidental. It’s the result of city councils that refuse to control spending and know taxpayers will be forced to foot the bill.
The Legislature must step in with the kinds of taxpayer affordability protections Republicans are known for such as a moratorium on local tax, rate, and fee hikes, voter approval for any local tax increase, absolute caps on local tax rates, and ending property tax hikes to support empty and underutilized schools.
Hobbs won’t be keen on choosing taxpayers over her local big-government allies, but Republican lawmakers should press ahead anyway. After all, affordability doesn’t end at the state’s income tax rate. It’s felt in every incremental tax and fee levied by local jurisdictions.
Lower Energy Costs by Stopping the Green New Scam
Arizona families are being crushed by rising utility bills. Ratepayers of the largest monopoly utility in the state have been shocked by three major rate hikes in four years with another 14% increase being proposed this year. And all of it is driven by utilities chasing expensive, unreliable “green” scam projects (and profits).
Ratepayers are paying for massive battery farms, wind, and solar projects that don’t reliably meet peak demand while pushing dependable energy offline. The result is an impending energy crisis with higher costs and less reliability.
Republicans have real solutions to this critical pocketbook issue. Reform utility resource planning to prioritize reliability and cost, allow large energy users to build their own power to reduce strain on the grid, and require utilities to meet dependable, dispatchable energy targets.
Despite Hobbs vetoing every prior attempt to protect ratepayers (and her consistent alignment with utility interests,) Republicans must make stopping these relentless rate hikes a priority. Affordable energy is the backbone of an affordable state and a major kitchen table issue for Arizonans.
Crack Down on Hobbs’ Welfare Fraud and Health Care Waste
Affordability is also undermined by billions of wasted taxpayer dollars. Arizona’s AHCCCS system alone has been rocked by more than $2 billion in fraudulent billing, including a single $650 million scheme that occurred under Katie Hobbs’ watch.
That money comes directly from taxpayers.
Whether Hobbs has been asleep at the wheel or distracted by manufacturing her own questionable pay-to-play arrangements, it’s up to Republicans to clean up her mess. That means strengthening oversight, improving fraud detection, enforcing eligibility rules, mandating regular independent audits – and continuing to investigate Hobbs’ alleged misconduct.
Every dollar stolen is a dollar that could have lowered taxes or reduced costs for families.
Hobbs is a Hinderance, But Help is on the Horizon
The 2026 legislative session is critical for Arizona.
One path leads toward California-style governance: higher taxes, higher costs, endless subsidies, and permanent dependence on government programs that only increase our state’s problems.
The other path builds upon Arizona’s proven conservative model: lower taxes, abundant energy, and accountability in public spending.
Republicans have the ideas. Republicans have the record. Now Republicans must make 2026 the session that decisively puts affordability first for today’s families and especially as we weather the last 12 months with Hobbs at the helm.
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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When people hear the phrase “left-wing political machine,” they probably think of local activist groups, paid protestors, and maybe even out-of-state wealthy progressive donors writing checks from afar. That mental model would be both outdated, oversimplified, and a major underestimation.
What operates in Arizona today is far more sophisticated and opaque. It’s best understood not as a movement (as the Left likes to brand themselves), but as a syndicate: multiple non-profits leveraging tax deductible contributions to advance shared political goals through a permanent, year-round infrastructure.
Our newly released report, prepared in conjunction with the Arizona Liberty Network, examined the financial transactions between a consortium of non-governmental organizations (NGOs) operating in the Grand Canyon State, and illuminates just how far-reaching this system is…in Arizona, this liberal syndicate has its fingerprints on almost every lever of government.
A National Pipeline, Not a Local Movement
When examining the financing of the liberal syndicate, it’s important to note that virtually all of their funding comes from out of state sources. National, and in some cases multinational, donors and foundations are the primary sources of money. The NGO network also utilizes direct taxpayer subsidies through grants at the federal level.
Most of the individual donors and foundations bankrolling the syndicate provide their giving through a financial instrument known as a donor-advised fund (DAFs). A DAF lets wealthy progressives make tax-deductible contributions to a private fund, which then routs their donations to ideological nonprofits.
The other major trough of funding for the network comes from taxpayers in the form of government grants. The most notable Federal agency providing these funds was USAID, which contributed over $50 million last cycle to progressive “philanthropic” organizations that then participate in political advocacy in Arizona.
From there, the money gets funneled through a web of intermediary organizations. Arabella Advisors (recently defunct and being replaced by Sunflower Services), Tides, and their affiliated funds dominate this space. These groups aggregate all that tax-advantaged and taxpayer-backed dollars, then redeploy them nationwide. Arizona is one of their preferred destinations.
Our report tracked more than 180 financial transactions, primarily from 2023 and 2024 alone. Altogether, the upstream sources pushed over $1.8 billion into the liberal NGO network, with nearly $200M ending up with organizations operating in Arizona.
So, this is no organic grassroots “movement”. It is a sophisticated syndicate: part tax-subsidized, part tax-advantaged, and built to operate year-round.
Permanent Infrastructure is the Name of the Game
What makes this system effective isn’t any single race or election. The bigger picture (and the bigger bucket of money) is the investment in everyday operations: voter registration, litigation, lobbying, and media narrative control.
