Key Points:

• The 2026 legislative session will feature both new and returning topics

• Senate leaders in both parties say crafting the state budget will be a challenge 

• Senate GOP leader doubts there will be much bipartisanship

The oncoming legislative session will bring new topics to the halls of the Arizona Legislature, alongside some familiar ones. 

The Arizona Capitol Times asked leaders from both parties what lingering topics remain and which new and shiny prospects will be introduced. 

The biggest topic that repeats year to year and looms over the session is the state budget, but this year, tax conformity and the federal government’s H.R. 1, also known as the “Big Beautiful Bill,” have continued to complicate discussions. 

Senate Majority Leader John Kavanagh, R-Fountain Hills, said the total cost of conformity with federal tax cuts is about $440 million, and lawmakers can’t make headway on the state budget until they decide what to do with conformity. 

“In the end, we might not do full conformity, but even only doing half conformity, which would be the personal income tax, we’re still finding ourselves scraping around for a few hundred million,” Kavanagh said. 

Senate President Warren Petersen, R-Queen Creek, said Republicans want to pass the H.R. 1 tax cuts onto Arizona citizens, but everybody needs to get on the same page. 

It seems everyone agrees that it will be a challenge to address the changes from H.R. 1, as Senate Minority Leader Priya Sundareshan, D-Tucson, pointed out that determining priorities will add to that challenge. 

“The challenge now will be figuring out what is available for the state and how do we make sure that we continue to fund everything that is a priority for the state, as well as what Arizona is legally and constitutionally mandated to support and provide,” she said. 

Water takes second spotlight at the Capitol

Fresh off the Colorado River Water Users Association conference in Las Vegas in December, water is the second biggest issue taking the spotlight at the Capitol. Lawmakers recognize that the state might receive less water in the future, given its status as a junior rights state and the need for a new agreement. 

“We’re always offering more, getting less, but we want to make sure that we negotiate a fair deal where all of the states are participating in any possible cuts to the Colorado River,” Petersen said.

Sundareshan said the water issue is close to her heart. She said she’ll continue her quest to make sure the state is managing its groundwater resources in the best and most conservation oriented way possible, because those resources are finite. 

“Unfortunately, we do have a lot of gaps in our groundwater management across the state,” she said. “It’s even more important that we have our hands and heads wrapped around and protective of our groundwater resources.”

Kavanagh said people will see a lot of talk on the Colorado River water shortages and the increased siphoning of water from some rural aquifers, which will eventually result in a crisis. 

AI and data centers topic will be more prominent

Artificial Intelligence and data centers were said to be the shiny new topics, with all three Senate leaders mentioning aspects of both. 

Kavanagh said data centers are kind of interesting from a conservative Republican standpoint. 

“I’m really grateful that they’re here,” he said. “I mean, beyond needing that technology, both for national security and so people can use ChatGPT to make funny illustrations of their friends, it has totally kneecapped the green environmental movement. 

Kavanagh added that proponents of that movement realized the electricity demand is massive because of the AI programs that people really want and businesses and universities also need it.

Concerns about regulating AI while also protecting people’s rights to create and produce were at the top of Petersen’s mind. He said potential legislation might require disclaimers for AI products if people can’t tell whether they’re real. 

“We certainly don’t want the public to be misled and thinking something is real, that’s not real, especially if it’s a substantive issue that may affect their decision-making or elections,” he said. 

The sales tax exemption for data center equipment passed about 13 years ago and Sundareshan said no one ever thought it would get “this big” and be so explosive. 

“It really underlines how Republican policies of just simply tax exempting your way into growth can really lead to major crises, and here we are now with explosive data centers that are keeping our state from having the tax revenues that we need to pay for the services that we need to provide everyone,” she said.

What Senate leaders are looking forward to

Beyond these topics, there is the excitement for a new legislative season with a mid-term election year. 

Kavanagh said he’s looking forward to another political season with good legislation, sponsoring bills and watching them pass, and debating and arguing with people. The season reminds him of his childhood growing up in New York City, where a lot of wild things happened, he said. 

“I like observing some of the more colorful members do their thing,” Kavanagh said.

Despite a wide range of Republicans, from far-right to moderate, Kavanagh said the party is “extremely unified,” even more so than in previous years. The lesser their majority margin, the more unified they are, he added. 

“Whereas going back before this session, the prior two, we only had one-vote advantages in each chamber, and nobody really broke ranks because they would have been the ones that did it and they would have incurred the full wrath of the base,” he said. 

Petersen added that he’s looking forward to working with constituents on issues that make a difference in their lives, especially with small-business owners and on ways the government can cut red tape and regulatory issues. 

Sundareshan said she’s very proud of the Senate Democratic caucus and how they’ve been unified in the places where it mattered most. 

“We have hung together in as many bills as we needed to, especially on the bills where our caucus unity was sending an important message to the Governor’s Office that this bill that Republicans are pushing forward is divisive, it is attacking certain communities, and by the way, it’s doing nothing to address the higher cost of living,” she said.

Democrats are likely to maintain a unified front against Republican bills that push divisive culture war issues, making it harder to vote or do nothing to address the cost of living, she said, adding they will stand up together. 

Give bipartisanship a chance

Even with two Republican leaders and one Democrat leader agreeing on the hot topics of the session, is there a decent chance for bipartisanship in a polarized and increasingly toxic political world?

Kavanagh said it’s less likely, especially given the few moderate legislators. If they are, they don’t campaign that way and they don’t vote that way, he said, and many of the elections are already decided by primaries in solid blue or solid red districts. 

“The primary voters are very active. The Democrats watch CNN and left wing blogs, and Republicans watch Fox News and right wing blogs,” he said, “And it has created very extreme polarization. On partisan issues, we’re like cats and dogs.”

Despite Kavanagh’s opinion that there’s less chance for bipartisanship, Petersen is a little more optimistic, saying they’re always open to bipartisanship. However, he put the responsibility on Democrats to introduce more bipartisan legislation. 

“I think the problem is Democrats don’t introduce very many bipartisan bills,” Petersen said, adding if Democrats did, they’d see more of their bills moving through the process. “Most of the bills that get voted out, the Democrats also vote on those bills.”

Sundareshan said she’s always looking forward to bipartisan efforts, especially those that are truly bipartisan and treat her caucus as negotiating partners. 

One good example of that is the Ag-to-Urban bill. Sundareshan said she was present for Senate Democrats during negotiations on that bill and ensured that caucus values and priorities were championed and heard. 

“Ultimately, the end product was a true bipartisan solution that we were able to support,” Sundareshan said.