Arizona Gov. Katie Hobbs vetoed legislation that was specifically crafted in response to allegations that her administration favored a political donor when awarding state contracts.
Hobbs vetoed Senate Bill 1612, which would have required companies that seek state contracts or grants to disclose “anything of value” they have provided to the governor, a gubernatorial campaign or other entities that supported the governor’s election or inauguration in the past five years.
It would also ban state employees from destroying notes taken as they evaluate companies seeking state contracts.
“Gov. Hobbs' veto of SB 1612 is an alarming example of the fox guarding the henhouse," Sen. T.J Shope (R-Coolidge), the bill’s sponsor, said in a statement.
Shope said the bill was crafted in response to a June 2024 report in the Arizona Republic that found the Department of Child Services provided a nearly 60% pay rate increase to Sunshine Residential Homes, a state contractor that runs group homes for children in foster care. The company and its CEO contributed hundreds of thousands of dollars to the Arizona Democratic Party and Hobbs’ gubernatorial campaign in 2022.
The company also donated to Hobbs’ inauguration fund, the Republic reported.
At the time, a spokesman for Hobbs said the Governor’s Office was not involved in the decision to increase Sunshine Residential’s pay rate, pointing to a letter to DCS from CEO Simon Kottoor claiming the company was losing money and needed the higher rate to continue providing services to the state.
Shope’s bill would have also made all Medicaid contracts subject to state procurement rules. Under current law, the Arizona Health Care Cost Containment System, which is the state’s Medicaid agency, is exempt from the Arizona Procurement Code.
Shope argued that part of the bill was needed after an administrative law judge determined last year that AHCCCS had improperly issued contracts with health care companies that provide services to 26,000 older adults and people with disabilities.
“Had she signed this bill into law, she would have given the citizens of Arizona greater confidence in state government acting in their best interests and not the best interests of political campaign coffers,” Shope said in a statement.
Hobbs only addressed that portion of the bill in a letter explaining her veto.
“AHCCCS’s current procurement and award processes for managed care contracts are consistent with Medicaid industry best practices,” she wrote.
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