by Ethan Faverino | Jan 8, 2026 | Economy, News
By Ethan Faverino |
As Arizona lawmakers prepare to convene for the 2026 legislative session, a leading nonpartisan think tank is warning of a demanding agenda driven by fiscal discipline, persistent housing shortages, and critical water policy decisions.
Katie Ratlief, Executive Director of the Common Sense Institute (CSI), emphasized the need for urgent action from the Legislature and Governor Katie Hobbs to address these issues. In a recent report by The Center Square, Ratlief highlighted that the session will require decisive leadership to tackle spending trends, affordability barriers, and the state’s long-term water security.
Arizona’s budget has expanded significantly over the past decade, rising from approximately $10 billion to nearly $18 billion, with $6 billion of that increase occurring in just the last five years. Ratlief urged policymakers to rein in spending increases and reassess recent commitments to determine whether they remain necessary, warning against expenditures outpacing economic growth.
Housing affordability remains a top concern for CSI Arizona, with the latest quarterly report underscoring ongoing challenges despite some cooling in the market. The average home price stands at $426,164—$53,400 more expensive than pre-pandemic trends—leaving households facing high costs amid elevated mortgage rates.
According to CSI Senior Economist and Research Analyst Zachary Milne, Arizonans now need to work more than 64 hours per month, at the average wage, just to afford a typical home payment, significantly up from the historical average of 45 hours.
Real-time estimates show an instantaneous housing shortfall of 52,846 units in Q2 2025, a 6.9% improvement from the revised 56,812 units in 2024. Arizona faces a cumulative housing deficit of 121,334 units, as of 2024, reflecting years of inadequate construction relative to population growth.
Ratlief believes the housing shortfall is not the result of state policy but of holdups originating within cities, noting that local governments control permitting, building codes, and enforcement—factors that can significantly slow housing development.
CSI revealed that most Arizona counties—including Maricopa, with a projected deficit of 34,737 units—are falling behind demand. Even with recent improvements in permitting, Maricopa County is still building thousands of units short of what is needed annually.
Water policy will also dominate discussions this legislative session, as ongoing negotiations over the Colorado River allocations approach a pivotal February 14, 2026, deadline set by the U.S. Department of the Interior.
This is viewed as likely the final opportunity for the seven basin states to reach a consensus agreement on sharing the river’s water before current operating guidelines expire at the end of the year. With Arizona’s unique constitutional requirement, any agreement reached will require legislative approval, setting the stage for intense debate in the 2026 session. Ratlief indicated that if states finalize a deal, the Legislature will debate and vote on authorizing the Department of Water Resources to sign on, potentially shaping Arizona’s water future for decades.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
by Matthew Holloway | Jul 8, 2025 | Economy, News
By Matthew Holloway |
Although the causes are attributed to various factors by different sources, largely dependent on political leanings, one irrefutable fact emerged on Monday. During Governor Katie Hobbs’ tenure, Arizona has plunged from a ranking of 4th place in the nation in job growth, to 47th.
On Monday, Russ Wiles, writing for the Arizona Republic noted, “AZ no longer ranks near the top for job creation,” and asked rhetorically, “What went wrong?”
Citing figures from the U.S. Bureau of Labor Statistics, the Republic reported that Arizona now ranks in 47th place among the fifty states, just ahead of Massachusetts, West Virginia, and Iowa. The report cited a net loss of 1,900 jobs year-to-date in 2025.
In 2020, at the height of the first Trump Administration and under former Gov. Doug Ducey’s tenure, Arizona ranked third in the nation for economic momentum.
In 2019, the Phoenix Metro area even beat out the largest cities in California, Texas, and Florida to take the #1 slot for job growth.
More recently, in a March 2024 statement, Hobbs touted that Arizona ranked 4th in job growth, and tripled the national average in workforce growth. In the pronouncement, which has aged quite poorly, the governor even dubbed herself “Governor Katie Jobbs,” and credited the “81,800 jobs created,” to “investments in housing, healthcare, infrastructure, childcare, and education.”
Meanwhile, a Goldwater Institute op-ed in January, predicting an acrimonious budget battle that materialized over the next five months, pointed out Hobbs’ askew priorities. While the beleaguered Democrat focused on defeating Arizona’s popular Empowerment Scholarship Account program (ESA) and presided over a surge in crime, her failure to account for $800 million in statutorily required Medicaid spending and an affordable housing crisis represented “fiscal mismanagement at its worst.”
