Surprise Families Await Budget Clarity as Hobbs and Legislature Near Arizona State Deal

The Clock Is Ticking on Arizona’s Budget

Surprise residents are watching closely as Governor Katie Hobbs and Republican lawmakers signal they are nearing a state budget agreement. The deal must be finalized by July 1 to avoid a government shutdown that would disrupt services across the Valley.

Both sides say they have resolved most issues behind closed doors after weeks of public hostility.

"We have closed out most of the line items. But the last details can be the hardest," Arizona Senate President Warren Petersen said in a text message to ABC15 on Friday.

From Veto to Negotiation

Three weeks ago, Hobbs vetoed the Republican budget proposal, calling it "unbalanced and reckless." The GOP plan totaled $17.9 billion and included full tax conformity with federal cuts as well as a 5% reduction to most state agencies.

Hobbs’ original budget proposal called for $18.7 billion in spending. Her plan prioritized education funding, expanded utility assistance, and staffing for the Department of Economic Security.

Since the veto, both sides have kept negotiations private. Hobbs ended her moratorium on signing bills on May 14.

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

The Issues Still on the Table

Two major disputes remain at the center of the negotiations.

Proposition 123 renewal. The education funding measure passed by voters in 2016 expired last year. Hobbs wants to send a new version to the ballot. Some Republican lawmakers now oppose it, arguing it could benefit Hobbs in her November re-election bid.

Tax conformity. Republicans want the state to fully conform to federal tax cuts enacted by President Donald Trump. Hobbs vetoed two tax-conformity bills, arguing the cuts would reduce state revenue. She has said she is open to partial conformity.

Senate Majority Leader John Kavanagh, one of the Legislature’s chief budget negotiators, told 12News that talks have been going "smoothly," though he declined to discuss specifics.

What Surprise Residents Should Know

The final budget will determine funding for:

• Public schools and the Empowerment Scholarship Account voucher program
• State agency operations, including law enforcement and health services
• Affordable housing and utility assistance programs
• Economic development and infrastructure projects

Petersen said the earliest the budget could pass is in the first two weeks of June. Hobbs suggested a deal could come within a couple of weeks.

Republican lawmakers are scheduled to visit Washington, D.C. for a three-day trip in mid-June. The trip, funded by taxpayer dollars, will take place just two weeks before the budget deadline.

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

No final agreement has been reached. Neither side has disclosed what concessions have been made or what remains in dispute.