Arizona House Republicans have criticized Governor Katie Hobbs for her approach to tax policy and affordability, highlighting a recent veto of their proposed tax relief plan. The dispute follows Governor Hobbs’ State of the State address on January 12, where she mentioned “affordability” 14 times, according to Republican lawmakers.
House Republicans argue that despite increased state revenues—nearly $3.5 billion more over the past five years—the governor has not supported efforts to return surplus funds to citizens through tax conformity. They say this annual process aligns state law with federal tax changes, and after significant federal updates last summer, they sought the governor’s cooperation in a special session. “What did the governor version of Katie Hobbs do? Nothing,” said House Republicans.
In response, House and Senate Republicans introduced a tax relief plan before the legislative session began. The proposal aimed to eliminate taxes on tips and overtime for workers, increase the child tax credit, allow deductions for childcare expenses for families, simplify filing and accelerate depreciation for small businesses, and provide retirement income deductions for seniors. The plan was projected to return $1.1 billion to taxpayers over three years.
Governor Hobbs vetoed this legislation early on a Friday morning and subsequently released a budget that included $650 million in new taxes and fees by noon that same day. “House Republicans want Arizonans to live well. Governor Hobbs wants the government to live well,” they stated.
The situation has created complications for taxpayers as the Department of Revenue has already issued tax forms that do not align with Governor Hobbs’ recently announced plan for tax conformity—a plan made public only after Republicans had passed their package through the Legislature. The forms include a state and local tax (SALT) deduction primarily benefiting higher-income individuals—a provision Democrats have criticized as favoring billionaires.
“Buried in the Hobbs tax forms is a state and local tax (SALT) deduction that primarily benefits the wealthy. Hobbs and Democrats routinely denounce this provision as a tax cut for billionaires, but they have confused which plan actually included it,” said House Republicans. They noted their own legislation would have eliminated this deduction in favor of expanding credits for children and childcare.
“The chaos ahead is entirely of Hobbs’ making. Candidate Katie Hobbs talks about smaller tax packages. Gov. Katie Hobbs’ tax forms suggest she either supports billionaires or has no idea what she is doing,” Republican legislators said.
Michael Carbone is among those Republican representatives raising concerns about these issues; he was elected in 2023 to represent Arizona’s 25th House District after replacing Michelle Udall.
Republican leaders conclude: “Arizona’s affordability crisis cannot afford either.”
