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The cheapest thing you did today might turn out to be the most expensive. Ask an AI to write an email and it costs you nothing you can see. Behind that one request, a data center somewhere pulled about a third of a watt-hour of electricity and a small amount of water to cool the machines. Counting the power plant feeding it, a hundred-word AI email runs through roughly a bottle of water, about 519 milliliters, according to researchers at the University of California, Riverside. Now multiply that by a billion requests a day. That is a new kind of industrial demand, and it has to be built, powered, and cooled somewhere real. In Arizona, that somewhere is more and more often the lot down the road, and the data center costs are landing on bills you never agreed to.

The short version

APS has asked for about a 14 percent residential rate increase, roughly $240 more a year, and a separate increase of about 45 percent for data centers and other large loads.
The Arizona Attorney General’s expert testimony says the household number could be cut to 3 percent, saving about $524 million a year.
Data centers are the primary driver of APS’s projected 40 percent peak-load growth by 2031.
Phoenix-area data centers use about 385 million gallons of water a year, projected to grow tenfold, and up to 85 percent of data center water is lost to evaporation.
Arizona’s data center tax break costs the state about $38 million a year, and new applications are now paused for three years.

Start with your power bill

Arizona Public Service has asked the Arizona Corporation Commission for about a 14 percent residential rate increase, roughly $240 more a year for an average household. The company says it needs the money because demand is surging: APS expects its peak load to grow up to 40 percent by 2031, with data centers as the primary driver, and it is spending around $2 billion a year on new plants, transmission, and grid upgrades to keep pace.

Here is the line that decides who actually pays. APS is also proposing a separate, much steeper increase for the data centers themselves, about 45 percent, on the argument that the customers driving the demand should cover the cost of serving it. The state’s Residential Utility Consumer Office wants to go further and put data centers in their own customer class entirely. Whether that holds is the whole fight. The Arizona Attorney General intervened in the rate case, the first time a sitting Arizona attorney general has formally opposed a utility rate request, and filed expert testimony arguing the 14 percent could be cut to 3 percent, saving customers about $524 million a year and roughly $220 each, mostly by lowering the guaranteed profit APS is allowed to earn for shareholders. The Attorney General has framed it plainly: the public should not be “subsidizing the cost of building data centers for a whole bunch of out-of-state billionaires.” APS responds that its plan protects everyday customers and makes the big users pay their share. An administrative law judge hears evidence through the summer and recommends a decision around November, with the Commission voting near December and any increase taking effect in early 2027. Until then, whether a data center’s power bill lands on the company or on you is still an open question.

Then the water you can’t see

In a state that has none to spare, water is the quieter cost. A single data center can use anywhere from tens of thousands to millions of gallons a day, and up to 85 percent of it evaporates and never returns to the supply. Phoenix-area data centers already use around 385 million gallons a year, and one analysis projects that growing tenfold. A few cities saw it coming. Chandler caps how much water a data center can draw per square foot, and Marana banned them from using drinking water at all. Most places have no such rule.

Then the taxes you forgot

Since 2013, Arizona has waived sales tax on data center equipment, a break that costs the state about $38 million a year. This June, lawmakers and the governor paused new applications for three years, which tells you how the math was starting to look from the inside. Nationally the trade is steeper still: these breaks can run more than $2 million for every permanent job, and one out-of-state deal handed a data center $77 million in exchange for a single job. The construction work is real and temporary. The permanent payroll is small.

How a data center actually gets approved

So how does a project that reshapes your power bill, your water, and your tax base get the green light? Through four separate doors, and most people never knock on any of them.

The first is the tax break, run by the Arizona Commerce Authority. A company applies, commits to investing at least $50 million within five years, and gets its equipment exempted from sales and use tax for ten to twenty years, under A.R.S. 41-1519. The break is performance-based, you only collect it if you actually build, but it locks in for a long time.

The second is the land, decided locally. Maricopa County now lets data centers go into heavy-industrial zones automatically, with no hearing at all. Anything else needs a rezoning or a special-use permit, which means public hearings at the Planning and Zoning Commission and then a vote by the City Council or the County Board of Supervisors. This is the door where you have the most say: if enough nearby property owners file a written protest, approval can require a three-quarters supermajority instead of a simple majority. It can work, too. In southern Arizona, Pima County voters rejected a data center and then watched the state move to override them. In the by-right industrial zones, that door never opens.

The third is the power, and it splits in two depending on who sends your bill. If you are an APS customer, your utility answers to the elected Corporation Commission, and the rate case deciding all of this is a public proceeding you can read and comment on. If you are an SRP customer, you are in a different system. SRP runs on its own elected board, but the votes are weighted by land ownership, roughly one acre to one vote. The more land you hold, the more say you get. In the 2026 board races, a political committee tied to large energy users ran a slate, and data center companies including Google, which is building a complex in Mesa, and Edgecore donated to it. The renters and quarter-acre homeowners whose bills are on the line barely register a vote.

The fourth is the water, set by cities and the state water department, which can cap use, require a hundred-year supply, or ban drinking water outright. Or not.

Where it helps, where it hurts

None of this is simple villainy, and pretending it is would be its own kind of dishonesty. Data centers bring real capital, real construction work, and a claim to being a serious technology state, the same pull that landed the chip fabs. The tax break only pays out if a company builds. The proposed 45 percent data-center rate and the push for a separate customer class are the system trying, in real time, to make the heavy users carry their own weight.

Where it hurts is quieter. Tens of millions in forgone tax revenue a year for a handful of permanent jobs. Water leaving a drying state for good. And a grid buildout whose bill is being argued over right now, with you as the default payer if the utilities win the argument.

For this piece, APS, SRP, and the Arizona Commerce Authority were asked to address whether data center costs shift to residential customers. Laterstack has also filed public-records requests for the tax-exemption totals, the utilities’ cost-allocation studies, and data center water permits, and will update as those return.

Some cities are starting to organize as a bloc. On June 23, Phoenix joined 42 others in the C40 Cities Global Urban Data Centres Pact, a set of standards that includes data centers paying appropriate rates for the energy, water, and network access they use, with excess revenue directed back into local resilience. Phoenix Mayor Kate Gallego, who co-wrote the launch, named the stakes directly: left unchecked, the buildout could “significantly increase emissions, strain resources, push up residential energy prices and erode public trust,” and cities cannot let “the fear of missing out on new technology result in data centers being waived through our planning processes.”

The door you keep walking past

Which brings it back to the email you asked an AI to write this morning. You paid nothing for it that you could feel. But you are paying for it on your power bill, in your water, and in the taxes that fund the break, and the one cost you actually chose, the query, is the only one that felt free.

The strange part is how much say you have and how rarely anyone uses it. The rate case is open for public comment. The zoning hearings are on the public calendar. The SRP board is elected, even with the deck tilted. The doors are right there, in daylight. Most of us have simply never walked through them. That is exactly how a bill this big gets approved without anyone voting for it.

FAQ

Do data centers raise electricity bills in Arizona?
It is being decided now. APS says large users will pay a separate, higher rate (about 45 percent) so costs do not shift to households, while the Arizona Attorney General’s office argues the proposed 14 percent household increase is too high and could be cut to 3 percent. The Corporation Commission is expected to decide by late 2026.

How much water does an Arizona data center use?
A single data center can use from tens of thousands to millions of gallons a day, and up to 85 percent evaporates. Phoenix-area data centers use about 385 million gallons a year, projected to grow tenfold.

How do data centers get approved in Arizona?
Through four channels: a state sales-tax exemption from the Arizona Commerce Authority, local zoning by a city council or county board, electricity service regulated by the Corporation Commission (for APS) or the elected SRP board, and water approval from cities and the state water department.

How can the public weigh in on data center costs?
By commenting in the APS rate case at the Corporation Commission, speaking at local zoning hearings, and voting in SRP board elections, where votes are weighted by land ownership.

FAQ

Is opposition to data centers bipartisan?
Yes. Roughly seven in ten Americans oppose local data center construction, including 75 percent of Democrats and 63 percent of Republicans, and conservative Republicans oppose them at a higher rate than moderate Republicans. Of politicians taking public positions against projects, 55 percent are Republican and 45 percent Democrat.

How many data center projects have been blocked?
More than 800 groups across 49 states are fighting about 1,500 projects, and tens of billions of dollars in builds have been blocked or delayed in 2026.

Why do the left and right oppose data centers?
For different reasons that reach the same conclusion. The right cites tax breaks, grid strain, and property rights; the left cites water, emissions, and rising bills.

Will the bipartisan coalition last?
Analysts expect it to weaken as the 2026 midterms turn the issue into a partisan weapon.

FAQ

How much is spent on AI lobbying?
In 2025, lobbyists reported roughly $130 million for AI-related work, and one in four federal lobbyists now works on AI, up from one in nine in 2023. In Q1 2026, eleven top tech firms spent $20 million, about $226,000 a day.

What is the Great American AI Act?
A June 2026 bipartisan draft from Representatives Jay Obernolte and Lori Trahan that pairs federal AI safety rules with a three-year preemption of state laws governing how AI models are built. As of late June 2026 it is a draft, not law.

