Governor State of the State Highlights

administration478
Jan 12
3 min read

The 57th Arizona Legislature gaveled into its Second Regular Session this afternoon. Governor Katie Hobbs gave the joint session of the Legislature her annual State of the State address. Some of the highlights of the Governor’s address include:

Middle Class Tax Cut Package

Governor Hobbs will call for the legislature to pass her Middle Class Tax Cut Package as the first bill of the session.
- Includes increased standard deduction, no tax on tips, no tax on overtime, an additional $6,000 deduction for seniors over 65, and no tax on interest for new, American-made cars
Governor Hobbs will reiterate her position that the rest of the tax conformity provisions— tax cuts for billionaires and big corporations— must be negotiated in the budget.

Arizona Affordability Fund

Governor Hobbs is proposing the creation of the Arizona Affordability Fund to help families manage the high cost of living. The revenue source for this new Fund is a proposed nightly $3.50 fee on short term rental stays, less than a cup of coffee. This will help us deliver major change for the working people in our state who are struggling to get by.
The Arizona Affordability Fund will be used to:
- Expand the Low Income Home Energy Assistance Program (LIHEAP) eligibility to up to 100% of State Median Income (first $15 million generated)
- Expand the Weatherization Assistance Program, which helps with households repairs and increases energy efficiency (next $3 million generated)
- Any additional funds will support the Housing Trust Fund to continue to build more affordable housing and prevent homelessness.

Housing Acceleration Fund

Governor Hobbs is launching a new Housing Acceleration Fund, a private-public partnership that will help affordable housing developers access low cost financing to build thousands of new housing units.
The fund, which is a pooled bond fund, will be kickstarted by a $2.5 million investment from the state government, and will accept investment from local governments, philanthropic and private investors.
This fund will 10x state, local, private, and philanthropic contributions through the Arizona Finance Authority’s bonding capability, creating significant impact and return on investment for the state and its partners.

Freeing Arizonans from Burdensome Medical Debt

In 2024, Governor Hobbs launched a bold partnership with Undue Medical Debt to forgive up to $2 billion in medical debt for up to 1 million Arizonans using only $10 million in federal funding. Since launching this initiative, Governor Hobbs has erased $642 million dollars in medical debt for nearly half a million people.

Arizona Capacity and Efficiency Initiative

Creation of a new Arizona Capacity and Efficiency Initiative
- Cost savings measures that can save Arizona up to $100M over the next 3 years

Operation Desert Guardian

Brings together local police departments, county sheriffs, state troopers, Tribal and federal law enforcement partners to disrupt and dismantle transnational organizations in Arizona.

Task Force SAFE

The Governor’s deployment of the National Guard to ports of entry along the southern border.

In the last year, the initiatives have seized:

More than $105 million worth of drugs
More than 16,000 pounds of fentanyl
More than 1,200 illegal firearms
And law enforcement has made more than 1,400 arrests

Protecting Rural Groundwater

Establish a new La Paz County Active Management Area.

Colorado River Protection Fund

Governor Hobbs is proposing the creation of a new Colorado River Protection Fund, funded by a fee on data center water usage.
She will kickstart the fund with a $30 million investment in her Executive Budget.
If set at $.01 per gallon, the same amount Arizonans pay, the fee will fund a multi-million per year investment in the fund to supercharge water conservation and recycling and position the state to continue its economic growth.

Data Center Tax Exemption