Gov. Katie Hobbs opened her 2026 State of the State address Monday with a blunt warning to Republican lawmakers: Arizonans “are tired of political games” and expect the Capitol to deliver on pocketbook issues, schools, water and border security — not partisan stunts.
Speaking to a joint session of the Legislature on January 12, 2026, Hobbs cast herself as a firewall for working families and promised to veto any plan she says puts “billionaires, corporations or culture wars” ahead of middle‑class Arizonans.
Taxes and cost-of-living showdown
Hobbs demanded that lawmakers make her Middle Class Tax Cut Package the first bill they send to her desk this session. The plan would increase the standard deduction, exempt tips and overtime from income taxes, add a new $6,000 deduction for seniors over 65 and eliminate tax on interest for new American‑made cars, while insisting any broader tax conformity changes for corporations and high‑income earners be negotiated in the budget.
Hobbs framed it as a litmus test for whether the Legislature stands with “servers, nurses and shift workers” or wealthy special interests. She pointed to rising housing, grocery and utility costs and accused GOP leaders of prioritizing tax breaks for corporations and the rich while families juggle two or three jobs to stay afloat.
The governor also pressed for broader affordability measures, including new relief on utility bills and continued efforts to erase medical debt, arguing that Arizonans should not have to choose “between life‑saving care and putting food on the table.” She vowed that any additional tax conformity deals would be negotiated only if they don’t gut essential services, setting up a high‑stakes budget fight with the Republican majority.
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Housing, medical debt and government efficiency
Hobbs said Arizona is finally beginning to see housing costs cool after what she described as “years of neglect and short‑sighted policy,” but warned that the state “cannot take its foot off the gas” on building more affordable homes. She highlighted new state partnerships designed to leverage public and private dollars to accelerate housing construction and expand down‑payment assistance so working families can buy their first home.
Hobbs outlined a new Housing Acceleration Fund, a public‑private partnership seeded with $2.5 million in state money that would pool investments from local governments, philanthropy and private investors to provide low‑cost financing for thousands of new affordable units.
The governor touted a medical‑debt relief initiative that has already wiped out hundreds of millions of dollars in obligations, saying it has given nearly half a million Arizonans “their futures back.” At the same time, she rolled out a government efficiency push she said could save tens of millions of dollars over the next three years, promising to “stretch every tax dollar” without “slash‑and‑burn cuts” to core services.
Schools, Prop. 123 and a warning on vouchers
Hobbs used a sizable portion of her speech to hammer the Legislature over school funding, saying last session’s failure to extend Prop. 123 “cannot happen again.” She urged lawmakers to send voters a clean renewal that pours hundreds of millions of dollars annually into public schools and billions into facility repairs “without tying it to ESA voucher entitlements or partisan wish lists.”
With public schools serving roughly 90% of Arizona students, Hobbs said families are “watching in real time” as teachers leave, buildings crumble and budgets yo‑yo from year to year, and warned that siphoning off more money to universal vouchers would “blow a hole in our finances and our kids’ futures.” She closed by challenging lawmakers to “choose governing over grandstanding” in the months ahead, saying Arizonans will remember “who showed up for them when it counted.”
Border security and crime: ‘No stunts, just results’
On border security, Hobbs took direct aim at federal leaders and out‑of‑state politicians she accused of chasing cable‑news moments instead of real fixes, declaring that “Arizona is done being a backdrop for photo ops.” She pointed to joint operations involving state troopers, local police, sheriffs, tribal partners and federal agencies that have seized large quantities of fentanyl and other drugs, illegal firearms and made thousands of arrests.
Hobbs said her focus is on “synchronized enforcement, not sound bites,” and pledged to keep National Guard resources at key points along the border while pressing Washington for more funding and personnel. She argued that until communities along the border feel safe, “the job is not done,” and urged lawmakers to back her public‑safety spending requests instead of using crime as “a talking point in campaign ads.”
Over the past year, the coordinated efforts among state, local, tribal and federal agencies have seized more than $105 million in drugs, including over 16,000 pounds of fentanyl, more than 1,200 illegal firearms and led to more than 1,400 arrests, according to the governor’s office.
Water fight and data center reversal
Calling water “the fight of our generation,” Hobbs blasted past legislatures for ignoring rural groundwater depletion and vowed to crack down on out‑of‑state corporations “pumping our future out from under Arizona families.” She announced new protections for rural basins and pushed a Colorado River strategy that includes conservation, recycling and legal defense of Arizona’s share of the river as basin states negotiate new agreements.
In one of the night’s sharpest breaks with her past record, Hobbs called for ending a multimillion‑dollar tax break for data centers, an incentive she previously backed as a lawmaker, saying “the experiment worked — now it’s time for them to carry their weight.”
Hobbs also moved to rewrite the state’s relationship with the booming data center industry, calling for an end to the $38.5 million Data Center Tax Exemption she described as a “corporate handout.”
She also backed a water‑usage fee on the industry to help finance a Colorado River Protection Fund, arguing that “tech giants should not get cheaper water than Arizona families.”
So the question now is not whether Arizona can afford bold action, but whether we’re willing to demand it — loudly, relentlessly, and without letting up when the headlines fade. Call your legislator, show up at the Capitol, pack the town halls and school board meetings, and make it unmistakably clear that any politician who sides with corporations, culture‑war distractions or out‑of‑state water barons over Arizona families will be called out — and voted out.
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