Gov. Katie Hobbs and Republican lawmakers reached agreement on a new $18.29 billion state budget that pauses subsidies for data centers for three years and includes provisions to codify federal tax cuts. The accord, announced in the closing days of budget negotiations, establishes the size of the state spending plan while setting out two of the most consequential policy provisions spelled out by negotiators.
The budget figure — $18.29 billion — is the headline number driving the agreement. Within that overall total, the deal specifically halts subsidies for data center projects for a three-year period and incorporates measures described as codifying the federal tax cuts. Those two elements were central to the compromise reached between the governor and Republican legislative leaders as they worked to finalize the state’s spending plan.
Shows: Gov. Katie Hobbs speaks into a microphone during a public appearance as lawmakers finalized the state budget.
Officials involved in the talks presented the agreement as a completed package, with lawmakers moving to finalize the budget text after reaching terms on the major items. The pause on data center subsidies was written into the agreement as a time-limited policy change, while the move to codify federal tax cuts was included in the budget language as a statutory or administrative action adopted as part of the spending plan.
Shows: Gov. Katie Hobbs places her hand over her chest at a public event; Hobbs and GOP leaders agreed on an $18.29 billion budget that pauses data center subsidies and codifies federal tax cuts.
The agreement came as lawmakers wrapped up their budget work. In public appearances tied to the conclusion of the budget process, the governor was photographed speaking and acknowledging the work of legislators as the final budget measures were completed. The photographs capture moments from the closing phase of the budget negotiations and show the governor in public settings while lawmakers finalized the spending plan.
The three-year pause on data center subsidies and the codification of federal tax cuts are the two policy changes highlighted in the agreement. The pause places a temporary hold on the state offering subsidies for data center projects, and the codification item embeds federal tax changes into state-level practice or statutes through the terms of the budget. Lawmakers and the governor settled on those provisions as part of the comprehensive spending plan.
This budget agreement, reached on June 10, 2026, sets the spending level and the specific temporary and statutory measures that will be enacted as part of the state’s fiscal package. The $18.29 billion figure anchors the deal and the two named provisions — the pause on data center subsidies for three years and the codification of federal tax cuts — define key policy outcomes within that total. With those elements resolved, lawmakers completed the final steps of adopting the budget and moving it forward through the remaining procedural processes required to enact the state’s spending plan for the coming period.