Business community hears from governor and legislative leaders about what 2025 session has in store

Members of the business community and elected officials at all levels of Arizona government gathered at the Phoenix Convention Center on Friday for the Arizona Chamber of Commerce & Industry’s Legislative Forecast Luncheon. The annual event featured remarks from Ariz. Gov. Katie Hobbs and state legislative leaders from the House and Senate.

What Hobbs had to say: Previewing today’s State of the State address, the governor said she would stress affordability in the 2025 legislative session.

“Affordability is top of the line for Arizonans. We saw that in this last election, and childcare is a huge issue too. It’s not just important for Arizonans, but also employers,” Hobbs said as part of a conversation with Chamber President and CEO Danny Seiden. “So, I’m really excited about the proposal we are going to put forward to help increase affordability and accessibility for Arizona families. It’s also going to be good for employers. We’ve been working with the Chamber, so we’re really excited to have your support.”

The governor also cited her concern about President-elect Donald Trump’s stated plan to impose steep tariffs on imported goods, including from Mexico, Arizona’s largest trading partner.

“Mexico is our number 1 trading partner and there are so many Arizonans and businesses that rely on trade with Mexico to be successful, so these are really harmful policies,” she said. “We have really worked to make our economy more resilient and diversified, and, so, I know that we will work together to mitigate the impact if these policies are implemented. But, hopefully, we can all put enough pressure to help Trump understand that these are not policies (for) Arizonans or Americans when they are at the grocery store trying to buy eggs.”

Grateful to @GovernorHobbs for joining us at #LFL2025 and sharing her top priorities for the #AZLeg session. From renewing Prop 123, to tackling the fentanyl crisis, to strengthening our workforce and trade relationships to ensure Arizona’s business climate stays competitive—we… pic.twitter.com/muJTlW4ADW
— Arizona Chamber (@AZChamber) January 10, 2025

The governor said deep federal budget cuts could negatively affect state programs like the Arizona Health Care Cost Containment System, or AHCCCS, the state’s Medicaid program.

“That is one of the biggest risks we’re facing right now. If the federal match is reduced, that will trigger a bunch of Arizonans, hundreds of thousands of Arizonans, potentially losing their healthcare. That’s devastating for those families; it would also be something devastating for our economy,” Hobbs continued. “We have been a donor state so we are sending more to the federal government than we are getting back and those Medicaid dollars really help ensure that we are getting our fair share.”

Big topics at today’s #LFL2025 legislative panel: Prop 123, housing affordability, regulatory reform, water, election reform, key budget priorities, and more.

A big thank you to Speaker @SteveMontenegro, President @votewarren, Sen. Minority Leader @priya4az, and House Minority… pic.twitter.com/5zqByf4n9n
— Arizona Chamber (@AZChamber) January 10, 2025

What legislative leaders had to say: Revenues are looking up slightly, but lawmakers indicated that they do not expect a spending spree, nor do they anticipate new taxes.

“We are not going to be raising taxes, what we need to do is grow Arizona’s economy, and don’t look at us; government is not good for growing the economy,” Speaker of the House Steve Montenegro (R-Goodyear) said in a panel discussion moderated by KTAR host Mike Broomhead. “Government is good at spending, you are good at growing the economy. We need to make sure the environment is there for small businesses to grow, we need to make sure that we have an environment where we incentivize creativity and innovation.”

Senate Minority Leader Priya Sundareshan (D-Tucson) said the state’s flat tax was jeopardizing the state’s ability to meet its responsibilities.

“We are experiencing a revenue shortfall this last year, while that is the impact of the flat tax hitting us. We may want to take a look at how we are failing short on what we are being able to provide in terms of services to Arizonans,” she said.

Senate President Warren Petersen (R-Gilbert) disagreed.

“I think what you can look forward to as a business community is that Arizona has the lowest flat tax in the nation. We are going to continue to keep looking at ways to get your taxes low to keep your regulations light and to make sure that the government gets out of the way of business.”

House Minority Leader Oscar De Los Santos (D-Phoenix) said he believes the Freedom Caucus, which represents the right flank of the Republican House and Senate caucuses, will ensure that any state budget will require Democratic votes to pass and reach the governor’s desk.

“The fact is that given the chaos and the infighting within the Republican caucus and what I’m hearing from the Capitol community is that they’re not going to be able to get the 31 votes they need for the budget or the 16 votes given the infighting. So, Democrats are going to be absolutely essential to this budget and we are going to use our leverage.”