Hobbs seeks common ground with GOP on housing, border security, water

As Gov. Katie Hobbs heads into her third legislative session, she's looking to find common ground on housing affordability, border security and water policy with Republicans who control both chambers.

The big picture: Hobbs is severely limited in her ability to pass Democratic policies by the GOP majorities in the House and Senate.

• Voters increased those Republican majorities in November's election.
• "The message I'm taking loudest from this election is that our voters want our elected leaders to work together to solve these tough challenges," Hobbs told Axios in a recent interview.

State of play: The 2025 legislative session begins Monday, and Hobbs will outline her agenda in her third State of the State address at 2pm.

Zoom in: One of Hobbs' biggest priorities will be addressing Arizona's housing crisis.

• She wants to expand the Arizona is Home program she launched last year, which provided down payment assistance and mortgage interest rate relief, to cover 1,000 households.
• Hobbs said she's eyeing legislation similar to bills she signed last year that made it easier to convert commercial property to residential, required larger cities to allow accessory dwelling units on single-family lots and allowed for denser housing in downtown areas.
• But she's wary of proposals that would encroach on local control by cities and create "untested experiments" like the starter homes bill she vetoed last year.

Between the lines: Hobbs wants to lower child care costs by two-thirds through a public-private partnership and create a grant program for after-school and summer programming for kids from working families.

• "It's a win-win for Arizona, for businesses and for these families," she said.
• Hobbs wants to give cities the ability to regulate short-term rental "party houses" that she says are "eating up housing inventory."
• And she hopes to enhance border security and public safety by increasing state support for border-area drug interdiction, funding an anti-fentanyl unit and increasing pay for law enforcement.

Hobbs also plans to push several water policies, including:

• Allowing rural communities more control over groundwater use.
• Giving communities the ability to build more housing with alternatives to groundwater, which has been a hindrance for fast-growing areas like Buckeye and Queen Creek.
• Permit homebuilders to retire farmland and use it for less water-intensive housing.

Friction point: Hobbs agreed to send her agency director nominees to the Senate last year after losing a court case challenging her attempt to sidestep the confirmation process.

• Her nominees will go back to the Senate committee that previously rejected several nominees after contentious confirmation hearings.
• "I expect a fair confirmation process," Hobbs said.
• Senate President Warren Petersen said he expects her nominees to be approved as long as they're "competent and nonpartisan," and he's "pretty confident it's not going to be a high-drama situation."

1 big veto stamp: Hobbs, who shattered the single-session veto record and has vetoed more bills than any other Arizona governor, said her approach to rejecting legislation hasn't changed.

• "If something restricts Arizonans' rights or is not a solution to a problem we have, I'll veto it. But I'm willing to work across the aisle with anyone to tackle the challenges we're facing," she said.