Arizona Governor Katie Hobbs confirmed she is under investigation in connection with allegations that a state contract increase may have been influenced by political donations, marking an ongoing political and legal controversy for the Democratic governor.
The inquiry stems from reporting that Sunshine Residential Homes, a company that operates group homes for foster children, made large donations—including roughly $400,000—to Hobbs’s inaugural fund and the Arizona Democratic Party before receiving a significant rate increase from the Arizona Department of Child Safety.
Documents indicated that Sunshine’s funding was raised about 30 percent above the standard rate, while other providers seeking similar increases were denied.
Hobbs was asked about the escalating investigations during a recent interview with KPNX. “Have any of Kris Mayes’ investigators talked to you?” the governor was asked.
She stated that they had not been interviewed, and the governor was then asked whether any of her staff members had been interviewed. “Yes, they have. So that investigation is ongoing,” the governor replied.
In June 2024, Arizona Attorney General Kris Mayes opened an investigation into whether the funding decision constituted a “pay-to-play” scheme, following a request from Republican state Sen. T.J. Shope.
“The Criminal Division of the Attorney General’s Office is statutorily authorized to investigate the allegations and offenses outlined in your letter,” Mayes’ office wrote in a letter to Shope. “To that end, the Attorney General’s Office will be opening an investigation.”
Mayes’s office is examining whether the contributions and subsequent contract action violated state laws related to bribery, fraud or misuse of taxpayer funds. Hobbs and her spokespeople have dismissed the investigation as politically motivated and said they will cooperate.
Separately, Republican legislative leaders formed an advisory team to investigate the matter further and potentially take action to address alleged preferential treatment in state contracting. Internal communications cited in that effort reportedly discussed the company’s political ties and how to handle its rate increase quietly.
Hobbs has also faced pushback over transparency and contract oversight from state officials, including Arizona State Treasurer Kimberly Yee, who urged the attorney general to allow other authorities to investigate because of potential conflicts of interest in the AG’s role.
Hobbs, who took office in 2023 and is seeking reelection in 2026, has denied wrongdoing and called for transparency reforms while defending her administration’s actions throughout the controversy.
In 2023, Hobbs said she wanted to see more charges filed against then-former President Donald Trump, who was, at the time, under a legal barrage from Democratic prosecutors and the Biden administration for alleged 2020 election interference.
At an event in Phoenix, Hobbs was asked, “Would you like to see the Arizona attorney general follow suit with Georgia and Michigan and move forward on pressing charges against President Trump?”
Hobbs replied: “Absolutely. I have been an advocate for holding folks involved in trying to overturn the will of the voters in the 2020 election accountable, and this is part of that process.”
“Accountability is critical. I don’t think we’re going to change direction until there’s accountability at the top level,” she continued. “And this is an important step forward that I think should move forward and play out in the legal process.”
Arizona went for Trump in 2016 by some 91,000 votes but swung to President Joe Biden in 2020 by about 10,500 votes. Following the election, Trump raised integrity questions, especially in Maricopa County, home to Phoenix, amid widespread reports of ballot machine problems.
After Hobbs, who was secretary of state during the 2020 and 2022 elections, made her comments, her 2022 GOP opponent, Kari Lake, called her out.
“In 2020 @katiehobbs ran a sham election & gave @JoeBiden Arizona In 2022 Hobbs ran a sham election & gave herself a promotion. Now, she’s using her illegitimate office to order her illegitimate AG to INDICT @realDonaldTrump & Grassroots Arizonans. If the fake news is wondering THIS is what a threat to democracy looks like,” Lake wrote on X.
