Entering her third year in office, Democratic Gov. Katie Hobbs told lawmakers to focus on cutting costs for Arizonans who have faced an increasing cost of living in a state that used to be known for its affordability.
The governor’s annual State of the State address, delivered before a joint session of the Arizona House and state Senate, offered Hobbs an opportunity to share her vision for what lawmakers can accomplish in the upcoming legislative session. But the cards are stacked against Democratic priorities, as Republican lawmakers return to the Capitol with bigger majorities than in the first two years of Hobbs’ term.
In 2023 and 2024, Republicans had one-vote majorities over Democrats in both chambers of the Arizona Legislature. Now there’s a six-seat GOP majority in the House and a four-seat majority in the Senate.
In Hobbs' address, and in earlier speeches by Democrats and Republicans, lawmakers from both parties highlighted increasing affordability as a top issue heading into the session, but they differ on how to accomplish that goal.
Affordable childcare
In her speech, Hobbs announced the Working Families Childcare Act, a proposal to lower childcare costs.
Details of that plan haven’t been published yet. But Hobbs said that there’s a need to address the more than 75,000 Arizona children in need of childcare whose parents can’t access it because it’s so expensive.
According to the Children’s Action Alliance, childcare can cost $10,000 annually for one child.
“Hardworking families will win. Employers will win. And, most importantly, our kids will be better off because they have the care they need to learn, play, and thrive,” Hobbs said of the plan.
Rep. Selina Bliss (R-Prescott) is the chair of the House Health and Human Services Committee. She said Hobbs hasn’t shared any specifics of her childcare plan with Republicans yet.
“You don’t judge something until you’ve seen it in writing,” Bliss said.
Housing and homelessness
The average rent and home prices in the state have risen dramatically in the past decade — researchers at Arizona State University found Arizona rents rose 72% from 2010 to 2022. And Axios reported that the cost of a home in Arizona has increased by 500% over the past four decades.
Recent data suggests home prices in Arizona are becoming more affordable but still remain too expensive for average wage earners.
Hobbs touted some existing state programs, like Low-Income Housing Tax Credits, and urged lawmakers to extend the program, which gives credits against the federal income tax liability of a developer of a low-income housing project. To qualify, developments must have a certain percentage of units dedicated to low-income tenants.
It’s a concept that historically has had some Republican support.
“I’ve always been supportive of LIHTC,” Rep. Jeff Weninger (R-Chandler) said after Hobbs’ speech. He’s the head of the House Commerce Committee where housing related bills typically go through.
Hobbs also urged lawmakers to address homelessness, particularly among the state’s military veterans.
“I am issuing a challenge to lawmakers and elected officials across the state to fully commit to ending veteran homelessness in Arizona in the next decade,” Hobbs said. The statement got enthusiastic applause from both Democrats and Republicans in the room.
Hobbs also touched on the need for reform of vacation rentals like AirBNB, although that’s something legislative Republicans typically don’t support.
The influx of short-term rental homes in popular destinations like Sedona is further exacerbating the housing shortage by swallowing up the available supply of housing.
“These housing speculators are buying up properties and turning family homes into party houses, making housing less affordable in the process,” Hobbs said. “Party houses are causing chaos in our communities.”
“By taking these common sense actions, we can lower the sky-high cost of housing and help families thrive,” Hobbs said.
Reproductive rights
Though Arizonans voted to enshrine the right to abortion in the state Constitution last year, Hobbs said more needs to be done to guarantee reproductive freedom for Arizonans.
She encouraged lawmakers to pass a law establishing the right to contraception, even though that’s something that’s been suggested before and hasn’t gotten past Republicans. Also, Hobbs said she wants to put something concrete in state law to ensure families can access fertility treatments like IVF.
“Every Arizonan should be able to decide how and when to start a family, on their own terms,” Hobbs said.
Water security
Protecting Arizona’s groundwater is where Hobbs took her hardest stand.
“Any bills that attack our assured water supply program, undermine our water future, or are political cover for this Legislature’s lack of action on water security, will meet my veto pen,” she said.
Hobbs listed some of the executive actions she’s taken to preserve rural Arizona’s groundwater supply and promised to act unilaterally again if the Legislature won’t work with her
“When we fail to take action to protect our groundwater, big corporations will recklessly over-pump this finite resource regardless of the people and communities they hurt,” Hobbs said.
Senate President Warren Petersen (R-Gilbert) scoffed at Hobbs’ comments on water, and accused her of killing good water-related legislation backed by Republicans.
School vouchers
When first elected two years ago, Hobbs made it clear that she wanted to undo the universal expansion of Empowerment Scholarship Accounts, Arizona’s version of school vouchers. This year, facing strengthened Republican majorities, Hobbs instead called for reforms, like an income cap limiting which families who’d qualify for vouchers, as well as reporting on exactly how taxpayer money is being spent on the program.
Hobbs referenced instances of questionable expenses the ESA program has approved, like ski passes and a grand piano, as a reason for reform.
Hobbs also said she wants to make sure the Legislature passes an extension of Proposition 123, a measure voters passed in 2016 that draws funding from the state land trust for K-12 schools.
Republicans respond
In Hobbs’ first session, she shattered the record for most vetoes at 143 bills. The next year, she rejected 73 bills.
In her speech this year, Hobbs didn’t threaten to veto Republican priorities, but said she hopes to see cooperation. But Republicans were far from supportive of what Hobbs had to say.
House Speaker Steve Montenegro (R-Goodyear) said that Hobbs’ speech makes it clear her priorities do not align with most Arizonans.
“Over the past two years, the governor has pursued a vision for our state that voters decisively rejected in the most recent election, choosing instead to strengthen Republican majorities in the state legislature,” he said in a statement.