Who benefits from AI preemption?
The largest AI developers and platforms, who would face one federal standard instead of dozens of state laws. Civil-society and labor groups, from Public Citizen to the AFL-CIO, oppose it.

What does it mean for consumers?
The draft is narrower than it first sounds. State protections on how AI is used, including hiring, deepfakes, and child safety, stay with the states. The three-year freeze applies only to state laws that regulate how AI models are built, with a federal safety and transparency framework put in their place.

FAQ

Who is Dean Ball?
Dean Ball was the senior policy adviser for AI and emerging technology at the White House Office of Science and Technology Policy and a primary author of the administration’s AI Action Plan. In July 2026 he joins OpenAI to lead a new team called Strategic Futures.

What is the AI policy revolving door?
The AI policy revolving door is the movement of people between the government roles that write AI rules and the companies those rules govern. The pattern is not unique to AI. It has long run between the Pentagon and defense contractors, and between the Treasury and Wall Street.

Liz Kendall used London Tech Week in June to formally launch a national AI hardware strategy with one feature the rest of the European pack has not put on the table. The British government plans to buy sovereign AI chips directly from British companies. Not just fund them, not just provide tax credits, be the first customer for what they build.

The centerpiece is a £1.1 billion AI Hardware Plan, built around a £750 million national supercomputer at the University of Edinburgh, due in 2030. Of that £750 million, £400 million is set aside for chips, with £150 million earmarked to buy next-generation inference chips from British firms this summer and £250 million for more specialised silicon as the technology matures. Around it sits a £120 million hardware innovation programme, a £45 million skills package, and a £150 million British Business Bank fund run with Playground Global. That plan stacks on top of the separate £500 million Sovereign AI Fund, which made its first allocations in April, seven companies led by an equity stake in Callosum plus compute access for six others.

The market thesis

Kendall’s office cites a global AI chip market growing at 30 percent annually, expected to clear one trillion dollars by the early 2030s. Capture five percent of that and Britain gets fifty billion dollars in revenue and tens of thousands of high-wage tech jobs that currently leak to the United States. Five percent of the AI chip market is a wildly optimistic number for a country that does not own a leading fab and has been losing senior design talent to California for a decade. The bet is on doing what the UK has historically done well, chip design, while keeping that talent home long enough to build something out of it. Beating TSMC was never the plan.

The market-share thesis sits inside a sharper concentration argument that Kendall has been making in public for months. At the Royal United Services Institute in late April, she put a number on the dependency, five companies now control roughly 70 percent of global AI compute, up from about 60 percent a year ago. The sovereign play is meant to push back against that concentration before it locks in. Whether a billion pounds is enough to dent a market dominated by NVIDIA, AMD, and the three US hyperscaler custom-silicon programs is the question the policy has not yet answered.

The advanced market commitment is the strongest piece of the strategy because it answers the founder’s most basic question. If a British AI hardware startup ships a working chip, the British government will buy it. That removes the early-stage commercial risk that has historically forced UK startups to either sell to a US acquirer or relocate to access US government and enterprise demand. It is the same playbook Operation Warp Speed used for vaccines, scaled down and pointed at semiconductors. The procurement instrument is also live in actual gov.uk tender records, the AIRR Expansion AI Cloud Compute procurement (notice ocds-h6vhtk-05a227) is the £250 million piece, running June 2026 through March 2029 with a one-year extension option, structured as a two-stage competitive under the Crown Commercial Service Technology Services 4 framework.

The contradiction at the center

The hardest part of the UK strategy is the one nobody at DSIT will say out loud. The same government that wants sovereign AI chips has also welcomed Stargate UK, the OpenAI partnership announced earlier this year, which depends on US-controlled compute infrastructure. The AI Growth Zone has £28.2 billion in private commitments, with NVIDIA’s £11 billion AI factory pledge as the headline number. The British government is simultaneously trying to build sovereign capability and host the US-led hyperscale expansion. Those two strategies can co-exist for a while. They start fighting when the sovereign startups need GPU allocation that NVIDIA is shipping into the Stargate facility instead.

The Stargate UK counterparty is Nscale, a London-incorporated AI infrastructure startup that has assembled a particularly fast funding stack. Companies House records show six Nscale UK subsidiaries spun up between May 2024 and September 2025. The parent raised $1.1 billion in Series B in September 2025 and a $2 billion Series C described as the largest European technology investment on record. Nscale’s investor list includes NVIDIA, Dell, Fidelity, Point72, and T.Capital. A separate $14 billion Microsoft deal commits Nscale to deploying NVIDIA GPUs across the US and Europe. The company is planning a 2026 IPO. So one company at the center of the Stargate UK build is itself a UK-incorporated entity, which complicates the simple sovereign-versus-foreign frame, but its investor base, customer base, and supply chain all flow through the same US hyperscaler ecosystem the sovereign strategy is supposed to balance against.

Compare the UK approach to what the US and EU are doing. The US went the direct-subsidy route with the CHIPS Act, fifty-two billion dollars in tax credits and grants tied to domestic fab construction. The European Commission’s Tech Sovereignty Package, which dropped earlier this month, leans on regulatory frameworks and pan-EU coordination through the Cloud and AI Development Act plus Chips Act II. The UK, no longer constrained by EU industrial policy mechanisms, can use procurement and direct equity stakes more aggressively. Whether that flexibility translates into faster results depends on whether the £500 million Sovereign AI Fund actually moves capital into UK startups before they sell to US acquirers. The fund made its first allocations in April, seven companies led by an equity stake in Callosum plus compute access for six others, though most of the £500 million remains uncommitted and the £150 million inference-chip purchase promised for this summer has not yet named a recipient.

The harder structural question is whether chip design without chip manufacturing is a sovereign capability or a marketing claim. Arm sells its designs to companies that fab in Taiwan. If the UK builds the next generation of AI design firms and they all fab at TSMC or Samsung, the British strategy has produced excellent IP and zero control of the supply chain that matters during a Taiwan crisis. The US CHIPS Act made the opposite bet, fifty-two billion dollars to bring fab capacity onshore even at the cost of slower returns. The UK is funding designers and hoping the fabs follow. The DSIT plan acknowledges this gap implicitly by funding the semiconductor research infrastructure. Whether that grows into actual fab capacity over a decade is the open question.

What skeptics will say

Skeptics will note that the British semiconductor strategy has been “about to launch” for the last three Conservative and Labour governments. The 2022 National Semiconductor Strategy promised £1 billion over ten years. Most of that money has not arrived. The current Labour government’s commitment is on a faster timeline but still depends on the next spending review surviving the next budget fight. If the chancellor cuts DSIT funding in October, the advanced market commitment shrinks and the sovereign fund slows. None of these announcements come with statutory guarantees. They are political commitments that can be reversed by political shifts.

The harder counter is that the UK is making this play after the window has narrowed. NVIDIA dominates AI training silicon. AMD is the credible second source. Custom silicon from Google, Amazon, and Meta has eaten the inference market. The remaining design real estate is in edge AI, specialized inference, and novel architectures. Those are exactly the categories where UK firms have real strength, Arm’s neural processing unit work for edge inference, Graphcore’s IPU pivot, and a cluster of smaller startups building reconfigurable AI accelerators. They are also niche markets. Capturing five percent of a one trillion dollar market is not the same as capturing five percent across all chip categories. The math gets harder when the categories where the UK has real talent are not where most of the market value sits.

What this means for everyday people

For everyone outside the UK, the development matters because every other mid-sized power is watching. Canada, Germany, France, Japan, and South Korea are all running variants of this same play. Sovereign AI, sovereign chips, sovereign compute. China has been doing this for a decade through Made in China 2025 and SMIC, with the difference being scale, China’s chip industry got hundreds of billions and a state-directed supply chain. The UK move tells the middle powers what the procurement instrument looks like when actually written into a strategy document by a country that does not have China’s resources. Expect to see the same advanced market commitment language show up in Berlin and Ottawa within twelve months.

The commitment to advancing human technology and quality of life is real here, and sovereign chip capability is a legitimate part of it. The Stargate contradiction is what to watch though, the same government funding sovereign British startups is also hosting an OpenAI build that depends on NVIDIA hardware those startups will eventually need to compete with. What makes the move matter beyond Britain is the procurement instrument itself, Canada, Germany, France, Japan, and South Korea are all running variants of this play, and London is the first to put the government’s checkbook at the center of it.

What happens next

London Tech Week has come and gone, and the plan is now formal. Three things still decide whether it becomes real industrial policy rather than a thesis, whether the £500 million Sovereign AI Fund moves beyond its first handful of allocations, whether the Treasury commits to multi-year funding stability beyond the next spending review, and whether US-UK trade negotiations on chip export controls force the strategy to bend toward Washington’s interests.

Requests for comment

Laterstack has reached out to the UK Department for Science, Innovation and Technology for comment and will update this story if they respond.

