Gov. Hobbs emphasizes collaboration and prioritizes education in first State of the State address, business community finds some areas of agreement

In her first State of the State address as the 24th governor of Arizona, Katie Hobbs on Monday emphasized the importance of bipartisanship during the upcoming legislative session and unveiled her policy agenda aimed at tackling some of the state’s biggest issues, including funding the state’s public education system, addressing housing affordability, and securing Arizona’s water future. 

Most of the governor’s speech reiterated the sentiments of her inaugural address, stating her “door would always be open” to those seeking to enact real solutions that will help everyday Arizona families. 

While speaking directly to Arizona legislators, Hobbs made it clear that public servants “have an obligation to find common ground and craft real solutions during the 56th Legislature.” 

And she hopes even with a divided Legislature, which features 41 new members, that state lawmakers will have “candid discussions about the issues facing our beloved state and how we can work together to ensure a better future for every family and community.” 

Danny Seiden, the president and CEO of the Arizona Chamber of Commerce & Industry, said his group is ready to collaborate with the governor and lawmakers to find solutions. 

“Arizona’s job creators this legislative session look forward to working with Gov. Hobbs and lawmakers from both parties to address some of the state’s most pressing challenges, including housing availability and affordability, and the security of our water supply so that the state can continue to grow economically,” he said. 

Investing in public education 

Hobbs said her administration’s top policy priority during the 2023 legislative session will be strengthening the state’s public education system. 

Throughout the address, Hobbs stressed the importance of improving access to quality education and subsequently called upon legislators to override the Aggregate Expenditure Limit, which limits school district spending based on the aggregate expenditure of all districts. Exceeding the limit requires a two-thirds vote of each legislative chamber. 

Republican House members Matt Gress, Phoenix, and David Cook, Globe, have already proposed measures to ensure schools stay open and are adequately funded. 

The Arizona Chamber and the Greater Phoenix Chamber, Greater Phoenix Economic Council and Greater Phoenix Leadership sent a letter on Tuesday to House and Senate leaders urging them to prioritize a resolution to the AEL issue. 

In a proposal likely to meet opposition from legislators and education reform advocates, Hobbs also said her budget, which will be released on Friday, will seek to repeal results-based funding, which gives high-performing schools additional resources to expand their impact. 

“The Chamber in previous years has strongly supported policy that recognizes and expands academic excellence so great schools can sustain their work and can serve more students,” Seiden said. “We hope to collaborate with Gov. Hobbs to preserve a funding model that elevates the work of outstanding school leaders.” 

Hobbs also announced that she would establish an educator retention task force to address a teacher “retention crisis” at Arizona public schools. 

The governor said that 1 in 4 Arizona teachers decides to leave the profession or move to another state. The goal of the task force is to examine all factors impacting K-12 education to explore comprehensive solutions to attract and retain more educators including the potential addition of more school counselors and other support staff. 

Hobbs said she plans to invest more heavily in the state’s university systems to improve access to higher education. Hobbs said she believes investments into community colleges – especially in rural areas – and dual-enrollment programs will better prepare the state’s future workforce, something the Chamber said it supports. 

“We were encouraged to hear Gov. Hobbs discuss the importance of investing in our community colleges and ensuring Arizona’s institutions of higher education are producing workforce-ready graduates to meet the demands of tomorrow’s economy,” Seiden said. 

Lowering the cost of living 

The governor said she seeks to build upon Arizona’s strong job market and economy by addressing housing affordability. She said she wants to invest $150 million in the State Housing Trust Fund and that she “will call for additional support in the years ahead.” 

A recent bipartisan paper by the Common Sense Institute authored by former state Sen. Sean Bowie and former Gilbert Mayor Jenn Daniels called for the permanent and ongoing funding of the trust fund. 

And she hopes to foster stronger cross-sector partnerships with Arizona businesses to address the state’s homelessness crisis, ensuring everyone has a roof over their head. 

Additionally, Hobbs revealed her executive budget proposal sets aside $50 million for a state level child tax credit for families earning less than $40,000 a year to help alleviate the pain caused by increasing costs. She also announced her plan to eliminate the state sales tax on diapers and other hygiene products. She states government officials must “provide relief to families that too often have to choose between paying bills or paying for the things they need to be healthy.” 

Securing Arizona’s water future 

Lastly, Governor Hobbs seeks to tackle “the issue of our time” by enacting environmentally friendly policies that “secure the state’s water future” and counteract the impacts of decades-long drought. 

Hobbs announced the creation of the Governor’s Office for Resiliency, which will focus on solving water, energy, and land use issues. 

Hobbs also issued an Executive Order on Monday to establish the Governor’s Water Policy Council, which is tasked with modernizing the state Groundwater Management Act. 

Valley Partnership, a group that represents real estate developers, said it liked what it heard from the governor. 

“We appreciate the transparency from Governor Hobbs on the current state of affairs and applaud the governor for announcing key initiatives today that will focus on water use, modernize and expand the Arizona Groundwater Management Act, and provide funds to rural communities to set up Active Management Areas,” Valley Partnership President and CEO Cheryl Lombard said. “We look forward to working with the governor on these and other solutions.”