Montenegro, Petersen put Pressure on Hobbs to Accept Budget

PHOENIX — The $17.9B Arizona House Republican budget plan is in, shifting the state’s budget stalemate from a petty partisan battle to a public test of whether Gov. Katie Hobbs and GOP legislative leaders can restart talks. The proposal, passed by House Republicans, includes nearly $1.5 billion in tax relief over three years and spends about $800 million less than Hobbs’ latest budget plan. Republican leaders say the package conforms Arizona tax law to recent federal changes, eliminates state taxes on tips and overtime, expands child-care tax relief, increases the dependent tax credit, and protects funding for K-12 education, public safety, and child protection.

House Speaker Steve Montenegro (R-29) framed the plan as a good-faith response to Hobbs’ demand that Republicans produce a public budget. Montenegro has said Republicans are now waiting for the governor to re-engage, arguing Hobbs walked away from talks and should return to the table. “We’re waiting for her to pick up the phone, email us, text us,” Montenegro said.

Senate President and SOS Candidate Warren Petersen (R-14) praised the package as proof Republicans can deliver tax relief while balancing the state’s obligations. He said Hobbs had claimed that full conformity to federal tax relief was impossible, but the Republican bill has proven otherwise. Petersen described the proposal as one of the largest tax cuts in state history and said it would benefit tipped workers, hourly employees, seniors, small businesses, and families.

The governor’s office has not signaled acceptance. As noted in the April 30, 2026, article in the Arizona Globe, Hobbs had previously objected to portions of the GOP plan, including proposed eligibility changes affecting Medicaid and SNAP, while also criticizing Republicans for leaving out her proposal to repeal the state’s data center tax exemption, which she says could generate $38 million annually. Her office has said it is still reviewing the proposal and waiting for signs that Republicans are serious about bipartisan negotiations.

That response suggests the House GOP budget is unlikely to become law in its current form. Hobbs may be open to portions of the tax package, especially politically popular provisions involving tips, overtime, and family relief. But the broader spending reductions, entitlement eligibility changes, and omission of Democratic revenue priorities make a signature improbable without further concessions.

For now, the budget appears more like a negotiating marker than a final agreement. Republicans can argue that they answered Hobbs’ demand for a plan; Hobbs can argue that the plan remains too partisan to sign. Unless one side initiates renewed talks, the dispute risks becoming less about arithmetic than political positioning.