Arizona Gov. Katie Hobbs vetoed HB 2873 in June 2026, a bill that would have allowed sponsors of referendum petitions to withdraw them after submission, affecting all statewide referendums retroactively to December 2025. The bill, backed by data-center developer lobbyists, aimed to change the rules for citizen referendum campaigns, but Hobbs blocked it after the Legislature had approved the measure, officials said.
HB 2873, introduced in the Arizona House in January 2026 and passed by the Legislature in late April, would have allowed sponsors of referendum petitions to withdraw them after submission, preventing those measures from reaching the ballot, according to legislative records. The bill was backed by lobbyists representing data-center developers, who have sought to influence state policies amid Arizona’s rapid expansion of large-scale data-center projects.
The bill’s provisions applied retroactively to all referendum petitions filed on or after December 31, 2025, potentially affecting ongoing campaigns launched under previous rules, sources confirmed.
Referendums in Arizona enable voters to veto laws or parts of laws by gathering signatures to place issues on the ballot, as defined by the Arizona Secretary of State. By granting sponsors the power to withdraw petitions after submission, HB 2873 would have shifted control over whether a law reaches voters from the electorate to petition sponsors and their backers, officials and advocacy groups said. Opponents argued the bill could disenfranchise voters who had already signed petitions by allowing organizers or outside interests to halt referendum efforts before a public vote.
The bill’s connection to data-center interests was highlighted by Pima County Board of Supervisors leadership, who publicly urged Governor Hobbs to veto HB 2873, framing it as a measure that would benefit large developers at the expense of local control. Local grassroots campaigns also mobilized against the bill, warning that it was written by lobbyists and favored by out-of-state and international business interests seeking to neutralize referendum challenges to data-center and other large industrial projects. Protesters at the Arizona Capitol had previously rallied against data-center tax breaks included in a proposed state budget, which Hobbs vetoed in 2026 citing concerns over a $30 million tax incentive for data centers.
Governor Hobbs’ veto of HB 2873 aligns with her broader stance on data-center incentives and regulatory oversight. Earlier in 2026, Hobbs expressed opposition to existing tax exemptions for data centers on equipment purchases and vetoed a $17.9 billion GOP budget that included such tax breaks, according to statements from her office and Capitol Media Services. She also vetoed HB 2774, a bipartisan bill that would have streamlined regulatory processes for building small modular nuclear reactors (SMRs), which are being considered for use by data centers and other large energy users. That veto preserved Arizona’s multi-step regulatory framework for nuclear development, including reviews by the Arizona Corporation Commission and other state agencies.
Legal analyses of Arizona’s data-center boom note that the state maintains regulatory authority over zoning, siting, energy procurement, rate structures, water use, and noise mitigation for AI compute and data-center infrastructure, despite federal preemption carve-outs. The 2026 legislative session saw multiple bills addressing tax incentives, siting, and energy supply for data centers, reflecting sustained industry pressure to reshape state rules. Hobbs’ vetoes on election-related and regulatory bills, including HB 2873, fit within a pattern of using executive authority to safeguard public and governmental control over electoral processes and regulatory oversight, according to legislative action updates and reporting on her tenure.
In the broader political context, Hobbs signed 72 bills and vetoed 88 during the 2023 legislative session, demonstrating a willingness to reject legislation she deemed problematic for governance or rights protections. Her vetoes of election bills such as HB 2691 (Elections; Ballot Chain of Custody) and SB 1565 (Ballot Processing; Electronic Adjudication; Limitation) underscore her attentiveness to preserving election integrity and direct-democracy mechanisms. The veto of HB 2873 prevents a precedent in which referendum petitions could be nullified after signature collection, maintaining a key tool for Arizona voters to check legislative and development decisions, including those involving data centers.
Local residents and watchdog groups in counties affected by large data-center developments have raised concerns about energy consumption, water use, tax burdens, and the erosion of democratic control related to the sector’s rapid growth and associated legislation. As Arizona continues to balance economic development with regulatory oversight, the defeat of HB 2873 marks a significant moment in ongoing debates over the state’s approach to citizen referendums, data-center expansion, and energy policy.
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