Progressive organizations build C3/C4 pairings where the “nonpartisan” arm registers voters, builds databases, does policy research, and trains staff year-round. The sister C4 then uses that same infrastructure for electioneering, lobbying, litigation, and ballot measures.
Another mainstay is their funding of media outlets that will curate and frame the everyday narratives around Arizona issues, politics, and politicians. For example, Copper Courier received more than $7 million since 2022 from Soros-aligned entities. Though funded through tax-exempt nonprofits, it functions less like journalism and more like a citation farm for Democrat messaging with content written by operatives, shared by activists, and then recycled by campaigns during election season.
They then utilize the network to amplify their direct political spending.
In 2024 alone, aligned progressive groups spent over $33.2 million on non-federal races, which includes down-ticket candidate races and ballot measures.
One mega-PAC, PAC for America’s Future – Arizona, raised $28 million, mostly from out-of-state donors, and sent $3.2 million straight to the Arizona Democratic Legislative Campaign Committee. Their largest individual donation was a $2 million check from Jonathan Soros, son of billionaire donor George Soros.
Their major targets were flipping the Arizona State Legislature blue and passing an extreme pro-abortion measure. Coordinated progressive groups, such as the Chispa AZ PAC, Future Freedoms, Opportunity Arizona, and Our Voice, Our Vote poured over $7 million into boosting legislative Democrats and $4.5 million into opposing Republicans in key swing districts. Groups such as Mi Familia Vota, Will of the People, AANHPI Rising Tide, and Worker Power PAC spent heavily in the ballot measure space.
Understanding and Countering the Blueprint
Most people after viewing our report want to know if anything can be done to thwart this coordinated assault on Arizona and other states around the country.
We believe it can be stopped, and believe the first step is creating awareness about this threat. It’s obvious that this liberal network is not spontaneous civic engagement. This is a sophisticated, tax-subsidized, and centrally coordinated political syndicate, built to operate every day, every year, regardless of election outcomes. The more people know about it, the less they can operate in the shadows.
The next step is cutting off taxpayer funds from organizations that engage in political activity. The Trump administration took a major step on this front when they shuttered USAID earlier this year. But there are other federal, state and even local jurisdictions handing out taxpayer cash to liberal non-profits, that then use those dollars to lobby and electioneer in Arizona. All of it should be banned.
And finally, while it can be difficult to draw a clear line between some philanthropic educational activity that can be political, what is undeniable is that tax-deductible NGO’s cannot finance overt electioneering or activities that violate the law. For instance, partisan get-out-the-vote drives or organizations that promote violent protests should not receive tax-exempt status and must be investigated by the Department of Justice.
The good news is that it’s clear that this progressive network is feeling the heat. In just the last couple of months, several major donors have announced that they are severing ties with the syndicate. And Arabella Advisors, the largest intermediary in the network, quietly announced that they are closing their doors and have reorganized under a new entity called “Sunflower Services.”
We believe that with continued public scrutiny and political pressure, the Arizona Liberal NGO Syndicate can be dismantled.
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!
Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.
Our country is facing an energy crisis. No, not because of new demand from data centers or AI. Instead, it’s because utilities in nearly every state, due to government imposed “renewable” mandates, self-imposed mandates, and the supercharging of the Green New Scam under the so-called “Inflation Reduction Act”, have been shutting down vital coal resources and building out almost exclusively intermittent and costly resources like solar, wind, and battery storage.
Taking a look at our largest regulated utilities (APS, TEP, and UNS) and the largest nonprofit utility, SRP, future plans paint an alarming picture. Combined, over the next 15 years, these utilities expect to see demand increase from 19,200 MW to 28,000 MW. For reference, 1,000 MW of electricity is enough to power roughly 250,000 homes. To meet that growth in demand, however, Arizonans will only get a net increase of 989 MW of reliable generation (coal, natural gas, and nuclear) compared to 22,543 MW (or nearly 23 times as much) of intermittent solar, wind, and battery storage.
But what about all of the new natural gas coming into the state? The vast majority of it will be eaten up just to replace existing coal resources, not to bring additional affordable energy to the grid. For example, the SRP board recently voted to approve the conversion of their Springerville coal plant to natural gas by 2030, which follows an earlier vote to convert another of their coal plants, Coronado, to natural gas by 2029. This coal conversion trap leaves ratepayers with the same amount of energy as before, eating up new natural gas capacity, without the benefit of more electricity.
So, while the Arizona utilities plan to collectively build an additional 4,538 MW of natural gas capacity over the next 15 years, at the same time they will be removing -3,549 MW (all of what is left on the grid today) of coal. And there are no plans for more nuclear capacity anytime soon. Instead, to meet their voluntary climate commitments, utilities plan to saddle ratepayers with the cost and resultant blackouts of the green new scam.
It’s the same story around the country. Electricity rates are rising. Reliability is crumbling. We know the cause. For generations, we’ve been able to provide reliable energy at an affordable cost. The only variable that has changed has been what we are choosing to build. Then, it was reliable, dispatchable power. Now, it is intermittent sources that we know cost more, and that we know cause blackouts, all to meet absurd goals of going 100% renewable – something that no utility, state, or country has been able to achieve. And we know the result when they try.
This crisis can be avoided. President Trump has laid out the plan to unleash American Energy. Now, it’s time for utilities to drop their costly green new scam commitments and go back to building reliable and affordable power that generations to come will benefit from.
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!
Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.
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