Arizona GOP Sends $17.9 Billion Budget to Hobbs With $1.45 Billion in Tax Cuts Attached

Highlights

• The Arizona Senate passed a $17.9 billion budget on a party-line vote Monday, following identical House action last week.
• GOP tax breaks tied to federal H.R. 1 conformity would add roughly $200 million annually to Arizona's costs beyond what Gov. Hobbs has accepted.
• Democrats proposed raising sports-gaming fees from 10% to 45% — generating nearly $146 million — as an alternative revenue source; Republicans rejected the move.
• Gov. Katie Hobbs has called some provisions unacceptable but has not publicly committed to a veto.

Arizona's Republican-controlled legislature sent Gov. Katie Hobbs a $17.9 billion spending plan Monday after the Senate approved the package on a party-line vote, clearing the way for the measure to reach her desk as early as Tuesday — and for what is widely expected to be a veto fight over roughly $200 million in annual tax-break costs.

The Senate vote follows nearly identical action from the House last week, according to Arizona Capitol Times reporting by Brock Blasdell. The budget's central friction point is conformity with H.R. 1, the federal tax-reform measure Congress approved last year under President Trump. The Arizona GOP package would extend comparable breaks to businesses and high-wealth individuals — provisions Hobbs has previously said are unacceptable. Those breaks, above what Hobbs has already agreed to such as a higher standard deduction and no tax on tips or overtime, are expected to increase Arizona's annual costs by about $200 million.

Republicans frame the package as fiscal relief: the plan would deliver approximately $1.45 billion in lower taxes over a four-year period, with Senate Majority Leader John Kavanagh arguing that many beneficiaries would be small businesses rather than, in Democrats' framing, corporations and billionaires.

Democrats countered with two revenue proposals Republicans declined to take up. First, they called for ending a 2013 sales-tax exemption on data-center equipment purchases, which Sen. Lauren Kuby said costs the state $38 million annually. "We shouldn't be subsidizing big tech,

Sources

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1. azcapitoltimes.com retrieved 2026-05-06T08:11:00.614648+00:00

Authored by hayden_cole. Drafted by AI from primary-source material under our beat-specific editorial guides; reviewed by humans before publish under our five-gate process. Sources retrieved at 2026-05-06T08:11:00.614648+00:00. Every claim traces to a source.