Lamar Rice

Editor, Laterstack

A small Nasdaq company called SEALSQ Corp (LAES) closed its eighth quantum acquisition on June 2, picking up Swiss photonics developer Miraex SA. The trade press covered it like a routine deal. The deal closes Europe’s quantum supply chain.

Eight acquisitions in 18 months out of a single $200 million fund, with $65 million already deployed, is not a roll-up. It is an explicit thesis being executed against a known deadline. The thesis is sovereign quantum infrastructure for Europe, built piece by piece, with the Miraex purchase closing the last missing layer.

That is the story worth reading.

What Miraex Builds, In Plain Terms And Then The Real Terms

Think of Miraex as the cable that connects the two halves of the future internet. On one side: quantum computers, which mostly speak microwave. On the other: quantum communication networks, which run on the same optical fiber as today’s telecom. Without something in the middle, they cannot talk. Miraex builds that middle piece.

The real version, for readers who want it: Miraex develops Thin Film Lithium Tantalate photonic integrated circuits that perform electro-optical transduction, converting microwave photons (the natural language of superconducting qubits) into optical photons at the 1550 nanometer telecom wavelength. The hardware exhibits high electro-optic coefficients, minimal optical dispersion, and a compact power footprint. They are based at EPFL Innovation Park outside Lausanne.

This is the layer everyone in quantum networking knows is unsolved and almost nobody publicly discusses. Now SEALSQ owns it.

The Pattern Inside The Fund

Look at the named subsidiaries inside the SEALQUANTUM stack so far:

IC’ALPS in France, an ASIC designer
Quantix Edge Security in Murcia, Spain, doing chip personalization
WeCan Group SA in Switzerland, compliance infrastructure
Miraex SA in Switzerland, the photonic interconnect

Four more acquisitions remain undisclosed by name. The four unnamed pieces fill the remaining gaps in the quantum supply chain SEALSQ is assembling.

The shape of the bet is clear. SEALSQ is not trying to win at qubit count, where IBM and Google live. It is building a vertically integrated European quantum supply chain that can produce, secure, and communicate quantum-grade signals without depending on US or Chinese components.

That word, sovereign, is doing the work here.

Why Sovereign Quantum Is The Real Story

Every G7 country is now writing checks for quantum infrastructure, often calling it a national security investment outright. The UK committed £2 billion through ProQure earlier this year. The EU has the Quantum Flagship and an expanded post-quantum cryptography mandate. Japan, South Korea, and India each have national programs. The US has the National Quantum Initiative reauthorization moving through Congress, and DARPA recently told the quantum industry to stop picking a winner.

What none of that money fully addresses is the quantum supply chain. The chips, the lasers, the photonic interconnects, the secure-element silicon, the compliance layer that lets a regulated industry actually buy and deploy this stuff. Most of that hardware today is concentrated in a small number of vendors, mostly American, with some Chinese exposure that makes European procurement officers nervous.

SEALSQ is the most visible private execution of the thesis that this supply chain has to be European-controlled. They are not the only company thinking about it. They are the one stacking the pieces in public, on a public balance sheet, and forcing the rest of the market to react. The quantum supply chain question stops being theoretical the moment a sovereign procurement officer can pick up a phone and order one.

Also Worth Watching, Briefly: QOSC

SEALSQ runs a separate joint program with WISeSat.Space called the Quantum Orbital Space Cloud, a planned 100-satellite quantum-secure constellation reaching full operational capability in 2033. That timeline lines up uncomfortably well with the cryptography cliff most cryptographers now treat as 2029 to 2030 for RSA-2048. It is a story large enough to deserve its own piece. Standalone coverage coming next week.

What This Is Not

SEALSQ is roughly $175 million in market cap. The stock has whipped between $4 and $11 over the last year. The $200 million Quantum Fund is approved capital, not cash on the balance sheet. Each acquisition has been small, mostly equity-funded, often using SEALQUANTUM as a vehicle that lets the parent absorb assets without putting the operating company on the hook.

The risk is integration. Eight companies across four jurisdictions, each needing to ship product, all answering to a parent in Geneva that also runs a separate satellite business, is the kind of architecture that fills the graveyard of European tech consolidation plays. The opportunity is timing. If post-quantum becomes a procurement mandate within 18 months (which the regulatory direction suggests), customers will not have time to assemble best-of-breed stacks. They will buy what ships now and works. A stack that exists today has a structural lead over one that exists on paper. The quantum supply chain advantage here is timing, not tech.

The Prediction

If SEALSQ does not execute, someone runs this exact playbook within 18 months. The most likely candidates are IBM Quantum Safe, Cisco Quantum, and Toshiba’s QKD division. Each has the balance sheet, the existing enterprise relationships, and the regulatory access to do what SEALSQ is doing in public. None of them has moved yet. That is partly because trade press has not made the sovereign-quantum frame visible enough for boards to feel pressure.

The frame is visible now. Watch the next quarterly earnings call. The quantum supply chain race has competitors who can move on short notice if a sovereign customer signs first.

The pattern is the story. Whether SEALSQ owns it or somebody bigger takes it is the second question.

UPDATE 2026-06-14: After publication, SEALSQ confirmed to Laterstack that the QOSC pipeline already includes government agencies, defense and security organizations, sovereign digital infrastructure operators, critical infrastructure providers, and financial institutions. Standalone coverage of the QOSC program publishes next week.

What is SEALSQ Corp?
SEALSQ Corp (Nasdaq: LAES) is a Geneva-based semiconductor and quantum technology company. It is a subsidiary of WISeKey International Holding and runs a $200 million Quantum Fund through its SEALQUANTUM vehicle, acquiring European quantum hardware, security, and compliance companies.

What is the Quantum Sovereign Vertical Stack?
It is SEALSQ’s published thesis for a vertically integrated European quantum supply chain. The stack covers chip design, chip personalization, compliance infrastructure, and photonic interconnect, with the goal of letting European customers buy quantum-grade hardware without depending on US or Chinese components.

What is the Quantum Orbital Space Cloud (QOSC)?
QOSC is a separate joint program SEALSQ runs with WISeSat.Space. The plan is a 100-satellite quantum-secure constellation, with full operational capability targeted for 2033. The timeline aligns with the 2029 to 2030 window most cryptographers now treat as the practical cliff for RSA-2048.

Who are SEALSQ’s main competitors in sovereign quantum?
IBM Quantum Safe, Cisco Quantum, and Toshiba’s QKD division each have the balance sheet, enterprise relationships, and regulatory access to run a similar playbook. None has publicly moved on a vertically integrated European stack yet.

Lamar Rice

Editor, Laterstack

The phone call came before the signing ceremony.

An earlier draft of Trump’s June 2 AI cybersecurity executive order would have given the federal government 90 days to review new frontier models before public release. David Sacks, Elon Musk, and Mark Zuckerberg called the White House to kill it. Sacks blessed a 30-day window, and the order moved forward on those terms. The signing went ahead Tuesday. Treasury Secretary Scott Bessent now has 30 days to stand up the AI cybersecurity clearinghouse the order created.

That was day one.

The 90-day version that died

The 90-day review was the headline restraint in the original draft. Three phone calls killed it. The replacement is voluntary and runs 30 days, and the class of “covered frontier models” subject to even that review will be defined through a classified benchmarking process at NSA and CISA. Companies will not know in advance whose models trigger it. The voluntary structure matters because there is no enforcement mechanism if a company decides its next release falls outside the covered class.

The order also instructs Treasury, Homeland Security, Defense, and the NSC to consult on the clearinghouse design. The Q1 federal lobbying record shows the companies were already inside that conversation. Six firms (Alphabet, Meta, Microsoft, Nvidia, Anthropic, and OpenAI) collectively employed 307 federal lobbyists in the first three months of the year. They reported $20 million in combined federal lobbying spend.

Altman went to the Hill the next day

Wednesday, Sam Altman flew to Washington. He met with White House staff, House Speaker Mike Johnson, Minority Leader Hakeem Jeffries, Senate Minority Leader Chuck Schumer, and Senator Bernie Sanders, whose draft plan would take half the equity of every frontier AI lab and channel it into a sovereign wealth fund. OpenAI used the trip to release what the company calls a blueprint for a durable federal AI framework. The single line in the blueprint that mattered to Altman was the call for a larger OpenAI role in the Commerce Department’s Center for AI Standards and Innovation. CAISI is the office that will write the safety standards every frontier developer has to publish.

Twenty-four hours after Altman asked for a seat in CAISI, Congress moved.

The bipartisan draft

Thursday, Representatives Jay Obernolte and Lori Trahan introduced “The Great American Artificial Intelligence Act.” Their co-sponsors include two more Republicans and two more Democrats. The draft preempts state laws regulating AI model development for three years. It requires any frontier developer with more than $500 million in annual revenue to publish a safety framework and submit to semi-annual third-party audits. And it codifies CAISI into statute, with $100 million in annual funding from 2027 through 2029. Exactly the office Altman lobbied to expand the day before.

The state-preemption clause is the part that travels furthest. As of this spring, 45 states had AI bills in motion. Arizona’s 2025 AI consumer-protection laws were already on a federal preemption track under Trump’s spring framework, as Laterstack reported in April. The 1,500 state-level AI bills the country has watched accumulate since 2024 now sit on a three-year clock, assuming the draft becomes law.