AZCentral’s Russ Wiles, in working to answer “What went wrong?” addressed one factor in the decline as “slowing migration, with fewer people moving here from other states,” which dovetails with the affordable housing issue and the Arizona Department of Water Resources (ADWR) rule cracking down on new developments.
Lee McPheters, director of the Economic Outlook Center for Arizona State University’s W. P. Carey School of Business, noted to the outlet, “With domestic migration trending down and international migration dropping off a cliff in 2025, the impetus for population growth has diminished and undoubtedly plays a role here.”
In May, Goldwater launched a legal battle against the Hobbs administration over the ADWR’s controversial new rule imposing the requirement of a 100-year “unmet demand” groundwater supply rule across wide swaths of the state, essentially choking out new housing development.
In addition, as Wiles notes, construction employment has been further weakened by rising material costs, with overall job growth stunted by tariff uncertainty and high interest rates.
Large scale layoffs, such as Nikola Corp.’s 855 jobs lost to its February bankruptcy and Joann Fabrics’ layoffs of 374 employees in January, also factored in heavily. While not directly attributable to Hobbs’ actions, the losses drew a spotlight to a lack of decisive action from Hobbs to attract new employers to Arizona in the short term.
Another factor, unmarked by AZCentral however, has been the $1.6 billion deficit under Hobbs which forced budget cuts, including Department of Economic Security layoffs that directly contributed to the 1,900 net job loss. As Common Sense Institute of Arizona (CSIAZ) explained in June, rather than being caused by Arizona’s flat tax, the shortfall was caused by a massive increase in spending under Hobbs.
“If spending had followed historical trends, Arizona would have had a $4.3 billion surplus rather than a $1.6 billion cash shortfall last year,” CSIAZ wrote.
Hobbs’ vetoes could present the most egregious contribution she’s made. By vetoing 178 total bills in 2025, 73 in 2024, and 143 in 2023, totaling 424 to date, or approximately a third of all bills sent to her desk, Hobbs has prevented the implementation of a comprehensive policy for economic growth from either her administration or Republican leaders in the state legislature from materializing.
Ultimately, Hobbs’ unwillingness to work productively with Republican lawmakers and her active obstruction of legislation to reduce tax burdens, ease regulation, and stimulate job growth may have proven to be as prominent in Arizona economics as it has been in politics. And as prominent Democratic President Harry Truman famously said, “The buck stops here.”
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Jonathan Eberle | Jun 29, 2025 | News
By Jonathan Eberle |
After weeks of political brinkmanship and competing proposals, Arizona lawmakers have approved a bipartisan state budget that combines Democratic Governor Katie Hobbs’ “Arizona Promise” priorities with over $100 million in conservative-driven spending cuts secured by House Republicans. The compromise averted a potential government shutdown.
The $16 billion spending package reflects a rare show of collaboration in a divided government, incorporating elements from both the governor’s agenda—focused on opportunity, affordability, and social services—and Republican demands for fiscal restraint, public safety funding, and government accountability.
“I am thrilled that the legislature passed the bipartisan and balanced Arizona Promise budget to expand opportunity, security, and freedom in our state,” Hobbs said in a statement. “We showed Arizonans what is possible when we are willing to reach across the aisle and deliver common sense solutions for the people of our state.”
House Republicans, meanwhile, emphasized that the final deal bears the mark of tough negotiations, resulting in meaningful structural reforms and a $100 million reduction in planned spending compared to earlier drafts.
“This revised budget isn’t the one we would have written,” said House Speaker Steve Montenegro. “But with time running out and the risk of a shutdown increasing, we fought for and secured serious improvements. We cut spending, added strong transparency requirements, and locked in public safety pay raises. Those changes matter.”
The final package maintains many of Hobbs’ original proposals while adopting Republican-backed amendments. “This was not a blank check,” said House Majority Leader Michael Carbone. “We held the line on conservative principles, cut unnecessary spending, and demanded accountability. This budget is better because of our efforts.”
While the Arizona Promise budget may carry the governor’s name, its final version reflects the realities of a politically split state government. The result is a package that funds long-term priorities across education, health care, infrastructure, and public safety, while also maintaining fiscal discipline and Republican values like limited government and transparency.
“We’ve led responsibly in a divided government,” Speaker Montenegro said. “We held the line, improved the bill, and protected the priorities of our voters.”
