Hobbs vetoes financial disclosure bill sparked by pay-to-play allegation

The measure written by Sen. T.J. Shope would have required any company bidding on state contracts to immediately disclose any donations made to the governor, to any campaign committees or inaugural funds, and to any entity that "advocates for the election of the governor or for the defeat of an electoral opponent of the governor.'' That would have applied to not just the company but all of its officers, directors, and all their family members — and would have gone back for five years.

The Coolidge Republican first introduced the measure last year after public disclosure that Sunshine Residential, which provides group homes to children in the state's foster care system, had donated $400,000 to Hobbs and the Arizona Democratic Party. It was later awarded a more than 60% increase in payment for the same services.

That led to ongoing investigations of what Shope has called a "pay-to-play'' scheme by both Attorney General Kris Mayes and Maricopa County Attorney Rachel Mitchell.

Hobbs made no reference to any of that in her veto message Friday.

"This proposal is a political stunt that applies only to one elected official,'' she wrote. "What we really need is real transparency and accountability for all elected officials, campaigns, and affiliated political committees.''

Shope told Capitol Media Services it is the governor who is playing politics.

The proof, he said, was that Hobbs, with the help of Senate Minority Leader Priya Sundareshan, sought to add new restrictions about donations from those bidding on state contracts — restrictions that would apply not just to state officials but to lawmakers.

"The Legislature, in and of itself, is not involved in procurement,'' Shope said. He said decisions on who gets a contract, the terms of the contract and any amendments are strictly within the purview of the Governor's Office and the department heads who report to her, making any proposals to add wording on donations to legislators a diversion.

Still, he said, the veto has served a purpose.

The controversy brings into sharp focus the whole issue of the ability of a company to influence the terms of contracts without more comprehensive public disclosure than now required. More to the point, it does so ahead of the general election in which Hobbs is running for re-election — and the contract already has become a campaign issue.

"It is now truly the proverbial political football in the sense that the voters will get their opportunity to weigh in in November,'' Shope said.

The contract award at issue

Hobbs has been on the political defensive since it was first revealed that Sunshine Residential gave $100,000 to her 2023 inaugural fund. Only a $250,000 donation by Arizona Public Service, the state's largest utility, was larger.

Close to $1.7 million was raised for the event. But Hobbs' campaign said it cost less to put it on. That meant Hobbs was able to set aside the balance for political purposes, including electing Democrats.

It ultimately turned out that Sunshine, owned by Paradise Valley businessman Simon Kottoor, also gave $300,000 to the Arizona Democratic Party.

All this came as the state was deciding whether to increase the amount of money the Department of Child Safety, run at the time by David Lujan, a Hobbs appointee, was paying Sunshine for out-of-home care for foster children.

An agency spokesman, Darren DaRonco, said Sunshine's initial bid for more money in 2023 was rejected.

But DaRonco said Sunshine made the case that unless it got more money, it would transfer more of its beds to the federal government to house immigrant children. He said such a move would have meant fewer places for DCS to place its foster children.

So DCS increased the contract from $140 per bed to $195. And then Sunshine got a new contract boosting its rate to $234. The feds were paying $225 a bed.

Hobbs proposed broad ban

Hobbs vetoed Shope's first disclosure bill in 2025.

But the governor said earlier this year she would be willing to consider the issue if it was more comprehensive, including a blanket ban on any and all registered lobbyists paying for food and beverages, speaking engagements, travel and lodging, and flowers for state officials, employees and legislators.

Gubernatorial spokesman Christian Slater said Hobbs agreed to scrap that language after Shope showed no interest in including such a blanket ban in contract disclosure legislation.

But he also acknowledged that Shope is not alone among lawmakers in having no particular desire to cut off lobbyist largesse: Not a single Democrat, including Sundareshan, offered a similar proposal this session.

Sundareshan said there may be a time to discuss such a ban. But not now.

"All I have is my lawmaker's salary,'' which is $24,000, said the Tucson Democrat. Much of that, she said, goes to pay for daycare for her two children.

So absent a salary hike — something that would have to be approved by voters — Sundareshan said she finds herself going to some of the lobbyist receptions, even taking home extra food for the family to cut expenses.

Still, she was willing to vote for Shope's original plan for a five-year lookback disclosure — with some additions.

Most significant, she wanted to outright bar any contribution, gift or other item worth more than $50 to any candidate for legislative or statewide office or political action committees from anyone connected with a bidder from the time a bid is submitted through 90 days after the award of a contract. That, said Slater, is far more comprehensive than simple disclosure.

Shope, however, got the Republican-controlled Senate to reject Sundareshan's addition. "I look forward to chatting with the sponsor at a future date,'' he said.

But Shope conceded he never contacted Sundareshan, instead sticking with his original plan which got through the House — unamended — and was sent to the governor's desk, where he acknowledged he knew it would be rejected.

Knowing that his plan was headed for yet another veto, why did he not reach out? "I think that that's a fair question,'' Shope acknowledged Monday. But he said Sundareshan's amendment "was also equally a political statement'' and not an honest effort to come up with an acceptable plan.

Investigations continue

The veto means there are still gaps in laws making it easy for the public to find out about donations by would-be contractors to the governor or gubernatorial candidates. 

Meanwhile, the probe that Mayes opened up in June 2024 about the contract award remains.

A spokesman for the office declined to say what the status is of that probe, other than it is "ongoing.'' Mayes herself has said she plans to complete it before the November election. But she also has confirmed she wants Hobbs to consent to an interview before wrapping up the inquiry.

Slater would not say Monday whether Hobbs would agree to sit down with investigators. He said the Governor's Office has been in contact with Mayes' office about the request "and looks forward to the conclusion of this investigation.''

He said that will show that neither Hobbs nor her office were involved in the contract decision "and DCS acted in the best interest of Arizona's foster children.''

The Maricopa County Attorney's Office, which is working with the state Auditor General's Office, an arm of the Legislature, also reports nothing new in its own probe.

Separately, Republican House Speaker Steve Montenegro put together an advisory team — composed only of Republican lawmakers — to probe any link between the donations and the contract. That team then hired Justin Smith, an out-of-state attorney who has defended other Republican interests, to act as an independent investigator in the probe.

There has been no report from Smith or the GOP panel.