January 13, 2025

This afternoon, Governor Katie Hobbs delivered her third State of the State to a joint session of the House and Senate. In comparison to last year’s address, which was filled with public outbursts from members of the Freedom Caucus, behavior during today’s speech was refreshingly tame as the Governor laid out her policy goals for the year ahead. The only real “fireworks” that ruffled some partisan feathers was the mention of reproductive rights and a call for reform to the school voucher program. But even that failed to receive energetic applause from fellow Democrats. To put it plainly, no knees were damaged with standing ovations.

Themed "Arizona Promise," the address focused on affordability, economic opportunity and public safety. Here are the highlights:

• Border Security: What could be considered an “olive branch” to Republican lawmakers, Governor Hobbs called out border security as a top priority. After commending the efforts of the U.S. Border Patrol, she promised to work with the Legislature to continue to “curb issues at the border” with an emphasis on the fentanyl crisis.

• Housing: Governor Hobbs called for an extension of the state’s Low-Income Housing Tax Credit (LIHTC) and committed to doubling her “Arizona is Home” program, which offers mortgage and down payment assistance to low-income Arizona families. She also announced a new plan called the “Home for Heroes” fund, which is part of her goal to end veteran homelessness in the next decade. It is also worth noting that the Governor called out short-term vacation rentals owned by out-of-state corporations, criticizing the “party houses” and their role in the affordable housing crisis.

• Child Care: The Governor announced her Working Families Child Care Act, which would create public-private partnerships to “lower the cost of childcare by two-thirds” and will be included in her budget proposal.

• Water: Vowing to fight against large corporations and “irresponsible developers” who don’t have the state’s best water interests in mind, the Governor called for a bipartisan solution to the state’s water crisis. As emphasis, she made reference to her recent designation of the Willcox Groundwater Basin as Arizona’s newest Active Management Area (“AMA”), which prohibits any new irrigation.

• Health: While most of her State of the State was partisanly benign, the governor did reference reproductive health as a continued priority. In addition to asking the GOP-controlled Legislature to pass bills that guarantee the right to contraception and access to fertility treatment, she also urged for the repeal of the abortion reporting law that requires government surveillance of pregnant women.

• Education: Perhaps the most inflammatory part of her speech, Governor Hobbs took a swing at Empowerment Scholarship Accounts (ESAs), which allow parents to use public funds for private-school tuition and other education costs. Signed under former Governor Doug Ducey, the program is celebrated by Republicans and is considered “off the table” when it comes to budget negotiations. Governor Hobbs again vowed to reign in the program by establishing guardrails, although she did not spend as much time focused on ESAs as she has in her previous two State of the State addresses. This year, she was more focused on Proposition 123 – the 2016 ballot initiative that has infused billions of dollars into K-12 education over the past decade – which is set to expire in June. Given the urgency, this will remain an immediate priority for the Governor’s Office as they seek a legislative referral for a special election to lift the spending cap and extend the funding.

Respective caucuses in each chamber have also unveiled their priorities for this session.

As expected, Republicans will focus on border security, elections and government reform. The Senate Majority Plan, however, dives deeper into law enforcement, blockchain technology, energy independence, and healthcare solutions, while the House Majority Plan emphasizes property rights, veteran services, and direct tax benefits, such as eliminating taxes on tips.

This morning, House and Senate Democrats held a press conference to unveil their top issues, which include education, water, healthcare and affordable housing. 

Details of these priorities will be included in the Governor’s Executive Budget proposal, which will be released on Friday (Jan. 17). We will provide our analysis of the Governor's budget in an upcoming issue of The Navigator. For the transcript of today's State of the State address, click here.