(The Center Square) – The Arizona Legislature is waiting to see whether Gov. Katie Hobbs will sign a $17.9 billion budget that gives Arizonans one of the biggest tax cuts in state history.
House Majority Leader John Kavanagh, R-Fountain Hills, said he thinks the Democratic governor will veto the Republican-passed budget. However, he said he thinks the budget that will be ultimately agreed upon will “be extremely close to this budget.”
“Our Republican members are locked into it. She pushed us to commit to a budget without her input. But we are open to some modifications to take care of her wants and needs,” Kavanagh told The Center Square.
The Center Square reached out to Hobbs’ office for comment, but did not receive a response before press time.
The Republican majority in the Legislature say that under their bill, Arizona taxpayers would save an estimated $1.45 billion over the next four years. The legislation was passed Monday along party lines and sent to Hobbs.
The budget proposal fully aligns with the tax cuts implemented in Congress’ HR 1, also known as the One Big Beautiful Bill Act
Besides tax cuts, items included in the Arizona budget are no state taxes on tips or overtime pay, a higher standard deduction and a dependent tax credit, as well as a $6,000 deduction for people over 60.
The budget also keeps current funding levels for K-12 education and public safety, maintains the state land trust funding for K-12 education and restricts the state’s spending growth to 1.9%.
To help eliminate waste, fraud and abuse, the budget includes what Republicans call stronger verifications for government assistance programs, repeals special interest tax credits and implements a 5% budget cut to most state agencies, except public safety and child welfare.
On top of this, the budget prevents Arizona taxpayers from having to refile their 2025 taxes.
Senate President Warren Petersen, R-Gilbert, said the Republican majority’s budget “puts Arizona families first.”
“We cut taxes, protect essential services, and base every decision on real April revenue projections — not wishful thinking,” he said. “In divided government, we faced the math, eliminated waste through targeted reforms, and delivered real results without raising taxes or growing government.”
Kavanagh told The Center Square that the Arizona Legislature’s passing of the new budget was a “great victory for everyday people who want to see a few extra dollars in their wallet.”
After Hobbs vetoed the two previous budgets the Legislature passed, Kavanagh said, a small group of Republican leaders from the House and Senate met to develop a budget. He added that both chambers received input from Republican members.
“We put together a budget that we felt we could pass with unanimous support in response to the governor’s challenge for us to come up with a balanced budget that gives people and businesses the tax cuts that conform with the federal tax code,” he said.
In reaction to the budget, Arizona Senate Democrats said on social media that Senate Republicans “once again defended a budget that raises costs to working families, cuts essential services, and risks Arizona’s fiscal stability all to protect tax breaks for billionaires, data centers, and special interests.”
“This budget takes from working families and gives to corporations,” the Arizona Senate Democrats noted on X.
Last year, during the legislative session, Hobbs and the Republican-controlled majority came down to the final days until a budget was signed into law. However, Kavanagh said budget negotiations will be quick in 2026.
Since April 13, Hobbs said she would not sign any new bills into law until Arizona Republicans engaged in serious negotiations.
Kavanagh said her moratorium on bills has not had any impact on the Legislature. He noted it had “plenty of bills” that needed work.
The Senate has an estimated 75 outstanding bills in its chamber, according to Kavanagh, adding that the senators could vote on them within a day.
“Public relations-wise, it made the governor look terrible, but it didn’t affect us,” he said.