Anthropic, the other major frontier lab, spent $1.6 million on federal lobbying in Q1, up from $360,000 in the same quarter last year. OpenAI spent $1 million. Both record their largest-ever quarterly outlays in the disclosures.

Inside the room

Look past the 30-day window. The room where it got drafted is where AI policy actually gets made. Access to that room is measured in millions of dollars per quarter and in the willingness of senior executives to phone a White House on a Sunday. The companies in the room change administration to administration. The Biden White House’s October 2023 AI executive order routed industry consultations through NIST and OSTP. This one routes them through Treasury, NSA, and CISA. Different agencies. Same companies. Same room. The faces and the company logos rotate. The mechanism does not.

This is what makes the EO and the Obernolte-Trahan draft worth reading together. The order created a clearinghouse. The bill, twenty-four hours later, codifies the office that will write the rules the clearinghouse depends on. Twenty-four hours after the executive who would benefit most asked for a seat at the same office, in person, with the Speaker and the Minority Leader in his calendar.

That is how AI policy gets made in 2026. Three artifacts, three days, one channel.

What this means for the people not in the room

Policy staff already know the channel exists. The Q1 lobbying numbers are public and the meeting schedules get leaked. The people who do not know are the readers and constituents who experience AI policy as a finished product. Federal frameworks descend, state protections get preempted, and the design of the safety regime gets treated as a technical question rather than a political one.

The next visible artifact will arrive in 30 days, when Bessent’s clearinghouse stands up. Watch who staffs it. The names will tell you whether the channel grew or held steady.

Requests for comment

Representative Obernolte’s office did not respond to a request for comment about whether OpenAI or Anthropic provided input on the draft bill’s CAISI language. OpenAI did not respond to a request for comment on whether the company advocated for the 30-day window over the 90-day version. Laterstack will update this story if either responds.

Lamar Rice

Editor, Laterstack

Pima County Board of Supervisors Chair Jen Allen said Tuesday she hopes Governor Katie Hobbs will veto HB 2873 “if and when it lands on her desk,” putting Arizona’s second-largest county on the record against a retroactive state bill that would strip local referendum tools used to challenge data-center developments.

Allen, who chairs the five-member board and represents Pima County’s third district, gave the on-record veto ask in a Laterstack interview Tuesday afternoon. The bill, sponsored by Republican Senator Shawnna Bolick, would void referendum petitions for projects already under way, including the Marana data-center referendum that Pima County residents are organizing as a check on local zoning decisions.

“This is a fight over whose interests the town council decisions are being driven by,” Allen said. “Is it the interests of the residents who clearly don’t want a data center? Or is it the interest of the private equity fueled, speculative developers?”

The dissent block, the redirect, and the rate increase

Allen’s veto ask did not come out of nowhere. She is part of a four-member dissent block on the Pima County Board of Supervisors that lost a December 16 vote on a $20 million land sale tied to data-center buildout. Losing the vote did not end the fight. Allen and the dissent block negotiated a redirect of $1.3 million from the land-sale proceeds to utility assistance and weatherization for Pima County residents.

The redirect mattered because it landed during the same budget window in which Tucson Electric Power proposed a 14 percent residential rate increase.

“Tucson Electric Power, the private utility who would provide electricity for the data center, has already proposed a 14 percent residential rate increase,” Allen said. “So $1.3 million for utility assistance and then also weatherization, helping folks get windows repaired so that money isn’t just flowing out their single-pane windows.”

Coverage of the rate-increase proposal has emphasized the load growth from data-center demand. Allen connected the two threads explicitly: a county that hosts data-center development pays for the buildout in the rate base, and the dissent block redirected dissent into a measurable transfer to ratepayers.

Marana, the referendum, and the Worker Power split

The Marana data-center referendum is the test case that brought HB 2873 into existence. Marana residents organized to gather signatures challenging a zoning decision tied to a data-center project. The referendum drive ran into structural problems on the local side, then state legislators introduced HB 2873 with a retroactive scope that would void referendum petitions like Marana’s even after they had been filed.

Allen described the referendum’s signature-gathering hand-off carefully.

“Worker Power had said that they would take it over because they were already out gathering signatures for a different referendum,” she said. “And so folks handed it over to them to do. Now, that’s regrettable. But the power of being able to have a citizen-driven referendum is important.”

Worker Power, a labor-coalition organization, picking up the signature drive split parts of the original organizing coalition. The No Desert Data Center Coalition, which Allen named as the source readers should follow on the ongoing Marana fight, has continued to track the case alongside Pima County’s broader posture.

A retroactive bill, in a moratorium

HB 2873 sits inside a larger procedural fight at the state level. Governor Hobbs declared a bill moratorium on April 13, 2026, pledging to veto every bill that reaches her desk until Republican legislative leaders produce a budget plan. As of late April she had vetoed forty-five bills in 2026, per Phoenix New Times tracking. HB 2873, if it clears House concurrence and reaches her, lands in moratorium territory.

The bill itself has been characterized in coverage as targeting referendum tools used by communities to challenge data-center development. Allen is the highest-ranking county-level Democrat to ask for the veto on the record.

The preemption frame

The Allen interview returned several times to the broader pattern of state-level preemption of local authority. The data-center fight is one example of a structural dynamic Pima County and other Arizona counties have flagged across multiple policy areas.

“We have so many things that we are preempted from doing by our state legislature,” Allen said. “The way that they have usurped so much local control over things that are unique to our community.”

The same federalism dynamic that has driven Arizona’s state-level AI protections into a fight with the federal preemption framework is the dynamic at work in HB 2873, only with the direction inverted: state authority preempting local authority instead of federal authority preempting state authority. The procedural defense looks similar at every level. Communities argue for the right to use the tools they have, including referendum, against larger entities arguing the tools are inefficient or contrary to development priorities.

Zoning as the choke point

Allen flagged zoning as the critical local tool that referendum law protects.

“Zoning is essential. It is a critical decision,” she said. “And it’s oftentimes one of the most powerful tools that community members have to weigh in on land use decisions.”

A retroactive bill voiding referendums tied to zoning challenges does not eliminate the zoning authority itself. It removes the corrective tool residents can deploy when zoning decisions move faster than the consent of the people they affect. Allen’s framing is that the bill is the wrong response to a procedural problem residents are already trying to solve through the channels available to them.

Where this goes next

Allen named the No Desert Data Center Coalition as the source she would point readers to for ongoing tracking of the Marana case.

“I would suggest that folks follow the No Desert Data Center Coalition,” she said. “They monitor not just us as the Board of Supervisors, but the Marana Town Council and the Arizona Corporation Commission.”

The bill remains pending House concurrence as of late April. If it clears, it goes to the governor. Hobbs’s bill moratorium gives the public posture; the actual veto would have to be signed. Allen’s veto ask gives Hobbs’s office air cover from the senior county Democratic side. The bill’s path through the House depends on the next two to three legislative days. The Marana referendum signature drive depends on local signature-collection volume and on whatever procedural posture the Marana Town Council adopts after April 27 oral arguments.

The data-center buildout in Arizona will continue regardless of HB 2873’s specific outcome. The procedural question is whether residents retain the tools to challenge specific projects in their own communities while the larger industry expansion plays out around them.

This is a federalism story before it is a partisan one. The same procedural template would apply against a state government of either party that overrode local referendums after the petitions had been filed. Coverage of this beat will hold to one rule regardless of who controls the state legislature: a retroactive bill voiding citizen petitions deserves the same scrutiny when it comes from the right or from the left.

Frequently Asked Questions

What is HB 2873?

HB 2873 is an Arizona state bill, sponsored by Republican Senator Shawnna Bolick, that would retroactively void referendum petitions filed against projects already under way, including the Marana data-center referendum in Pima County. As of late April 2026, it is pending House concurrence and has not yet reached Governor Hobbs’s desk.

Why is Pima County Chair Jen Allen asking Hobbs to veto it?

Allen said in a Laterstack interview Tuesday April 28 that local referendum tools are “one of the most powerful tools that community members have to weigh in on land use decisions” and that retroactively voiding citizen petitions removes a check on data-center development. Her exact words: “Hopefully the governor will veto it, if and when it lands on her desk.”

What is the dissent block on the Pima County Board?

A four-member dissent block on the five-member Pima County Board of Supervisors lost a December 16, 2025 vote on a $20 million land sale tied to data-center development. After losing the vote, the dissent block negotiated a redirect of $1.3 million from the land-sale proceeds to utility assistance and weatherization for Pima County residents.

How does TEP’s 14 percent rate increase fit in?

Tucson Electric Power, the private utility that would provide electricity for the data-center development, proposed a 14 percent residential rate increase during the same budget window in which the dissent-block redirect was negotiated. Allen tied the two together publicly, framing the $1.3 million utility-assistance redirect as a direct offset to the rate-increase pressure on Pima County residents.

What is Hobbs’s bill moratorium?

