It’s the first month of the Arizona legislative session and fireworks have already erupted between the Executive and Legislative branches of government, with control of the branches split between Democrats and Republicans respectively. Across both chambers, legislators have introduced more than 1300 pieces of legislation, a record for this point in the session. Twenty-five bills have made it out of committee, and one bill has passed both chambers and been vetoed by Gov. Katie Hobbs.
Ten days into the session the biggest issue is tax cuts for Arizonans. SB 1106 was the plan from Republican legislative leaders to conform state law with the federal income taxes cut in last year’s One Big Beautiful Bill by cutting taxes on overtime and tips, among other changes. All told, SB 1106 would save Arizonans $441 million this year and more than $1.1 billion overall. Importantly, the bill was retroactive to 2025 tax year, meaning it would affect taxpayer this filing season. For that reason, legislative leaders prioritized the issue and passed SB 1106 only a few days into the legislative session. Gov. Hobbs, despite claiming tax cuts were a priority in her State of the State address, vetoed SB 1106 the next day. The same day, Hobbs endorsed separate bills from Democratic leadership to cut some of the same taxes as SB 1106, but that would leave out some of the important changes for Arizona businesses. Hobbs talked a big game about affordability, but her actions speak louder than her words.
Separate from the tax cut fight, budget talks between the governor’s team and the legislature have already become contentious. Gov. Hobbs proposed a $17.7 billion budget for FY 2027 that includes millions of dollars in additional wasteful spending and new taxes to fund it, including a tax on short-term rentals. Tourism is one of Arizona’s strongest performing industries every year and is responsible for employing hundreds of thousands of Arizonans. Imposing new fees won’t just affect out-of-state travel – it will also hurt Arizonans trying to save money by taking their family on a “staycation.”
Of the other 24 bills that made it through committees so far, voting and election security was a priority. In addition, there were bills to cap concealed weapons permit fees, change the sentencing restrictions for fentanyl distribution, and appropriate funding for stormwater mapping, among other issues. With several more weeks left for legislators to introduce bills, we can expect the amount of legislation to grow and the budget fight to continue.