Arizona State Treasurer Kimberly Yee (R) is refusing to allow Governor Katie Hobbs’ controversial “executive deputy directors” to participate in this week’s State Board of Investment meeting. The shot across the Governor’s bow is the latest skirmish in an increasingly contentious battle stemming from Governor Hobbs’ appointments outside the State’s legally proscribed oversight process. The Board is responsible for overseeing the state’s $30B investments in programs, including Arizona’s Education Savings Plan, and serving as the Trustee of the Permanent Land Endowment Trust Fund (PLETF), a nearly $8B trust that funds a variety of programs including Arizona education, hospitals, and prisons.

Treasurer Yee’s refusal comes on the heels of the ongoing war of words between the Governor and the Senate over department head nominations. Arizona law mandates Senate approval of nominees put forward by the Governor, a process that was so frustrating to the Governor that she withdrew all of her candidates, filling the Directorships as temporary positions instead. This “end-run” around the Senate’s oversight created growing tensions between the two branches of State government, and resulting in the escalation by the Treasurer.

Yee took a swipe at the governor. “I believe she (Hobbs) is thumbing her nose at the law,” said the Treasurer. She added that Hobbs should know better, having served in the AZ Senate.

The Governor’s press aide, Christian Slater, fired back. “We expect Treasurer Yee to stop playing political games,” arguing that Arizona law allows temporary appointments. He demanded that the Treasurer “seat the duly authorized board members and ensure government keeps working on behalf of Arizonans.

Senate President Warren Petersen (R-14) released a statement earlier calling the Governor’s move “unlawful” but acknowledged that the appointees could serve without Senate approval for up to one year. He vowed to “continue following State law” despite Hobbs’ decision. In the meantime, Ms. Yee will likely continue disallowing temporary appointees from accessing critical treasury meetings, at least in the short run.