GOP lawmakers call on Gov. Katie Hobbs to pass their welfare reform measures or AZ could lose federal funds

PHOENIX — President Trump’s “Big Beautiful Bill” brought major changes to the nation’s tax system — but it also reshaped benefits for low-income Americans. 

Now, those federal shifts are fueling a new budget battle at the Arizona State Capitol.

On Tuesday, Republican leaders gathered in the Rose Garden outside the Capitol to push for new legislation aimed at cracking down on fraud in two major assistance programs: Medicaid and SNAP, commonly known as food stamps.

House Majority Leader Michael Carbone said federal law now requires states to tighten oversight, warning that Arizona could lose critical funding if changes aren’t made.

“Federal law mandates reform,” Carbone said. “Arizona has about 7.5 million residents, and nearly one in three Arizonans receive either Medicaid or SNAP.”

Republican lawmakers delivered a clear message to Democratic Gov. Katie Hobbs: sign the reform package, or risk losing millions in federal support for vulnerable residents.

“If Gov. Hobbs vetoes this package, Medicaid costs will continue to grow,” Carbone said. “SNAP penalties could rise up to $300 million annually.”

One of the central issues is Arizona’s error rate in distributing SNAP benefits. 

The state currently sits at 8.8% — one of the lowest rates in the country — but new federal standards require every state to reduce that number below 6%.

Lawmakers argue that failing to meet the requirement could bring steep penalties.

Hobbs’ budget director has said the governor also supports lowering the SNAP error rate below 6%. However, a spokeswoman for Hobbs declined to comment Tuesday on the Republican reform package or the growing budget dispute.

But another troubling statistic has entered the conversation: improper spending in Arizona’s school voucher program.

12News Investigates found that questionable purchases through the Empowerment Scholarship Account program may be closer to 20% — far higher than the 1% fraud rate that GOP leaders have repeatedly cited.

Carbone defended the state’s oversight efforts, saying there is already a process in place to address misuse.

“It is reined in. There’s a process in place,” he said. “If you talk to Superintendent Horne, he’ll tell you everything that they have caught.”

Carbone was referring to State Schools Superintendent Tom Horne, who has maintained that fraud in the voucher program is minimal.

However, a recent 12News investigation uncovered records from Horne’s office showing spending on banned items — including cell phones, big-screen televisions and jewelry — suggesting misuse is far more widespread than previously claimed.

Those records showed misspending at roughly 20% — more than double the error rate in Arizona’s SNAP program.

RELATED: Voucher supporters say Empowerment Scholarship fraud is 1%. New records peg misspending closer to 20%.

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