Gov. Katie Hobbs is now on the other side of four legislative sessions on the Ninth Floor. 

And while the final session of her first term as governor did not feature the uproarious political battles over immigration, abortion and disability rights that defined her previous years, it did still bring plenty of clashes between an incumbent Democrat seeking a second term and a Republican Legislature doing everything it can to regain a trifecta in November’s election.

Hobbs sat down with the Arizona Capitol Times on June 30 to discuss the session’s highs and lows, the tax cuts she hopes will help Arizonans struggling during an affordability crisis and her disappointment at the lack of movement on education funding and school voucher reform. 

Questions and answers have been lightly edited for style and clarity.

What do you consider to be your biggest win from this legislative session?

The budget we got through this year. Now (we have) four years of bipartisan, balanced budgets. This one had the most support on both sides of the aisle, and delivered a huge win for Arizonans with the tax cut. That is going to really help provide relief and put money back in the pockets of middle-class Arizonans. That tax cut was one of the biggest sources of contention throughout the session, but I’m glad we were able to finally get this negotiated and give Arizonans a higher standard deduction, no tax on tips and overtime, a $6,000 senior tax credit, expanded child care and a child tax credit.

What was the biggest missed opportunity?

The Prop(osition) 123 extension. When we’re looking at ways that we can increase revenue to deliver for Arizonans, Prop. 123 has been a way to support our public schools without raising taxes. It’s been very successful, and so it was a once in a decade opportunity to make sure we continued that, and unfortunately, really, it was Republicans who let electoral politics get in the way of doing what’s right for Arizonans.

What is your response to the criticism that you are taking credit for a tax cut created by Republicans in Washington and backed by Republicans in the Legislature?

It was part of the budget that we negotiated together. If I wasn’t willing to make that deal, we wouldn’t have a budget. The Republicans are taking credit for it too, I don’t understand why it’s an issue that I am when we agreed on it together. As governor, I’ve focused on ways to lower costs for Arizonans, cutting taxes is one way to do that. I proposed this plan back in November, based on the federal tax cuts, I encouraged the Legislature to get it to me first thing this session, and we worked on this together.

Why did you veto the plan before it ultimately got baked into the budget?

What I said when I put out that plan in November and in January is, look, we can have a conversation about full tax conformity, but it has a big price tag, and we can’t do that in absence of looking at the whole budget. So when we sit down to negotiate a budget, let’s negotiate that. (Former Gov.) Doug Ducey did that in 2019 when there was another large federal tax cut. It wasn’t unprecedented to break that up like that, and it was quite frankly irresponsible for the Republicans to continue to send full tax conformity (to my desk) without showing how they wanted to pay for that. We got there in this budget, but that was after figuring out how we were going to pay for it, and what things we are going to compromise on to do that.

Do you think there is any hope for Prop. 123 in Arizona’s divided government?

Obviously this is an election year and things get more heated. I imagine that (Sen.) Jake Hoffman will have some other excuse next year not to do it. But the fact is, he put out a tweet that said “(Prop. 123) will guarantee Governor Hobbs’ reelection.” That’s not what I’m focused on. That’s not why I think it’s important to do it, but that killed any chance of a deal this year. Perhaps when we’re not in an election year, we can take that off the table.

There has been criticism from both sides on the data center tax moratorium, how do you respond to that?

I proposed a full repeal of the tax credit. There was legislation that was introduced that also would have done that from both sides of the aisle, and I think the three-year stop to that tax credit is responsible. It takes into account those companies that already have that tax credit, we’re not going back on something that they already have. But it’s one of the toughest data center policies in the country now, and it gives us a chance to craft the right policy and look at making sure we’re getting the right return on investment, which honestly I think we should be doing for any tax credit or tax incentive. (We will) really have a chance to address some of the real concerns about water, energy and the valid community opposition we’ve seen to data centers. It’s not putting a moratorium on them, and the data center market is thriving here. I voted for that tax credit 13 years ago, but I think it’s a moment that we should be pausing and looking to see that we’re crafting the right policy.

Can you talk about your office’s role in the last-minute Empowerment Scholarship Accounts program deal that fell through?

We were involved, particularly about the concerns around (House Concurrent Resolution) 2040. We heard from teachers, but also it attacks fire and police and other public employees. We wanted to protect them and at the same time have some guardrails on the waste, fraud and abuse that we’re seeing in ESAs, and we had a real chance for a bipartisan deal. It is unfortunate that that didn’t end up happening. Voters are going to have a chance to have their say on ESA reform. I think that, ultimately, we’re in the situation we’re in because people have political agendas, and they were more focused on that than on doing what’s right for Arizonans. I hope there’s still a way to address HCR 2040 and protect the public employees who are really out there on the front lines for us every single day.

You have now vetoed 541 bills since taking office in 2023. What do you want voters to know about that veto record?

I have signed nearly 1,000 bills into law, so I think that speaks more to what we’ve been able to get done together. So much of what happens at the Legislature is not controversial, it’s the controversial stuff that I vetoed, it’s the controversial stuff that gets the headlines. And there’s election-year politics at play here. I don’t know how many veto letters we issued that said, “when I vetoed this last year.” It just shows there was no interest in working with us to get whatever they were doing to a place where it was workable or actually solved a problem. It was just people trying to make political statements. I said from day one I’ll be a backstop, but I didn’t come here to veto bills, I came here to work across the aisle and get things done, and we’ve done that with almost 1,000 bills. I think that is what Arizonans elected us to do, and over and over again, we’ve shown that when we are focused on doing the right thing and putting the politics aside, we can do that.