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
by Jonathan Eberle | Jun 26, 2025 | News
By Jonathan Eberle |
Arizona Governor Katie Hobbs on Tuesday vetoed a continuation budget passed earlier in the day by the state House of Representatives, sharply criticizing House Republicans for what she called “pointless political grandstanding” just days before the June 30 budget deadline.
The House-passed stopgap measure aimed to keep the government operating past the end of the fiscal year while negotiations continued over a full budget agreement. But Hobbs swiftly rejected the proposal, calling it a “sham budget” that threatens critical state services and derails the bipartisan progress already made in the Senate.
“For months, I worked with leaders of both parties, in both chambers, to craft a bipartisan, balanced, and fiscally responsible budget that the majority of Senate Republicans support,” Hobbs claimed in a statement. “That budget has pay raises for State Troopers and firefighters, cuts taxes on small businesses, invests in combatting Veterans homelessness, and makes childcare more affordable and accessible.”
The governor’s veto comes amid rising tensions between the House and executive branch. House Speaker Steve Montenegro (R-LD29) had framed the continuation budget as a responsible step to avoid a shutdown after the Senate-negotiated agreement failed to garner enough support in his chamber. “We owe it to the people we serve to take the time needed to get this right,” Montenegro said. “This continuation budget ensures state services remain funded while giving lawmakers the time to work toward a better, more responsible solution.”
Governor Hobbs, however, dismissed that reasoning and accused House Republicans of endangering essential state services for political gain. “I have long made clear that both of the partisan and reckless House Republican budgets are unacceptable,” she said. “They gut public safety, slash health care for Arizonans, harm businesses, fail to lower costs, and leave our Veterans out in the cold.”
With just five days remaining before the state’s fiscal year ends, the legislature remains without an approved budget. Hobbs urged lawmakers to abandon political brinkmanship and adopt the bipartisan budget already passed by the Senate.
“Now, it’s time for House Republican leadership to move past their political stunts and work productively with their colleagues before they force an unnecessary state government shutdown of their own creation,” she said.
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
by Matthew Holloway | Jun 25, 2025 | Economy, News
By Matthew Holloway |
Earlier this month, Goodyear’s City Council passed a massive $1.2 billion budget for 2026, unchanged from the tentative budget presented to the city in May. The budget is a shocking increase of over $304 million year-over-year or approximately 25.3%, without increasing its combined property tax rate or sales tax.
Goodyear Mayor Joe Pizzillo told reporters that the city was impacted by the loss of the city transaction privilege tax (TPT), eliminated as of Jan. 1st, 2025, through Republican tax reforms passed in the state legislature over the objections of Arizona Cities and Towns.
“A lot of cities here in the valley unfortunately had to raise their taxes to make up those $234 million…more than likely (which will) be doubling over the next five to 10 years,” Pizzillo said. “The city of Goodyear did not raise its sales tax or its combined property tax rate.”
Similar to property tax changes in Maricopa County, the city’s Truth in Taxation notice recorded an increase of $303,271. However, the overall property tax rate will not see an increase. This was accomplished by increasing the primary property tax rate, which is statutorily limited to an increase of 2%, while decreasing the secondary property tax keeping the rate effectively the same at $1.74 per $100 assessed property valuation.
In December 2024, Lee Grafstrom, a tax policy expert with Arizona Cities and Towns, told Fox10 that municipalities aren’t “cutting any of the services that citizens are requesting and requiring, so, we still have to do all the same amount of work. We just have this much less money to do it.”
“We have to find a way to either cut services or make up that shortfall,” he added. “This is a minor piece of a solution to a much larger problem, in terms of housing affordability.”
Finance Manager Ryan Bittle asked rhetorically, “‘Why is my property tax bill going up if the rate isn’t changed?’ (It) is one of the typical questions you might hear, and that’s simply because the value of your property is likely more this year than it was last year.”
The changes, according to Bittle, will bring more consistent revenues to Goodyear’s general fund. He explained that the secondary tax rate can only be used for servicing the city’s debts, while the primary property tax provides revenue for approximately 8% of the general fund on an ongoing basis.
In addition, Bittle explained that most of the property taxes paid by Goodyear property owners goes toward education, by a wide margin. “Most of the property taxes paid by citizens here in Goodyear falls outside of council’s decision-making authority,” Bittle said, noting that a full 66% of the collected taxes fund schools with just 15 cents on the dollar going to the city’s coffers.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