Governor Katie Hobbs declared on April 13, 2026 that she would veto every bill that reaches her desk until Republican legislative leaders produce a budget plan. As of late April she had vetoed forty-five bills in 2026. HB 2873, if it clears House concurrence and reaches her, lands in moratorium territory.

Where can readers follow the Marana referendum case?

Allen pointed readers to the No Desert Data Center Coalition, which she said tracks “not just us as the Board of Supervisors, but the Marana Town Council and the Arizona Corporation Commission.”

Lamar Rice

Editor, Laterstack

“Well, those those are outside the bounds of my employment with the city. So I’m not going to respond to those.”

Rial (Lamar) Whitmer, on tape, in compelled testimony, when asked about his outside employment with The Alliance for Scottsdale’s Future.

That sentence is what a Garrity refusal sounds like. Garrity is the name of the 1967 Supreme Court rule that governs how public employees can be compelled to give evidence in their employer’s investigations. The compromise is a use immunity exchange: the employer can compel the testimony, the testimony cannot be used in a criminal prosecution, and refusal to answer is itself a fireable offense. Public employees who walk into a Garrity-warned interview have already been told that staying silent on a relevant question is grounds for termination on its own.

Laterstack has obtained the 388-page Witness Statements file in the Scottsdale City Hall public records request 26-006729, the same release that produced the Confidential Executive Summary covered in Piece 1 of this series. The Witness Statements file contains fifteen refusals on tape from Whitmer, in addition to the verbatim accounts of seventeen city employees who were interviewed during the 65-day investigation conducted by HR Senior Analyst Jason Stokes and Assistant HR Director Fred Verdugo. The Executive Summary distilled the findings. The Witness Statements file is the underlying record. This piece is what the underlying record says.

The architecture is conduct first, cover-up second, escalation third. The reader is taken through the five conduct findings, given the response Whitmer offered through his attorney, then walked through the recall-interference and failure-to-cooperate findings where the criminal-statute exposure and Garrity refusals concentrate. Every quote in this piece is verbatim from the public records release. Every characterization of intent is attributed to the city’s investigators by name, not to Laterstack.

Finding 1: The Christmas Eve at City Court

The clearest single scene in the investigation begins on the morning of December 24, 2025, when Whitmer arrived at the Scottsdale City Court window to contest a parking citation that was not in his name.

The court window clerk’s account, in her own words, is the opening of the violation:

“Um, he came to my window to address a citation that wasn’t in his name, so I told him uh, but he came and he s- he said that the mayor sent him to address his citation but it wasn’t his citation. And then he took out his business card and told me that he was the Chief of Staff and that he wanted to fix it.”

The judge declined to see Whitmer. The court bailiff, who watched the exchange and gave the longest direct-witness account in the file, recalled that Whitmer then named the city’s Chief of Police as the person he intended to escalate to:

“And again, he stated that that’s not how the City Attorney said it would go. Um; and then handed me his business card, and I just told him that I treated every citizen the same in Scottsdale. It doesn’t matter to me what your business card says. And then he said he was going to contact the, um, Chief of Police, and he said a name but I don’t know what name he said. I don’t know who our Chief of Police is. Um, and I wished him well with that.”

After the judge’s refusal, Whitmer mocked the bailiff, the court window clerk recounted, with a Peter Pan reference. “He was just being very, um sarcastic, he said, ‘Peter Pan?’ And he was like, ‘So what does that mean? Does that mean Tinker Bells the bailiff?’ And I was like, ‘No. It’s no, no.'” The bailiff then described Whitmer physically shoving his city business card across the court window: “Well, the first time he just tried to hand it to me, and I was sitting back there and then he was like, ‘Oh, no. Thank you. I don’t need your business card.’ And then after the judge had refused to see him; he, like, set it down and shoved it at me.” Asked by the investigators directly whether Whitmer was attempting to use his position to influence his wife’s parking citation, the bailiff answered with a single word: “Yes.”

In his Garrity interview, Whitmer answered with an admission that took the form of a challenge: “‘Cause I wanted to identify myself if the judge came out so that I could get this thing straightened out. Do you think that’s wrong?” He flatly denied the Peter Pan and Tinker Bell mocking the clerk had described, telling investigators “That is completely absurd and a lie” and, separately, “You’re just making this shit up then.” The bailiff and the clerk gave consistent accounts; Whitmer denied the specific incident; the city investigators substantiated the finding.

A separate Supplemental Addendum to the investigative report, dated March 24, 2026, addresses the parking-citation matter under a Scottsdale Revised Code 14-72(8) standard for “knowingly made a false statement.” That document was included in the records response and was previewed in Piece 1’s scope notes.

Finding 2: A pattern of unprofessional comments

The Christmas Eve scene was not an isolated event. The investigators substantiated a pattern of unprofessional and offensive comments that ran across Whitmer’s three months in the office. The clearest single passage in the entire 388-page file is Whitmer’s own retelling of an earlier comment, made in the form of a story he chose to repeat under Garrity:

“I don’t recall making that comment, but there is a story behind that… the Navajos have a tradition that at the first you know, that the snow, the first good snow, you go out and you roll around in the snow without clothes. And the Navajo president and his brother suggested that I do the same, and I said I doubt that I would do that because the Navajo police would pick me up for indecent exposure. And he said that it would that would be okay because I’d probably be as red as an Indian. Is that an inappropriate story to tell? No.“

That last sentence is Whitmer’s own verdict on his own conduct, on tape, in his employer’s investigation. The investigators reached a different verdict.

On the same Christmas Eve trip to the courthouse, the screening officer at the security checkpoint testified that Whitmer surrendered a knife and made a comment with a knife-mime gesture. The court security supervisor who reviewed the incident with contemporaneous notes recorded the comment this way: “So as he came around, he… uh, it was… he made a statement, he… something like Allah Akbar, he goes, ‘I was told to say Allah Akbar,’ and I’m like, and I thought that was very, very strange. Why would you even say that?” The Muslim screening officer who took the knife filed a complaint that day: “I said, uh, ‘I wanna file a complaint. I don’t appreciate that.’ Um; I don’t know if I opened up a can of worms because of that, but, uh, I didn’t like the comment he made. I thought it was, um; derogatory toward Muslim people.”

A senior city attorney’s birthday party earlier in Whitmer’s tenure produced a comment about gypsies and deportation that, per multiple witnesses, caused another attorney to walk out of the room. One witness recounted: “I remember it was something to do with gypsies, his word again… they all ended up getting deported and he thought that was really funny and [REDACTED] was, like, so offended she left the room. She said that’s not okay and she left the room.” Whitmer’s response in his Garrity interview, asked specifically about the comment, was: “To overly sensitive people, sure.”

A staffer Whitmer called by phone during her shift recalled him alluding to required onboarding training in these terms: “He alluded to the onboarding training that we provide… And he said something to the effect of, ‘I have been dealing with all of the onboarding training, the sex trafficking makes me think some of the ladies I have dated have probably felt the same way.'” Whitmer’s Garrity reframe of the call was that the substance was actually about grooming, that he felt up until the last five minutes that the training applied to him personally, and that the topic was human trafficking rather than sex trafficking.

Whitmer’s umbrella defense across the entire pattern was a single rhetorical move that repeats throughout his interview: “If you’re saying that to be a city employee you have to, uh, strip yourself of any sense of humor, it’s just absurd and impossible.” The most senior witness in the investigation put a number to the result the investigators concluded: “There was a couple of comments made to me like, hey, I don’t wanna meet with Lamar, will you be in the room?… I do not feel comfortable meeting with Lamar. Will you please put me in with the mayor?… I can meet with you if the mayor has that direction but I don’t wanna be alone with Lamar.”

Finding 3: Insubordination

The same senior witness, asked about Whitmer’s relationship with Mayor Borowsky, confirmed that Mayor Borowsky herself had reprimanded Whitmer twice before HR ever opened an investigation file: “100%. The mayor’s actually reprimanded him on two separate occasions, um, for the way that he communicated.”

The substantiated insubordination conduct centers on a hypothetical Whitmer asked the city’s senior Building Official, in a meeting where Whitmer had a property owner on speakerphone seeking permits the official’s department had refused to issue. The Building Official’s verbatim of Whitmer’s question: “And then he asked me a question that I thought was And I found it kind of unusual. He should know the answer to. He says, ‘Well, if the city manager told you, directed you to issue those permits, would you do it?'”

In his Garrity interview, Whitmer admitted arguing with the City Manager and reframed the entire investigation: “I recall being told that. I also recall arguing with him, saying that that my job description was not that my job description and the charter allows me to make inquiries. I don’t have to go through his office to do those… this whole effort here has been to immobilize the mayor’s office and her agenda and her outreach efforts.” Asked separately whether he had been given a directive he disregarded, he answered: “I didn’t feel the I had that authority in the first place. Secondly, if it was if he was going to do that, he should have written a directive directly to me because I would have contested it vigorously. There’s no way I wouldn’t have contested it.”

