STATE CAPITOL, PHOENIX – The House Ad Hoc Committee on Executive Budget Mismanagement, chaired by State Representative Matt Gress, concluded its first hearing today after advancing a slate of findings detailing the Hobbs administration’s budgetary failures and the looming $122 million shortfall in Arizona’s Developmental Disabilities (DD) program.

The hearing moved forward despite Democrat Governor Katie Hobbs’ last-minute directive—issued just 15 minutes before the meeting began this morning—ordering her agency directors not to appear and testify. Democrats on the committee also refused to attend.

Agency leaders from AHCCCS and the Department of Economic Security (DES), both responsible for managing the state’s DD program, were scheduled to answer lawmakers’ questions on why program costs have exploded, threatening service disruptions for families across Arizona.

“The Governor pulled her directors because she can’t defend the damage she’s done,” said Chairman Matt Gress. “If she had a plan, she would have sent her team to explain it. Instead, she’s hiding behind a press release while Arizona families face the consequences of her financial mismanagement. This Legislature asked for answers. The Governor responded with a tantrum. What she calls a ‘political stunt’ is actually legislative oversight—a constitutional duty that we will carry out whether she likes it or not.”

Despite the Hobbs administration’s refusal to participate, the committee reviewed budget data, testimony from JLBC, and expert insight from former Idaho House Majority Leader Megan Blanksma, who helped her state navigate a near-identical funding crisis.

The committee formally adopted findings holding the Hobbs administration accountable for:

• The Hobbs administration, without approval from the Legislature or specific appropriation authority, dramatically expanded its Developmental Disability program by making permanent a temporary, COVID-era program to pay parents to provide attendant and habilitative care to their minor children.
• The programmatic and scope changes of the DD program adopted by AHCCCS and implemented by DES led to dramatic unfunded liabilities, threatening the entire DD program and leaving the state with at least a $122 million budget deficit in FY2025.
• The Hobbs administration, through its Medicaid agency at AHCCCS, put the Department of Economic Security under legal threat with a November 2023 Corrective Action Plan, which aimed to grant parents additional hours for care under the PPCG program, which was at odds with the “extraordinary care” standards and dramatically expanded costs to the state.
• AHCCCS delayed implementation of guardrails on the PPCG program by over 18 months, despite its original plan submitted to the Federal CMS in August 2023, causing considerable cost overruns and unrealistic expectations for families.
• The critical nature of the Developmental Disabilities program and its pending exhaustion of funds requires that the Executive identify available federal funds, and the Legislature will work to identify transfers of other available funds, in the month of April, to continue the program.
• The State Legislature must receive annual reports from the executive administration identifying all federal funds received and an exit plan should those federal funds be eliminated.

Following the hearing, Chairman Gress addressed the House floor on the Governor’s refusal to cooperate and the Legislature’s responsibility to act.

Today, the House Ad Hoc Committee on Executive Budget Mismanagement held its first meeting, and I must say, I was disappointed with the actions of Governor Katie Hobbs and her Executive Branch agencies.

Our hearing was more than just about facts and figures, it was about the families of those who rely on Arizona’s Developmental Disabilities Program. These families provide extraordinary care for their loved ones, who navigate complex systems daily and who deserve stability, not uncertainty.

The purpose of our committee is to review the budget year programs administered by executive agencies, analyze the January executive budget proposal, and provide recommendations to the House of Representatives on managing cost overruns and preventing agencies from facing bankruptcy. Last month, the Joint Legislative Budget Committee addressed a crisis in the Department of Child Safety and our committee today sought to examine an even larger crisis, one unfolding in DD.

Yet 15 minutes before the committee hearing began, I received a letter from Governor Hobbs criticizing legislative intent on providing oversight and learning exactly what happened. Now this is a pattern and a practice of Governor Hobbs. She fails to even acknowledge who’s responsible for this problem. Instead, it’s deflection and trying to scare families who rely on the DD services for their loved ones.

We will not be deterred. Her unhinged, chaotic letter falls far below the standard that Arizonans expect of their leaders. We will continue to find the facts. We will be the adults in the room to provide a supplemental appropriation, and we will ensure that there are guardrails put in place so that this never happens again.

Let me be very clear, we will not pass a financially irresponsible supplemental. It will include the reforms necessary to protect families who rely on DD for their loved ones. We demand accountability and transparency, and it’s going to happen soon.

Today’s hearing was a fact-finding opportunity with agency officials and policy experts. House Republicans continue to meet with families and other stakeholders in an effort to address the Governor’s budget mismanagement, identify solutions to stabilize services, and ensure the long-term stability of critical programs that serve vulnerable Arizonans and protect taxpayers from further fallout caused by the Hobbs administration’s failures.

Watch the full hearing here: https://youtu.be/fRkHtOsWMok

Matt Gress is a Republican member of the Arizona House of Representatives serving Legislative District 4 in Phoenix and is Chairman of the House Committee on Education. Follow him on X at @MatthewGress.