PHOENIX — State lawmakers have hired an out-of-state attorney who has defended Republican interests to act as an independent investigator in the long-standing probe of what they contend is a "pay-to-play'' scheme by Gov. Katie Hobbs.
In a press release Monday, an all-Republican "advisory team'' of the Arizona House that has been looking at the situation concluded that it needs to proceed to the next step to determine if there is a link between political donations to the governor by the owner of Sunshine Residential Homes and a decision by her Department of Child Safety to grant a large increase in what it was paying to house children in the residential facility.
Gov. Katie Hobbs
This is separate from an ongoing probe of the Democratic governor by Attorney General Kris Mayes into any link. And it also is in addition to the fact that lawmakers have asked Maricopa County Attorney Rachel Mitchell as well as the state Auditor General's Office to investigate.
None of those inquiries, first launched in 2024, has yet to reach any conclusion.
The announcement also comes nearly a year after Hobbs vetoed legislation which would have required companies that seek state contracts or grants to disclose "anything of value'' they have provided to the governor, a gubernatorial campaign, or other entities that have supported the governor's election or inauguration in the past five years.
But the governor also promised at that time that she would work with state lawmakers to craft something designed to ensure the kind of disclosure that Sen. T.J. Shope, R-Coolidge, sought in the bill she vetoed.
On Monday, Hobbs said she won't comment on the investigation. Instead, she repeated her statement that's she's "willing to talk to legislative leaders about how we can make changes to increase transparency and accountability.''
But the governor balked when asked when the public actually will see her plan.
"I don't have an update on that,'' she said.
Christian Slater, the governor's press aide, was no more specific, saying only that his boss is "engaging with legislators" and "hopes to pass a bipartisan, common-sense ethics reform plan to bring greater accountability and transparency to state contracts."
All this traces back to the fact that Sunshine had given $100,000 to a committee which was seeking donations for the governor's 2023 inaugural. Only Arizona Public Service, at $250,000, was a larger contributor.
Even before the election, Sunshine contributed $200,000 directly to the Arizona Democratic Party. And there was another $100,000 donation in 2023.
DCS spokesman Darren DaRonco said an initial bid by Sunshine in 2023 for more money was rejected.
But in May the agency agreed to raise the standard rate from $140 per bed to $195, a 30% increase.
DaRonco said Sunshine said unless it got more money it would make more of its beds available to the federal government which was looking for places for immigrant children. He said such a move — the feds were paying $225 — would have meant fewer places for DCS to place its foster children.
Then Sunshine got a new contract boosting its rate to $234.
Mayes opened her own probe in June 2024, the one that an agency spokesman said Monday remains "ongoing.''
Meanwhile there was the June 2025 veto of Shope's bill — and the November 2025 promise to find ways to shed more light on who is doing business with the state.
"I can say we're in support of transparency in government,'' Hobbs said at the time. "And we're going to put forward a package that does that.''
That same month House Speaker Steve Montenegro put together an advisory team — composed only of Republican lawmakers — to probe any link between the donations and the contract which was first reported by The Arizona Republic.
Slater, however, called all this "a shameless publicity stunt from partisan actors who are desperate to score political points."
And now that team has hired Justin Smith of the James Otis Law Group in Missouri. According to the press release, he will review records, conduct interviews, and report his findings to the team and to House GOP leadership.
This isn't the first time Republican lawmakers in Arizona have entered into contracts with the firm for which Smith works.
Smith is representing GOP efforts to block legal challenges to state abortion laws mounted by two physicians who perform the procedure and the Arizona Medical Association. They contend voter approval in 2024 of Proposition 139 inserting a "fundamental right'' to terminate a pregnancy prior to fetal viability makes the restrictions, like a 24-hour waiting period, illegal.
He also was retained by Montenegro and Senate President Warren Petersen to try to overturn a federal court ruling that voided a state law which says transgender individuals can get an amended birth certificate only if they first undergo surgery. Smith also is handling separate litigation about the enforceability of a state law that bans anyone born male from participating in girls' sports.
Separately Smith is trying to get a federal appeals court to conclude that a federal judge got it wrong when he concluded that Montenegro and Petersen have no legal standing to challenge the decision by the Biden administration to create the Baaj Nwaavjo I'tah Kukveni-Ancestral Footprints of the Grand Canyon National Monument.
And the James Otis Law Group for which Smith works was founded by James Sauer who, after successfully getting the U.S. Supreme Court to rule that President Trump is entitled to broad immunity from criminal prosecution, was named by the president as solicitor general of the United States.
Montenegro defended the choice.
"Justin Smith has the experience and integrity this investigation demands,'' the speaker said. "He has no interest other than uncovering the truth.''