Other substantiated insubordination conduct includes calling another speaker “an effing liar” during a council recess (Whitmer admitted this in his interview: “And that’s when called the mayor a liar about the deal, the 1,500, to which I called an effing liar”), and a documented exchange with the Scottsdale City Clerk over a proposed rules-of-procedure change in which Whitmer told the Clerk it would “be like, you know, a shame if that stopped or didn’t continue.”

Finding 4: Outside employment, conflict of interest, and a contradiction in his own words

The Alliance for Scottsdale’s Future is the political nonprofit at the center of Piece 1, the organization the city investigators concluded had run ads against three sitting Scottsdale city councilmembers and against a council-approved Old Town parking structure. The Witness Statements file adds physical-evidence corroboration that did not appear in the Executive Summary.

A senior Mayor’s-office staffer testified to seeing an Alliance ad open on Whitmer’s personal laptop in his city office: “Um, I saw something on his on his private computer.” “Uh, an ad.” “Uh, it felt like it was more, someone had sent it to him.” A separate witness from the city’s planning office, asked a general background question about Whitmer’s outside work, surfaced the Arizona Corporation Commission record without any prompting from the investigators: “I noticed that Lamar, along with a few others; um, part of that Alliance for Scottsdale’s Future were And I thought that seemed strange if he’s a City employee and then also, um, part of that group.”

Whitmer’s foundational admission, given in his Garrity interview, settled the public-record question directly: he confirmed under compelled testimony that he was, at the time of the interview, “currently the president” of the Alliance for Scottsdale’s Future. Asked whether the city paid him while he did Alliance work, he answered: “Yes.”

The clearest documentary moment in the entire file, however, is a contradiction Whitmer produced inside one continuous interview session. Asked first about a photograph the investigators showed him of his own city office whiteboard, Whitmer confirmed it was his writing and explained: “the mayor wanted to do something with respect to economics… we talked about it. put it on put it on the whiteboard.” The whiteboard, in his own confirmation, said “Scottsdale Economic Alliance.” Three pages later in the same interview, Whitmer told the investigators: “What what what is the what is the Scottsdale Economic Alliance? It doesn’t exist. How can I how can I work on something that doesn’t exist?” Two pages after that, he reconciled the two answers in a single sentence: “It’s if it’s the mayor’s initiative and I’ve talked about it while on city time, I don’t see that as an issue.”

A separate substantiated conflict involves The Fulcrum Group, the consulting entity through which Whitmer sent invitations to Arizona Republican Roundtable breakfast events using the Fulcrum email domain on dates during his city employment, including twice while on paid non-disciplinary leave. Whitmer’s defense in his Garrity interview took the form of a sole-proprietor loophole: “Well the question is, am I, uh yeah, am I an employee of the Fulcrum Group? No. I own the Fulcrum Group. I am the Fulcrum Group.” The senior Mayor’s-office staffer’s account of the timing was less rhetorical: “I think that he was running into some of those same things where he had some, some of his Fulcrum consulting, whatever that, that entity is. I think that he was kind of tidying up some of that to get fully on board with the city. And honestly, I think some of that overlapped.” Laterstack will publish a dedicated piece on the Fulcrum Group and Arizona Republican Roundtable component of the findings as Piece 3 of this series.

Finding 5: Attorney impropriety, OtterAI, and the weapons-at-work questions

Finding seven in the Executive Summary covers what the investigators called the appearance of impropriety in Whitmer’s handling of attorney-related matters. The centerpiece is a meeting Whitmer convened on December 17, 2025, with an outside attorney representing private property owners, on a permit dispute the city’s Board of Adjustment had recently ruled on. The attorney’s own laptop recorded the meeting using the OtterAI transcription service, a fact a senior Mayor’s-office staffer confirmed under one-word direct questioning: “Yes. Otter.ai.” The same staffer testified that when she had asked Whitmer about the recording before HR opened an investigation, “I don’t know. I asked Lamar about that and he didn’t really give me an answer.”

Whitmer admitted in his Garrity interview that he had convened the December 17 meeting specifically to pressure the City Manager: “Well, uh, I think the purpose of the of the meeting was that, uh, that I asked for it, was to see if we couldn’t get the City Manager to uh, postpone action for a while to allow the the ordinance to be amended.” Asked separately about a prior personal relationship between himself and the outside attorney, and whether that relationship had been disclosed at the December 17 meeting, Whitmer’s answer is the most concise admission on this finding: “That wasn’t disclosed. It wasn’t relevant to the discussion at hand.”

The investigators also documented a separate pattern, raised by the city’s Building Official: “I have a con- concealed carry weapon permit. He says, And I’d asked the city attorney if I could bring my weapon to work. And the city attorney told him no. And he says he asked him a couple of times. And he kept telling him no.” The Christmas Eve scene at City Court contains the bridge sentence to the same finding: at the security checkpoint, Whitmer challenged the courthouse’s knife-surrender requirement by asking, “the city attorney says I can carry it with me on their side. Why can’t I carry it over here?”

What Whitmer says

The notice of claim filed by Whitmer’s attorney Dennis Wilenchik on April 10, 2026, is the substantive on-record response Whitmer’s side has offered. Per Piece 1’s coverage of the notice, Wilenchik has called the HR investigation “a sham” and “predetermined to defame Mr. Whitmer.” Laterstack sent a written request for comment to Wilenchik on April 22, 2026 with a response deadline of April 23 end of business for inclusion in Piece 1, and a second window of April 27 end of business for inclusion in Pieces 2 and 3. No response was received from Wilenchik by either deadline. Laterstack also sent written requests for comment to The Alliance for Scottsdale’s Future at scottsdalealliance.com and to The Fulcrum Group via the contact form at thefulcrumgroup.com on April 24, 2026, with a response deadline of April 27 end of business. No response was received from either party. Their non-response is reproduced here as a matter of record.

Finding 6: Recall petition interference (A.R.S. 9-500.14)

The substantive escalation in the file occurs in two adjacent pages of Whitmer’s Garrity interview. The investigators asked him a series of direct yes-or-no questions about a recall petition that, the Executive Summary established, had been pulled in connection with Mayor Borowsky. Whitmer’s answers, in his own words, are short. They are also the substance of the substantiated finding under Arizona statute A.R.S. 9-500.14, which prohibits the use of city resources to influence a recall election, including “supporting or opposing the circulation of a petition for the recall of a public officer.”

Q: did you ask who requested the recall petition? A: “Yes.”

Q: did you ask the petitioner for a copy of the recall petition? A: “Yes.”

Whitmer separately confirmed that the information about who had pulled the recall papers had reached him from Mayor Borowsky: “I had heard that from the mayor.” He also confirmed that he had personally arranged and held a meeting with the petition requester during work hours using city resources: “I arranged it.” “They were held at the Kiva conference room at 3 o’clock on Tuesday the 13th.”

A senior Mayor’s-office staffer who was in the room when the recall papers were first raised described the moment in the staffer’s own words: “He literally just said, just in full disclosure, we have pulled recall papers for you.” That staffer, asked by the investigators what she understood the comment to mean in context, was direct: “And I think they were using that as a as a threat, quite frankly.”

A separate Clerk-level witness recounted that she explained to Whitmer at the time that the conduct he was undertaking was procedurally improper: “explained to him that could not talk to him about it because it was an election related matter; and that City employees can’t be involved with elections… he indicated that he disagreed with that.” She then escalated to the Scottsdale City Attorney for an independent read: “called the City attorney just to make sure he and were on the same page about employee involvement in election matters, and that a recall matter is considered an election matter, and he did agree with me.” The investigation made no finding against Mayor Borowsky. The factual record places the Mayor in the recall-information chain. The formal violation, in the city’s substantiated finding, runs against Whitmer alone. The Arizona Attorney General has historically reviewed alleged violations of A.R.S. 9-500.14 when they are referred for review. Whether that referral occurs is outside the scope of this piece.

Finding 7: Failure to cooperate

The fifteen refusals are the file in compressed form. They occur in a continuous stretch of Whitmer’s interview, in answer to questions the investigators asked about The Alliance for Scottsdale’s Future and the Fulcrum Group. The pattern is a single sentence repeated in different forms: that the question is outside the scope of his employment with the city, and that he is therefore not going to answer it.

The lede sentence of this piece is one of those refusals. The dismissal kicker is another: “You’re not gonna get a response, so let’s move on.” The blanket refusal: “We do too. And this is outside the scope, so I’m not responding to any inquiry into these.” The version directed at his outside-employment activity while on city paid suspension: “My role and scope of my employment with the city does not is not relevant to any activity with the Alliance for Scottsdale’s future.”

The same interview contains the worldview the refusals are operating inside. “I’m just angry at the whole process because I think it’s a farce.” “We’re really getting to the heart of the matter now, of what this farce and charade is all about, but go ahead.” “I actually think the, uh, this whole endeavor has been an overreach by the city manager.” Each line is in Whitmer’s own voice on tape. Each is part of the file the investigators eventually delivered to City Manager Caton.

The very last sentence Whitmer spoke on the record, at the close of the entire compelled-testimony interview, is the closer of this piece because it does not require a closer. “Since you’re paying me, I guess I could do that. Well, not you guys. You probably don’t live here but you spend money here.”

