PHOENIX — Arizona Gov. Katie Hobbs demoted three officials running state agencies to deputy director posts after a judge ruled her move to name them and other agency heads as “deputy executive directors” to avoid a contentious Senate agency director confirmation process was illegal and there was no hope the trio could win confirmation.

But the demotions didn’t mean lower salaries for the former agency leaders.
Despite David Lujan, Karen Peters and Dana Allmond being stripped of their leadership posts by the Democratic governor last month after Senate Republicans signaled they could not be confirmed, state records obtained by Capitol Media Services show they are still getting paid exactly what they were before demotions.

And all three are serving in significantly reduced roles.

Allmond is working as a deputy director of the Department of Veteran Services and reporting to a new director Hobbs named last month. That person, John Scott, had been Allmond’s deputy.

Meanwhile Peters and Lujan are sharing responsibilities with two other deputies in their respective departments and reporting to an interim director.
Lujan was earning $220,000 a year as the top official in the Department of Child Safety, which is charged with responding to child abuse and neglect and oversees thousands of children in foster homes. He is now among three department deputies reporting to the temporary agency head, Hobbs Director of Operations Ben Henderson.

A former Democratic lawmaker, Lujan was appointed as director in April 2023, but the Senate made no move to confirm him before the end of the legislative session in June of that year.

Peters was named director of the Department of Environmental Quality at an annual salary of $224,000 in February 2023 and found herself in the same position as Lujan when the Senate held no hearings for her before they adjourned four months later. She now shares duties with two other department directors and also reports to Henderson.

Allmond also was hired in February 2023 to lead the agency that provides services to veterans and runs four nursing homes for Arizona vets. She was — and is still — earning $170,000.

Lujan, Peters and Allmond were among 16 agency director nominees who were not confirmed in the first year of Hobbs’ term after the Republican-controlled Senate set up a new committee to heavily scrutinize her picks to run state agencies. Without formal Senate confirmation, they would legally be out of a job at the end of their first year running the agency.

Just six of her 22 agency director nominees were confirmed. Several others were rejected, and 10 other nominees got hearings during the 2023 legislative session but no votes by the full Senate.

In September 2023, Hobbs came up with a plan to get around the Senate roadblocks by naming 13 unconfirmed agency directors as “deputy executive directors” to run their departments with full director authority. She then formally withdrew their nominations.

The Senate cried foul and sued Hobbs, contending she was breaking state law that requires Senate “consent” for top state agency officials. A judge found Hobbs’ end-run around the Senate was illegal and issued a formal judgment last month.

In response, Hobbs reached an agreement with Republican Senate President Warren Petersen to send the names of the de facto agency leaders as part of 19 nominations that will go the Senate in January. Lujan, Peters and Allmond, however, were not among the names to included because the Senate signaled they would not be confirmed.

When Hobbs took office in January 2023 as the first Democratic governor since Janet Napolitano stepped down to become U.S. Homeland Security secretary in the Obama Administration in 2009, the Senate decided to aggressively vet her nominees to lead state agencies.

GOP Senate President Warren Petersen scrapped the system where committees with experience with individual departments held hearings on director nominees. Instead, he created a new committee dedicated to overseeing nominations and named an ally, Arizona Freedom Caucus leader Sen. Jake Hoffman, to lead the panel.

Hoffman sharply criticized many of Hobbs’ appointees during the 2023 hearings he did hold, leading Hobbs to pull the rest of the nominations in September 2023 and create the “executive deputy director” title.

Asked about Lujan, Peters and Allmond retaining their former salaries despite having fewer responsibilities, Hoffman slammed the move, calling it an example of “Democrats’ corrupt, pay-to-play style of politics.”

“Katie Hobbs’ decision to gift tens of thousands of dollars in excess salary to her political allies is simply the latest example of just how out of touch Democrats are with everyday Arizonans,” the Queen Creek Republican said in a text message. “While the hardworking people of this state struggle to put food on their tables, gas in their tanks, and afford life-saving medications in Democrats’ disastrous economy, Katie Hobbs is busy treating their hard-earned tax dollars like her personal piggy bank.”

Hobbs spokesman Christian Slater defended the decision, pointing to efforts to save taxpayer money by imposing a cap on overall state employment, instituting a pause on pay raises and cutting costs as part of an effort to address a $1.8 billion state budget deficit she faced this year.

The deficit is mainly the result of income tax cuts and a universal school voucher program approved by the GOP-controlled Legislature and Republican former Gov. Doug Ducey before she took office.

“The new deputy directors are valued contributors to agency operations,” Slater said in a statement. “The administration will continue to examine compensation across state government to protect every cent spent by the state government.”

“We can’t risk losing continuity in agency operations while we are exploring who will be the eventual directors,’’ he said.

Petersen never said exactly why the trio would be unlikely to survive Senate confirmation. But there have been indications the Republican majority was not happy with their performance.

In the case of DCS, Sen. David Farnsworth said he wants more oversight of the agency, saying it is taking far too many children from their homes and then losing track of some of them.

“Children are being kidnapped, murdered and are being forced into the sex-trafficking world because of state negligence,” the Mesa Republican said though he provided no actual evidence. “If state government uses law enforcement power to forcibly remove children from their parents’ homes because of unsafe conditions, then state government must also provide those children with a safe haven, both physically and emotionally.”

Hoffman, who has expressed doubt about some environmental policies and the state’s role, had poised a whole set of written questions to Peters.

For example, he asked whether she would recommend that Arizona follow California’s lead by pushing to reduce carbon emissions by limiting vehicle sales. And he wanted information about what role she believes public transit plays in improving air quality.

Peters, however, never got a hearing where she could provide answers.
Hobbs’ appointment of Allmond had been questioned by some in the veteran community after the governor fired former Director Wanda Wright, a political independent, to replace her with Allmond who was a failed Democratic candidate for the Arizona House from the Tucson area.

In pulling the nominations and demoting the trio, Hobbs said that move may not be permanent. She said they could be reinstated to their old jobs if Republicans, who have a 16-14 edge in the Senate, lose control in the general election.