Hobbs budget veto threatens tribal water, health and wildfire funding in Apache County

Apache County’s biggest budget question right now is not symbolic. It is whether Sage Memorial Hospital in Ganado gets the $3 million it was promised for a dialysis unit, and whether tribal water, health, food and wildfire money stays stuck in Phoenix.

Gov. Katie Hobbs vetoed all 17 bills in Arizona’s 2026-27 budget package on May 5, sending the $17.9 billion plan back to the Republican-led Legislature after calling it “unbalanced and reckless.” For Navajo Nation communities in Apache County, the veto wipes out a package that had included money tied to water rights, health care, food aid, schools and wildfire response.

The most immediate local loss is the dialysis project at Sage Memorial Hospital. SB1575 set aside $3 million from the state general fund for fiscal year 2025-26 for the Arizona Department of Health Services to distribute to the hospital in Ganado so it could construct and operate a dialysis unit. For residents who already travel long distances for care, that unit was one of the clearest ways the state budget could have eased a daily burden.

The veto also leaves in doubt a smaller state match that carried a much larger payoff. The budget had included $100,000 in state funds to help secure more than $222 million in federal matching dollars for traditional healing services. Arizona’s Medicaid agency said those services began for Medicaid members on October 1, 2025, making the state match a key bridge between a modest line item in the budget and a much larger care network for tribal patients.

Water rights work is caught in the same stall. The Northeastern Arizona Indian Water Rights Settlement Agreement, introduced in the U.S. Senate as S.953 on March 11, 2025, would settle claims by the Navajo Nation, Hopi Tribe and San Juan Southern Paiute Tribe. Arizona water officials said the agreement would create a reservation for the San Juan Southern Paiute Tribe and authorize $5.1 billion for delivery infrastructure and water-development projects. The Morrison Institute at Arizona State University said the deal addresses Colorado River, Little Colorado River and groundwater claims across northeastern Arizona.

Hobbs’ veto was her fourth rejection of a Republican-backed budget plan since taking office in 2023. The House passed the GOP budget on April 29 and the Senate passed it on May 4. Republican budget writers had also said their plan was about $800 million smaller than Hobbs’ preferred budget, while Hobbs argued it would have forced major Medicaid and food-aid cuts. Until the impasse breaks, the money tied to tribal clinics, water rights, schools and wildfire response remains on hold for families in Ganado and across Apache County.