Why this matters outside Scottsdale

The findings here matter past a single city for the same reason the Piece 1 framing on the Alliance and the Juneteenth-recall arc matters: a senior political appointee operated for three months at the boundary between municipal duty and outside political work, then refused to answer questions about that boundary when the city’s investigators asked him to. The state element is that A.R.S. 9-500.14 exists, and that this is the first substantiated city-level finding under the statute that Laterstack has identified in the recent record. The institutional element is that a city manager in a council-manager form of government fired a senior political appointee whose boss publicly disagreed with the firing, and the question of which office’s authority controls is now in front of a court via a $1.5 million notice of claim.

The piece readers should expect next, Piece 3, focuses on the Fulcrum Group / Arizona Republican Roundtable component of the findings and is gated on the city’s Exhibit 15 and Exhibit 20 calendar cross-check. Laterstack’s Tucson coverage, the Arizona AI preemption framework piece, and the RealPage YieldStar Arizona explainer are the relevant background on the Arizona accountability beat this series sits inside.

Methodology

The reporting in this piece relies primarily on the 388-page Witness Statements and Interview Notes file released by the City of Scottsdale in its partial response (received April 21, 2026) to public records request 26-006729. The file was processed through optical character recognition. Every direct quotation in this piece is reproduced verbatim from the public document as released, including transcription artifacts and the speaker’s own filler words. Witness names in the released file were redacted at source by the city; this piece refers to witnesses by role (court window clerk, court bailiff, Building Official, senior Mayor’s-office staffer, etc.) rather than name. Characterizations of intent are attributed to the city’s investigators (Jason Stokes, Senior HR Analyst, and Fred Verdugo, Assistant HR Director) by name. Analytical passages are presented as Laterstack’s good-faith reading of the public record. Additional context draws from public reporting by KJZZ, 12News, Scottsdale Progress, scottsdale.org, East Valley Tribune, Axios Phoenix, Newsweek, and other outlets listed in the Sources section.

Requests for comment

Laterstack sent written requests for comment to Dennis Wilenchik (Whitmer’s attorney) on April 18, 2026 (with a response deadline of April 20 end of business for inclusion in Piece 1) and on April 22, 2026 (with the substantiated findings stated and a response deadline of April 23 end of business for Piece 1, and April 27 end of business for inclusion in Pieces 2 and 3). No response was received from Wilenchik by any of those deadlines. Laterstack also sent written requests for comment to The Alliance for Scottsdale’s Future via the email address ScottsdaleAlliance@gmail.com (the verified contact channel on scottsdalealliance.com) on April 24, 2026, and to The Fulcrum Group via the contact form at thefulcrumgroup.com on April 24, 2026, with a response deadline of April 27 end of business for inclusion in Pieces 2 and 3. No response was received from either party. Laterstack will add any responses received after publication as dated updates to this piece.

Scope notes

The allegation that Whitmer solicited a campaign donation from Axon was found not substantiated by the city’s investigation, as documented in Piece 1. Axon is named in this piece only to clarify the scope of what was investigated and ruled out. Laterstack is not alleging any improper conduct by Axon or any of its officers or employees.
Mayor Lisa Borowsky is referenced in this piece to the extent the public record places her in the information chain on the recall-petition matter (Whitmer told the city investigators he learned of the recall request from her, per his own Garrity admission). The investigation made no finding against Mayor Borowsky. Nothing in this piece alleges or implies any improper conduct by the Mayor.
City Manager Greg Caton appears in this piece as the official who issued the dismissal letter and as the supervisor whose authority Whitmer admitted, in his Garrity testimony, he had argued with. No allegation of wrongdoing is made against the City Manager.
The NAACP is referenced only for the limited fact that one witness, per the Executive Summary covered in Piece 1, characterized a recall-related conversation as a possible vehicle to encourage a dialogue between the Mayor’s office and the NAACP. Nothing in this piece alleges or implies any improper conduct by the NAACP or its representatives.
Scottsdale councilmembers Barry Graham, Adam Kwasman, and Jan Dubauskas are referenced only as the publicly reported targets of advertising by The Alliance for Scottsdale’s Future, as documented in Piece 1. No allegation against any councilmember is made in this piece.
Jason Stokes, Fred Verdugo, Greg Caton, Monica Boyd, Holly Peralta, and the Scottsdale City Clerk and City Attorney appear in this piece only in their professional capacities as referenced in the official public records. No allegation of wrongdoing is made against any of them.
The “outside attorney” referenced in Finding 5 is not named in this piece because the released portion of the records file does not identify the attorney by name. Laterstack does not impute the public-records-act question to the unnamed attorney.
Direct quotations from witness testimony are reproduced for the purposes of news reporting, comment, and criticism, uses expressly protected as fair use under 17 U.S.C. § 107 and as fair report privilege under Arizona law for matters of public concern in official municipal proceedings.
Characterizations of Mr. Whitmer’s conduct in this piece are drawn from the substantiated findings of the Executive Summary and from the verbatim testimony in the Witness Statements file. Where the piece offers analysis of those findings, it is presented as Laterstack’s good-faith reading of the public record and is clearly marked as analysis.

Legal posture

This piece reports on matters of public concern involving a public official and an official municipal proceeding in Arizona. It relies on records lawfully obtained through a state public records request. Reporting on the content of an official municipal investigation, the verbatim text of a Garrity-warned compelled-testimony interview as released by the city, and the public posture of all parties involved is entitled to fair report privilege under Arizona law. Analytical passages reflect Laterstack’s good-faith commentary on a matter of public concern and are protected opinion under applicable First Amendment and state law, including the protections of Arizona Revised Statutes 12-751, Arizona’s anti-SLAPP statute as expanded effective September 24, 2022, which explicitly protects the lawful exercise of freedom of the press.

Corrections and updates

Laterstack is committed to accurate reporting. Any party that believes a factual statement in this piece is inaccurate is invited to contact the editor at lamar@laterstack.com. Substantiated corrections will be published inline with timestamps. New information received after publication will be added as dated updates rather than silent edits.

Image credit

Featured image: Old Town Scottsdale, East 1st Avenue. Original photograph by Marine 69-71 via Wikimedia Commons, used under the Creative Commons Attribution-Share Alike 4.0 International license. Brand-treated by Laterstack for this piece.

Frequently Asked Questions

What is a Garrity interview?

A Garrity interview is a compelled-testimony interview of a public employee conducted under the rule established by the 1967 Supreme Court case *Garrity v. New Jersey*. The employer can compel the employee to answer questions in an official investigation, but the testimony cannot be used against the employee in a criminal prosecution. Refusal to answer is itself a fireable offense for the public employee.

How many times did Whitmer refuse to answer in his HR interview?

Fifteen. Across the compelled-testimony interview conducted by Scottsdale’s Senior HR Analyst Jason Stokes and Assistant HR Director Fred Verdugo, Rial (Lamar) Whitmer declined to answer fifteen separate questions on the record, citing the bounds of his employment with the city.

What is records request 26-006729?

A public records request submitted by Laterstack to the City of Scottsdale, to which the city issued a partial response on April 21, 2026, including a 388-page Witness Statements and Interview Notes file. That file is the primary source document for this piece.

What did the city’s investigation substantiate?

Seven findings against Whitmer, including unprofessional comments documented in witness testimony, insubordination, undisclosed outside employment, attorney impropriety connected to OtterAI transcripts, and recall-petition interference under A.R.S. 9-500.14. The Axon donation-solicitation allegation was found not substantiated.

Was Mayor Lisa Borowsky implicated by the investigation?

No. The investigation made no finding against the Mayor. She is referenced in the public record only to the extent that Whitmer’s own Garrity testimony placed her in the information chain on the recall-petition matter.

What is A.R.S. 9-500.14?

Arizona Revised Statutes 9-500.14 is the state statute governing the use of city resources to influence the outcome of a candidate election, recall election, or ballot measure. The Whitmer investigation produced what Laterstack believes is the first substantiated city-level finding under this statute in the recent record.

Lamar Rice

Editor, Laterstack

A Trump-appointed federal judge in Phoenix dismissed the Justice Department’s lawsuit against Arizona’s voter rolls Tuesday, with prejudice. The ruling came down on April 28. It was the sixth time a federal court has rejected the DOJ’s nationwide push for unredacted state voter data, Brennan Center litigation tracking confirms. Arizona joins Massachusetts, California, Michigan, Oregon, and Rhode Island. The Department has yet to win a single case.

The headline is the ruling. The story is what Arizona did before any judge saw the case.

U.S. District Judge Susan Brnovich, an appointee of President Trump, wrote that Arizona’s voter list is “not a document subject to request by the Attorney General” under federal law, Votebeat reported. Amendment of the suit, she ruled, would be “legally futile.” The dismissal forecloses DOJ’s ability to refile in Arizona, the Associated Press confirmed. The Department has demanded full unredacted voter rolls from forty-four states and the District of Columbia since May 2025, per Brennan Center analysis, and has filed roughly thirty lawsuits against states that refused. Thirteen states handed their data over without litigation. The cases against the holdouts have been a clean sweep for the states.

