Hobbs and Petersen Say Arizona State Budget Deal Near as July 1 Deadline Looms for Prescott Families

Governor Katie Hobbs and Senate President Warren Petersen both say a bipartisan state budget agreement is close, with a final deal expected within weeks of the July 1 fiscal year start.

The statement came Monday as the clock ticks down on one of the most contentious budget battles in recent Arizona history.

From vetoes to negotiations

Just three weeks ago, Hobbs vetoed a Republican budget proposal she called "unbalanced and reckless." The governor had also vetoed two tax-conformity bills and instituted a moratorium on legislation after a dispute over whether to put a new Proposition 123 measure before voters.

That moratorium ended on May 14, and budget talks restarted soon after the veto.

"We've done this for the past three years. I'm confident we'll get to a bipartisan balanced budget that works for Arizona," Hobbs said Monday.

Petersen agreed in a text message to ABC15.

"We have closed out most of the line items. But the last details can be the hardest," he said.

What Prescott residents should know

The final budget will determine funding for the Arizona Department of Economic Security, which administers SNAP benefits, utility assistance, and other programs used by thousands of Yavapai County families.

Hobbs' January budget proposal called for more DES staffing, expanded utility assistance, and funding for affordable housing. She also proposed a new fee on short-term rentals, higher fees on large sportsbooks, and repealing tax incentives for data centers.

The Republican proposal she vetoed included full federal tax conformity and 5% cuts to all but three state agencies.

Hobbs would not disclose what compromises have already been agreed to.

A tight timeline

Petersen said the earliest a budget could pass is in the first two weeks of June. Hobbs said to expect a budget within a couple of weeks.

The deadline is firm. A new budget must be in place by July 1.

Complicating the timeline, Republican lawmakers are scheduled to visit Washington, D.C. June 15-17 for a three-day, taxpayer-funded trip to discuss policy with the Trump administration.

That leaves roughly two weeks between the lawmakers' return and the fiscal year start.

The bigger fight: tax conformity

The central disagreement remains tax policy. Republicans want full conformity with President Donald Trump's federal tax cuts so Arizonans do not have to file amended state returns. Hobbs has rejected that approach.

"I think a lot of what we see in the public is political gamesmanship. And we've had that before, and we've gotten past that and gotten to the table and gotten negotiations done," Hobbs said.

The outcome will shape state revenue, agency funding, and the cost of living for residents from Phoenix to Prescott for the next two years.