PHOENIX — Arizona’s top elected Republican is refusing to recognize the “executive deputy directors’’ named by Democratic Gov. Katie Hobbs.
State Treasurer Kimberly Yee said she did not allow those Hobbs appointed as heads of two state agencies to sit at a meeting this week of the State Board of Investment. That panel reviews the state’s $30 billion in investments and serves as trustee for certain funds.
It also, by law, includes the directors of the departments of Administration and of Insurance and Financial Institutions.
Only thing is, there currently are no “directors,’’ at least not officially.
That’s because Hobbs, upset with the Senate’s failure to act on her nominations of directors, not only withdrew them from consideration but removed them as interim directors. She then had them reinstalled through a procedural maneuver as each agency’s “executive deputy director,” saying that way they don’t need Senate confirmation.
Yee, a former state senator, said that is illegal. She won’t accept those named deputies to be voting members of the State Board of Investment, she said Wednesday.
“I believe she is thumbing her nose at the law,’’ the treasurer said of the governor. Yee said Hobbs should understand that, with the two having served in the Senate at the same time.
“We expect Treasurer Yee to stop playing political games,’’ responded Christian Slater, the governor’s press aide. He contends the law allows these deputies to serve as designees, saying the treasurer should “seat the duly authorized board members and ensure government keeps working on behalf of Arizonans.’’
But Yee, who had made a short-lived bid for governor in 2021 before withdrawing from the GOP primary and deciding instead to seek reelection for her own office, said the issue goes beyond the members of the investment board. She said if there are not Senate-confirmed people heading agencies “then we really do have some rogue people sitting in top positions, making executive decisions, and who are not elected, for a very long time.’’
It turns out, though, that the tactic is not new.
It happened to the Democrats who controlled the Senate in 1991 after they refused to confirm the choice of Republican Gov. Fife Symington to head the Department of Administration. He turned around and named that person as the agency’s deputy and left the top slot vacant.
But Senate President Warren Petersen said that was different because the majority Democrats chose not to fight the move. That, however, isn’t the case here where the Gilbert Republican has threatened legal action.
And there’s another complicating factor.
The Arizona Constitution spells out that in the governor’s “absence from the state,’’ the next in line automatically assumes the powers and duties of the office.
Hobbs has been out of state since Sunday and was not set to return until Thursday morning.
Secretary of State Adrian Fontes was scheduled to leave Wednesday night. And Attorney General Kris Mayes also is gone.
Strictly speaking, that has left Yee in charge.
But no acting governor in decades, however, has actually attempted to circumvent or countermand actions taken by the elected governor. And Yee said she would not use that power to fill what she said are the 13 vacancies or call the Legislature into special session.
More immediate is the spat over the Board of Investment.
The five-member panel was able to meet earlier this week, with Yee and two of her appointees present. But that leaves the board without a working majority if any of them are absent for their monthly meetings. And it also means that the governor’s appointees are effectively locked out of any decisions made.
Yee’s move also changes the legal landscape for the whole dispute.
Hobbs’ actions in naming “deputy executive directors’’ — a position that doesn’t even actually exist in state law — puts the Legislature in the position of having to file suit if they want to have the moves declared illegal. In the interim, though, her appointments remain.
Now, however, the tables are turned: If Hobbs wants the heads of the two agencies to serve on the Board of Investment, she would have to get a legal ruling to overturn Yee’s decision to exclude them.
What’s behind all this is the refusal of the Senate to consider 13 of the governor’s nominees.
In some cases, the Committee on Director Nominations recommended that they not be confirmed, leaving them in a kind of political and legal limbo, able to continue serving as “interim directors’’ for up to a year. At that point, Hobbs would have to submit a new nomination.
In other cases, the panel headed by Rep. Jake Hoffman, R-Queen Creek, has yet to schedule hearings months after the governor submitted the names for consideration.
So Hobbs withdrew the names of the 13 pending nominations. That, in turn, meant they were no longer interim directors.
Instead, she tapped Ben Henderson, the interim director of the Department of Administration, to be the interim director of other agencies — one at a time — which Hobbs said allowed him to name deputy directors of each of those agencies. And with no directors above them, that made what Hobbs is calling the “executive deputy directors’’ the de facto heads of each of those agencies.
Slater said Arizona law allows those deputies to serve, without reservation, in the absence of a director, confirmed or interim. And he said it gives them the same powers and, in this case, allows Elizabeth Alvarado-Thorson, her choice for Department of Administration, to serve as its deputy director and Barbara Richardson to head the Department of Insurance and Financial Institutions — the two posts that Yee contends are not filled.
The treasurer, however, isn’t buying it.
“We received legal counsel that this is an area that would not be abiding by the law which requires the director of an agency to sit as members of the board legally,’’ she said.
Yee said, the withdrawal by Hobbs of her interim directors means these two agencies — if not the others which are not of her direct concern — don’t have someone who qualifies to sit on the board.
Nor does she believe that a deputy director can serve in their stead.
“They may have a designated member, written to us, of who that appointment would be,’’ Yee said. She said that’s how it’s occurred in the past, with the director of the Department of Administration sending a staff member.
“In this case, there was no director, legally, to appoint this designee,’’ Yee said.
It would have been different, she said, if Hobbs had left Thorson in place as interim director. Yee said she would have been allowed to be on the board — or send a designee — at least for the one year in which Arizona law allows someone to serve as an interim director.
Ditto Richardson, Yee said. And she called the legality of the governor’s action of naming Henderson the interim director of all agencies questionable at best.
“It’s a murky area,’’ Yee said.
Beyond her own issues, the treasurer said Hobbs runs the risk that any future action of any of the affected agencies that require the approval of a director will be called into legal question and could be overturned.
And what of what Symington did?
“I never said it was OK when Fife did it,’’ Yee said.
In that case, Symington could not get the full Senate to confirm Jerry Tobin to head the Department of Administration despite his getting a unanimous recommendation for approval from the Senate Committee on Government and Public Safety. The Senate Democrats wanted to hold his appointment for another year as insurance the governor would not veto some of their bills and budget line items.
But Petersen noted that Democrats did not make a legal issue of it, allowing Tobin to serve as deputy director with a promise by the governor to search for a new head for the agency. That would have allowed Symington to renominate him the following legislative session.
That never happened. Tobin continued to serve as the top officer until he resigned in early 1992 after it appeared clear the Senate would not bless him for the permanent top spot.
