Arizona AG clears Democratic governor in bribery probe
Arizona Attorney General Kris Mayes will not file criminal charges against Democratic Governor Katie Hobbs over accusations involving a group-home company that received a rate increase from the state after making political contributions.
The investigation centered on Sunshine Residential Homes, to which Hobbs had been accused of giving preferential treatment after The Arizona Republic reported the company contributed to the inaugural fund and Arizona Democratic Party, and later received a 30 percent payment increase from the state.
The probe that lasted more than two years “has not uncovered any evidence of the necessary quid pro quo to support a bribery charge,” Mayes, also a Democrat, announced Friday.
Hobbs spokesperson Christian Slater said the report clearly says that there was “no wrongdoing” by the governor or her office.
“Governor Hobbs was not involved in, did not direct, and did not instruct any member of her administration regarding the rate increases the Department of Child Services approved,” Slater said in a statement.
Newsweek reached out to the governor’s office for comment outside of normal business hours.
Sunshine’s Political Donations and Rate Increase
Sunshine gave $200,000 to the state Democratic Party ahead of Hobbs’ 2022 election, followed by $100,000 to her inaugural fund and another $100,000 to the party in 2023, according to records.
After being denied an increase in 2022, the company was approved in May 2023, months after Hobbs took office, raising its rate from $149 to $195 per bed.
Sunshine said that without a rate increase, it would reduce the beds it made available to the state and instead use those beds for unaccompanied immigrant children under the federal program, according to the Arizona Department of Child Safety (DCS).
The agency is Arizona’s largest provider of beds for children without developmental disabilities, operating about 290 across 28 homes.
After calling the potential loss of beds a “serious capacity concern,” the DCS approved the increase. The agency also said that the governor and her staff members were not involved.
Sunshine spokesperson Tommy McKone told Newsweek that the company has fully cooperated with all investigations over the past two years.
“Throughout, our focus has never wavered from what matters most: the well-being of Arizona’s most vulnerable children,” McKone said in a statement Friday.
“That has been our highest priority for 30 years, and it will remain so for the next 30. Sunshine has been committed to transparency from the start, and that commitment continues today.”
In statements sent via attorneys, Hobbs said she did not discuss contract rates with anyone from Sunshine, nor did she “order or authorize” others to do so on her behalf, according to a memo from Nick Klingerman, chief of the attorney general’s criminal division.
In addition, the company’s founder, Simon Kottoor, and his wife each contributed a total of $10,000 to Hobbs’ gubernatorial campaigns.
Mayes, however, said the case shows there is a need for legislative reform. “The Legislature and the Governor have the power to ensure greater transparency with regard to political donations made by state contractors. I am urging them to work together and try again to pass legislation that does so.”
A separate investigation by Republican Maricopa County Attorney Rachel Mitchell and the state auditor general is ongoing.
What It Means for the Arizona Governor’s Race
Hobbs is running for reelection against Republican Representative Andy Biggs in the key swing state. Last week, she announced her running mate, former Mesa Mayor John Giles, a longtime Republican who changed his party affiliation to independent earlier this year.
Biggs has launched attack ads against Hobbs over the Sunshine investigation. On Friday, he slammed Mayes’ decision and her call for legislative reform, saying state lawmakers “already” passed such measures.
“And guess what happened? Katie Hobbs vetoed them,” Biggs posted in a video on X Friday night. “Arizonans know this entire process stinks.”
Republican Chances of Flipping Arizona Governor’s Seat: New Poll
Biggs is trailing Hobbs in the race for Arizona governor, according to a new Quantus Insights poll released on Friday.
Hobbs leads Biggs 49.1 percent to 43.2 percent among likely voters, with 6 percent undecided and 1.7 percent supporting someone else. In a two-way matchup, Hobbs’ advantage grows to 53.2 percent to 46.8 percent. The poll surveyed 780 likely Arizona voters from August 14-17 and has an overall margin of error of plus or minus 4.1 percentage points.
As a pivotal battleground state, Arizona’s political trends may foreshadow national outcomes, with shifting demographics and voter priorities influencing both major parties’ strategies. Election outcomes in the Grand Canyon State could play a critical role in the broader national landscape amid the 2026 midterm cycle.
Midterm elections are also commonly seen as a measure of public approval for the current president too, and the president’s party has traditionally lost seats during these elections. President Donald Trump has backed Biggs in the race.
Newsweek reached out to both Biggs and Hobbs’ campaigns via email Friday night for comment on the poll.
The numbers suggest Biggs faces a challenging path but that the race is not settled. Quantus Insights described Hobbs’ lead as real but close to the survey’s margin of error, while just 6 percent of voters remain undecided. That pool is considerably larger among independent voters, with 28.8 percent saying they are undecided. Biggs would likely need to make significant gains among those voters, while also holding onto the Republican base, to close the gap before November.
The poll also highlights a sharp geographic and demographic divide. Hobbs leads 56 percent to 40.4 percent among urban voters, while Biggs leads 47.6 percent to 32.8 percent among rural and town voters. Hobbs also holds a significant advantage among younger voters, receiving 74 percent support among voters ages 18 to 29 compared with 17.8 percent for Biggs. Among voters 65 and older, however, Biggs leads 52 percent to 41.2 percent. Women favor Hobbs by 15.6 points, while men favor Biggs by 4.6 points.
Hobbs’ position is also reflected in voters’ views of her first term. Half of likely voters say she deserves reelection, compared with 47.6 percent who say it is time for a new governor, giving her a 2.4-point net advantage on the question.
The Associated Press contributed to this report.
Contact Newsweek editors on this story: Anna Commander and Edward T. Cummins.
