This week at the Arizona Legislature: What to expect during Hobbs' State of the State address

The state Legislature gets its new session underway today. Gov. Katie Hobbs will give her State of the State address this afternoon.

There have been more than a hundred bills filed already before the session even started — many more will follow. And both lawmakers and the governor have been talking about some of the issues they expect to debate in the coming months.

Howie Fischer of Capitol Media Services joined The Show to talk more

Full conversation

MARK BRODIE: Howie, this will be Gov. Hobbs’ fourth State of the State speech. So what are you expecting to hear from her this afternoon?

HOWARD FISCHER: Well, we start off with the obvious, which is “I’ve been your governor three years. I’ve done a great job. The state is in great shape.” And the undertone of that is just, “Reelect me because I’ll be on the ballot.” Beyond that, I think she has some issues she’d like to share.

The biggest, of course, is money. As always, money. It starts off with the question of who gets a tax break. Now this is fascinating because the fact that this is the same governor whose own economic advisers said last year, “We’re in for a little bit of deep kimchi this year, and we really should figure out how exactly we’re going to deal with that.”

I think what happened was HR1, the Big Beautiful Bill passed that had a bunch of tax breaks in there. The Republicans said, “Oh, we like these. We’d like to conform to the same tax breaks, the higher standard deduction, the things like that.”

And the governor said, “Oh wait! I’ve got my middle class tax breaks, and I want to talk to you about those.” So I think that’ll be a very big issue. She doesn’t particularly like the ones for the business, the accelerated depreciation. So that’s going to be a big fight.

The other part of it becomes, how do we spend the money? Now we’re not going to see her budget until Friday, and she insists it’ll be balanced and everything will be fine.

But I think she’s going to urge folks to invest in certain things. I think we’ll look for some more money for Colorado River litigation funds should it come to that because we know that Bureau of Reclamation is waiting on the states to settle, the Upper and Lower Basin states.

And then there’ll be a lot about her basic philosophy and why she says legislators should pay attention to fiscal issues versus social issues.

BRODIE: Howie, in the past we’ve heard the governor talk about education and specifically ESA school vouchers. Any expectation that she will be talking about that later today?

FISCHER: I think at the very least you will see her want to put in – I don’t know whether you’d call them guardrails or perhaps some better monitoring. There is a consensus that there have been situations where particularly homeschool parents who are getting these $7,400 checks have used them for less than educational things. I mean, that particular pregnancy test probably doesn’t relate to your biology class.

The issue of whether she’s able to go ahead and rein them in – I mean she’s tried this every year she’s been there. I don’t know how much she’s willing to keep beating her head against the wall on this one, but it’s a nonstarter. Anything that says we’re going to take vouchers away from people who already have them is not going anywhere in this Legislature.

BRODIE: Sure. One other education note, Howie. The Legislature and the governor need to come up with — or at least the Legislature — with an extension of Prop. 123, which was narrowly approved by voters. The measure ended last year, but the state filled in the money to make up for it so the schools didn’t lose that money.

It seems like that’s not really an option this year. But there hasn’t been consensus on what to ask the voters to extend. Might we hear what the governor’s plan is on that today?

(via @azcapmedia on Twitter)

FISCHER: I think you will hear something asking for an extension. Now remember there’s two issues here. Number one is how much money to be able to take out of the funds and where they would go. The original Prop. 123, which as you point out expired, sent it to basic K-12 education. The schools pretty much got to use it the way they wanted.

There are a lot of Republicans saying number one, we want it used only for teacher salaries. And number two, you’ve got on the other hand the governor saying “Well, we can actually take out more money because the education trust fund is healthy, and we could also use it for school safety and for non-teacher salaries and such.”

The other issue is if you’re going to put something on the ballot, there are a lot of Republicans say wait a second, let’s put in some constitutional protections for these empowerment scholarship accounts, these vouchers here because they are protected under a Supreme Court ruling, but they could be taken away – not necessarily by a court, I think court would have a hard time saying they’re no longer legal — but a future Legislature.

But if you put them into the constitution, the only way to get rid of them is by going back to the voters. The governor does not want the those issues tied together. Is it critical? Well, the fact is as you point out, they have done the backfill of the $300 million a year so far. They could keep doing that forever, but it means $300 million less to provide for tax breaks or services. So there is some push on both sides to go ahead and get that done.

BRODIE: So, Howie, you referenced the tax conformity issue, which is expected to be a pretty big issue right off the top. Anything else that you’re expecting or that you’re looking for sort of in this first several weeks of session to be a big issue?

FISCHER: Well, big is relative. I think there are some areas where they’ve found consensus. I think, for example, the whole issue of data centers. When the data center law was first established in 2013, data centers were placed for cloud storage. You know, I’ve got 42,000 pictures here for Aunt Martha, and I need to store them somewhere.

Now we have AI. Data centers have become bigger, more expensive, which is necessarily good for construction costs. But they also use a lot of water. They’re noisy. Some people would say they’re ugly. I think there’s finally consensus to say, “Look, we can’t stop people from building data centers. What we can do is say we’re not going to give them a tax break to go ahead and build them here.” And that was what was put in, again, in 2013.

The governor said it’s time to get rid of tax breaks. You have Rep. Neal Carter (R-San Tan Valley) already has a bill in to do that beginning at the end of next year. And you’ve got not only some other Republicans who are interested, but Andy Biggs, who could be the governor’s Republican opponent in the November election, also says perhaps it’s time to get rid of tax breaks. And again, remember that he also voted for them back in 2013.

BRODIE: So Howie, quickly before we let you go, the conventional wisdom is that during an election year, the Legislature wants to try to keep its session short so members can go and campaign for reelection or election to something else they’re running for and so that they can collect campaign contributions. Any sense of how long lawmakers might be at the Capitol this year?

FISCHER: Well, as you point out, you know, there’s the issue. You can’t take campaign money from lobbyists during the session. Theoretically, you could raise money somewhere else. You’ve also got the fact that the primary this year is going to be in July. I mean, this has gone back week after week after week as we try to meet certain deadlines.

I think, as you point out, there’s pressure to get out of there. I think there are some lawmakers for example, Warren Petersen (R-Gilbert), who’s the Senate president, who may quit the Legislature to be able to run for attorney general full time.

So that may not affect him. I’d say the chance of us getting out of here by the second or third week in April, which is theoretically the week of the 100th day, which is what the rules require — not going to happen.

I’m guessing more closer to perhaps May 30, somewhere in there. But again, you never know the kind of things that are going to delay the end of the session. It could be some big problem that nobody realizes. And that’s the other rule I’ve got to warn our listeners about.

Every year you ask what’s going to delay the end of the session. And every year it’s something that was not on anyone’s radar in January. When we’re talking in June, we’ll know.

MARK BRODIE: We’ll find out as the time comes.