Governor Katie Hobbs Discusses the Successes of 2025 and the Challenges Ahead in 2026

By most measures, Arizona Governor Katie Hobbs had a very successful 2025 in enacting portions of her Arizona’s Promise and Affordability Agenda.

Among the successes were:

• The AG to Urban Water Security Bill.
• Record investments in Childcare.
• Feeding many impoverished school-age children.
• Helping disabled children in need.
• Cancelling medical debt for many Arizonans.
• Expanding rural broadband. 
• Expanding apprenticeship programs. 
• Prescription Drug Price Reductions. 
• Rural infrastructure investments.

Looking toward 2026, several challenges lie ahead for the Governor and state, county, and local government officials, including:

• Renewing Proposition 123 to help fund public schools.
• Needed reforms in the Empowerment Scholarship Account-Private School Voucher for the Wealthy program. 
• Enacting middle-class tax cuts.
• Advancing more of Arizona’s Promise and Affordability Agenda. 
• Mitigating the damage to Arizonans from Donald Trump’s HR 1-Big Billionaires First Bill. 
• Securing a more encompassing groundwater security agreement. 

Governor Hobbs graciously spoke with Blog for Arizona and discussed the successes of 2025, the challenges ahead in 2026, and what she hopes to achieve when members of the State Legislature return to session. 

The questions and the Governor’s responses are below. 

Governor, please tell us your overall feelings about how 2025 went for you, the state, and the people of Arizona.

“I am really proud of what we were able to accomplish this last year, particularly during the legislative session. We entered the session with a lot of expectations that it would be more difficult to work across the aisle. Republicans had picked up seats in the election, and we actually ended the legislative session with more accomplishments than we’ve had in any of my previous years.”

“I think the biggest thing is our fight over the funding for kids with disabilities. I was able to really force the Republicans’ hand on that, and the folks who are down at the Capitol advocating every day really felt like their voices were heard. We had a significant investment in childcare in the budget, which certainly is something that’s needed across the state. It’s something I hear from people almost more than anything else. They were struggling to find affordable and quality childcare. So, the investment we made to support childcare assistance in the budget helps address some of the gaps from the federal government. We saw HR1 slash food assistance. Our budget invested in 10 million school meals for working-class kids.”

“The AG to Urban legislation we passed is maybe the most significant groundwater legislation since the Groundwater Management Act of 1980. I heard that directly from Bruce Babbitt himself, who is the Water Governor and did usher the Groundwater Management Act into law. We passed the Ag to Urban legislation, which allows us to transfer unused agricultural land to be used for housing, saving millions of gallons of water. The first development under this new law has been certified. It will build 800-plus homes in the Buckeye area, which is fast-growing and definitely needs them, and save millions of gallons of water. That’s just the first certification, so more to come on that.”

“The last one is Axon, the legislation that kept Axon in Arizona. Axon is a homegrown company that started in a garage in Tucson. They manufacture public safety equipment right here in Arizona. In planning their headquarters in Scottsdale, they also wanted to build workforce housing on the site. We were able to pass a bill to keep them here. Scottsdale was trying to override their housing, and its 5,000+ jobs that would have moved to Florida or Texas. They’re good-paying jobs and a company with billions of investments. So, I think those are just a few of the things that will continue to create opportunity for Arizonans, and we were able to work across the aisle to get those things done.”

I noticed this morning that you announced the cancellation of medical debt.  Did you want to comment on that?

“Absolutely. I announced the medical debt cancellation program last year. My administration partnered with a national nonprofit called Undue Medical Debt. We invested some ARPA (American Rescue Plan) dollars for them to be able to cancel $2 billion in medical debt for up to a million Arizonans. The second round of those cancellations started today. Folks should be seeing those letters in the mail.”

“How it works is Undue Medical Debt will work with hospital administrators to identify eligible accounts. These are folks who are 400% or below the federal poverty level and whose medical debt amounts to five percent or more of their annual income. Eligible folks don’t need to do anything; they will just be notified by mail of this cancellation. To date, we have canceled more than $642 million of medical debt for nearly half a million Arizonans. It’s really exciting, and I know for people who have the potential to have this cancellation, it would mean a lot in terms of their ability to provide stability for their family, get out from under mountains of debt—debt that they have through no fault of their own, but because of some catastrophic event or chronic illness.”

