I have two thing to your project.
On on the motor and battery:
- How much current do your motor draw when runing?
- How much current do your motor draw when it stalls?
My bet is that the Sabertooth motorcontroller is too small for your motors.
On one your Hall Effect sensor and magnet:
What does a motor run? is it magnets?
You have only one point in your encoder right now, how accurate do you thing you can drive your motors with one point in the encoder?
Have you tried just to run your motors without your encoders?
I would also drive your arduino from a different battery than you motors.