Arizona’s four-move refusal

Arizona’s refusal ran in four moves before Brnovich opened the file. Secretary of State Adrian Fontes formally declined the DOJ request, citing federal preemption limits and Arizona’s confidentiality protections on voter data, including driver’s license numbers and partial Social Security numbers. Attorney General Kris Mayes co-signed a public legal opinion supporting the refusal, converting Fontes’s individual decision into a state legal posture rather than an officeholder’s preference. The two of them then wrote a joint letter to all fifteen county recorders telling them the federal demand “violates both federal and state law” and instructing local refusal. The letter pre-empted a maneuver federal enforcement actions sometimes try, bypassing state offices and going directly to counties. Brnovich’s ruling validated each move at every level. A judge ruling against the same administration that nominated her, on a plain-text reading of the federal statute, is the part that travels well across the political map.

The mechanics do not care which party signs the demand letter. The same procedural template would apply against a Democratic administration’s DOJ. The pattern is the same federalism dynamic Laterstack flagged earlier this year on AI law, when Arizona’s state-level AI protections were targeted by a federal preemption framework. The fight has moved from state AI bills to state voter rolls. The procedural defense looks identical.

What the federal interest looks like

DOJ’s case is not frivolous. Federal law authorizes the Attorney General to enforce both the National Voter Registration Act and the Help America Vote Act. The Department’s stated purpose has been list-maintenance compliance, the argument that without unredacted access it cannot audit how states manage their rolls. A California federal court rejected that framing last year, writing per Brennan Center reporting that “representations made by the DOJ elsewhere paint a starkly different picture that this Court cannot ignore.” The Cato Institute, writing from a federalism perspective, has argued that recent federal voting-data moves flunk the basic civics test on state authority over election administration. Both flanks of the argument exist on the public record. Brnovich rejected the statutory hook on which the audit-access argument rested, but the underlying federal interest in clean rolls is real, and a different fact pattern with a different statute could land somewhere else. State officials who refuse the current demands are not refusing federal oversight in principle. They are refusing this specific demand on this specific statute.

The DOGE-SSA dimension

A second story is unfolding alongside the Arizona ruling. Records first reported on April 29 by Democracy Docket reporter Yunior Rivas show personnel inside the Department of Government Efficiency signed a Voter Data Agreement with an outside political group on March 24, 2025. Democracy Forward, the legal nonprofit run by President and CEO Skye Perryman, obtained the records through public-records requests and ongoing litigation. The advocacy group had already acquired state voter rolls and wanted Social Security Administration analysis to support efforts to challenge election results in certain states. The agreement was not reviewed through SSA’s standard data-exchange procedures. DOGE team members shared data through unapproved third-party servers including Cloudflare between March 7 and March 17, 2025. SSA did not learn about the agreement until a separate review in November 2025. The disclosed records include Hatch Act referrals. A federal appeals court called the conduct “alarming.” A district court has now greenlit discovery, which means more documents are coming.

Why Laterstack will not name the redacted party

The names of the outside political group and most government officials in the disclosed records are redacted in the underlying filings. Democracy Docket has analyzed several candidates, including True the Vote, an organization that has publicly pursued voter-roll analysis for years. Laterstack will not name a redacted party without primary-source confirmation. Groups like True the Vote and similar entities have publicly pursued this kind of work, but the redaction itself is the story until the document trail closes the question. Tips and document context can be sent on Signal at lamarrice.66 or lamar@laterstack.com

The federalism principle

Arizona’s four-move playbook is the procedural defense against precisely the kind of arrangement the DOGE-SSA disclosure describes. State officials who require federal data demands to identify themselves, follow statute, and reach the right office through the right channel are not blocking law enforcement. They are insisting that the demand show its work.

This is a federalism story before it is a partisan one. Should any executive branch be able to share Social Security data with an unnamed organization to analyze voter rolls? That is the question that survives the next election.

What we are watching

Discovery in the Democracy Forward case is greenlit. The next batch of documents will land on the public docket in the coming weeks. Whichever states are next on the DOJ’s litigation list, including Washington, where the DOJ suit was allowed to proceed earlier this month, have Brnovich’s reasoning available to them and Arizona’s full four-move sequence to copy. The same federalism logic that drove forty-five states to introduce more than 1,500 AI bills before the federal framework arrived is the logic at work in the voter-data fight: a structural preference for state-level authority over centralized federal overrides, regardless of which party is in power.

This is a federalism story before it is a partisan one. The state-refusal playbook works regardless of which party controls the federal request. Coverage of this beat will hold to one rule: a federal data demand that bypasses normal procurement and oversight deserves the same scrutiny when it comes from any administration, and a state secretary of state defending the public’s data against that demand deserves the same coverage regardless of party affiliation.

Frequently Asked Questions

What did Judge Brnovich rule on April 28, 2026?

U.S. District Judge Susan Brnovich, a Trump appointee, dismissed the Department of Justice’s lawsuit against Arizona Secretary of State Adrian Fontes with prejudice. She ruled that Arizona’s voter list is “not a document subject to request by the Attorney General” under federal law, and wrote that amendment of the suit would be “legally futile.” The dismissal forecloses DOJ’s ability to refile in Arizona.

How many states has the Department of Justice lost in voter-roll litigation?

Six. Arizona joins Massachusetts, California, Michigan, Oregon, and Rhode Island as states where federal judges have ruled against the Justice Department on demands for unredacted voter rolls. The DOJ has filed roughly thirty such suits since the start of 2025 and has yet to win a single case, per Brennan Center tracking.

What is the four-move state-level playbook Arizona used?

Step one: the Secretary of State formally refuses the federal data demand. Step two: the Attorney General co-signs a public legal opinion supporting the refusal. Step three: the two offices write a joint letter to all county recorders instructing local refusal. Step four: the court confirms. Arizona executed all four moves before Judge Brnovich’s ruling validated the refusal at every level.

What is the DOGE / SSA Voter Data Agreement?

Records first reported on April 29, 2026 by Democracy Docket reporter Yunior Rivas show personnel inside the Department of Government Efficiency signed a Voter Data Agreement with an outside political group on March 24, 2025. The agreement was not reviewed through Social Security Administration’s standard data-exchange procedures. DOGE team members shared data through unapproved third-party servers including Cloudflare. A federal appeals court called the conduct “alarming” and a district court has greenlit discovery.

Will Laterstack name the redacted political group from the DOGE / SSA records?

No, not without primary-source confirmation. Democracy Docket has analyzed several candidates including True the Vote, but Laterstack will not name a redacted party without a verified document trail. The redaction itself is the story until discovery closes the question.

What states complied with the DOJ voter-roll demands without a fight?

Thirteen states handed their voter data over without litigation: Alaska, Arkansas, Indiana, Louisiana, Mississippi, Nebraska, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, and Wyoming. Source: Brennan Center analysis.

Lamar Rice

Editor, Laterstack

The short version

Start with your power bill

Then the water you can’t see

Then the taxes you forgot

How a data center actually gets approved

Where it helps, where it hurts

The door you keep walking past

FAQ

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Not a fringe

Same enemy, opposite reasons

Already moving votes

Why this one crosses the line

Whether it lasts

FAQ

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The money, by the numbers

What the spending is near

Whose problem it solves

What sits closest to home

The room where it happens

Where it stands as of late June

FAQ

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The market thesis

The contradiction at the center

What skeptics will say

What this means for everyday people

What happens next

Requests for comment

What Miraex Builds, In Plain Terms And Then The Real Terms

The Pattern Inside The Fund

Why Sovereign Quantum Is The Real Story

Also Worth Watching, Briefly: QOSC

What This Is Not

The Prediction

The 90-day version that died

Altman went to the Hill the next day

The bipartisan draft

Inside the room

What this means for the people not in the room

Requests for comment

The dissent block, the redirect, and the rate increase

Marana, the referendum, and the Worker Power split

A retroactive bill, in a moratorium

The preemption frame

Zoning as the choke point

Where this goes next

Frequently Asked Questions

What is HB 2873?

Why is Pima County Chair Jen Allen asking Hobbs to veto it?

What is the dissent block on the Pima County Board?

How does TEP’s 14 percent rate increase fit in?

What is Hobbs’s bill moratorium?

Where can readers follow the Marana referendum case?

Finding 1: The Christmas Eve at City Court

Finding 2: A pattern of unprofessional comments

Finding 3: Insubordination

Finding 4: Outside employment, conflict of interest, and a contradiction in his own words

Finding 5: Attorney impropriety, OtterAI, and the weapons-at-work questions

What Whitmer says

Finding 6: Recall petition interference (A.R.S. 9-500.14)

Finding 7: Failure to cooperate

Why this matters outside Scottsdale

Methodology

Requests for comment

Scope notes

Legal posture

Corrections and updates

Image credit

Frequently Asked Questions

What is a Garrity interview?

How many times did Whitmer refuse to answer in his HR interview?

What is records request 26-006729?

What did the city’s investigation substantiate?

Was Mayor Lisa Borowsky implicated by the investigation?