What have been two continuing or unexpected challenges during 2025 that you and your office had to handle, and that you had to continue dealing with in 2026?

“We’re experiencing so many cuts from the federal government. Obviously, the cuts that are coming were already in effect because of H.R. 1. The Medicaid cuts that will be in effect starting next year, in 2027, but we’re already seeing rural hospitals brace for that impact, making decisions about how they offer care, and really, compromising access to care. Healthcare in our rural communities, especially. The increasing Insurance premiums for folks who get their insurance on the marketplace are going into effect, and that’s affecting households who have their insurance on the marketplace. That’s huge.”

“And then, in terms of just across state government, the SNAP (food stamp) cuts, along with new administrative requirements, are going to cost a whole bunch more administratively. The staff cuts, along with new administrative requirements that are supposed to address waste, fraud, and abuse, largely do not exist. The administrative burden is just going to cost a lot more. It means we’re spending more money on staff than on actual benefits to people who need them. DES, which is the State Agency Department of Economic Security, administers a lot of federal benefits, including unemployment insurance and SNAP benefits. They’ve had a disproportionate share of federal cuts, which have caused them to lay off nearly 80% of workers who handle unemployment claims and benefit claims. This is causing a backup of wait times for people, and the state doesn’t have the capacity to backfill these cuts. So, the people who need the services the most are the least able to get them.”

“We’re continuing to experience all kinds of cuts. We had invested federal dollars in getting more neighborhood solar deployed to low-income areas to save folks money on their energy bills. Those grants have been canceled. We had to make huge changes to our BEAD program, which is deploying broadband around the state. That means now some places aren’t going to get the broadband that we needed them to. We continue to challenge some of these cuts in court, but we haven’t been able to go to court on all of them. We’re going to continue to feel the consequences of these cuts for a long time to come because the state doesn’t have the capacity to backfill, and we rely on these federal benefits to provide services to Arizonans.”

What are the names of at least two current or two new policy goals you would like to advance or expand upon in 2026?

“What I hear constantly from Arizonans is their concerns about increasing costs. I’m always looking for ways that we can lower costs. Earlier this month, I announced my plans for middle-class tax cuts, which are in line with the tax cuts in the federal budget, focused on the cuts that will benefit middle-class Arizonans. My plan will give a higher standard deduction to every Arizona filer. In addition, folks can claim no tax on tips over time. There’s a senior tax credit and a credit for interest on car loans. I’m calling on the legislature to pass that as soon as we get into session, so that Arizonans can have some relief as soon as possible. That’s the biggest one.”

“The other thing that we’re really focused on is getting a Prop 123 renewal over the finish line that can go to voters and renew that really important source of funding for our public schools.”

 ESA reform?

“We’re going to continue to propose that. As you’ve seen over the last three years, it’s been a non-starter for Republicans in the legislature, which I don’t think is reflective of the sentiment of most people, including Republicans in the general public. We continue to see more and more reporting about the abuses and the egregious ways that people are spending those tax dollars in unaccountable ways. People who generally support ESAs don’t support those kinds of abuses. I’m hopeful that Republicans will finally focus on bringing some accountability there. At the end of the day, there’s no other entitlement program that we don’t put any kind of restriction on, like ESAs.

Is there anyone at your office you would like to recognize for their contributions to making 2025 successful?

“It’s really hard to single out one individual. In all of the legislative accomplishments I mentioned, there’s a different policy advisor to point to in each one of those that was key. I have a great team here at the Governor’s Office, and we all work together to deliver for Arizonans. I’m really proud of the whole team that we have here.”

Is there anything not covered in the first six questions that you would like the readers to know about what happened in the state government in Arizona in 2025?

“I can point to a lot of accomplishments in the areas I know Arizonans are focused on: securing the border, lowering costs, creating jobs, investing in education and workforce, and securing our water future. I know those are all critical issues for Arizonans, and we’ve done a lot, but I also know there’s more to do. I’m looking forward to making more progress over this next year and hopefully after that, the next four years after that.”