Arizona August Legislature Report

Building Managers and Owners Association of Phoenix August Legislative Update

With the 2026 legislative session adjourned, attention has shifted to implementing new laws, the November General Election, and preparations for the 2027 session. 

Around Arizona State Government

Colorado River policy remains a major focus as the federal government finalized new operating guidelines for Lake Powell and Lake Mead. Arizona will account for 760,000 acre-feet in reductions under the Lower Basin states' agreement. Longer-term negotiations among the seven Basin states remain unresolved, keeping water policy at the forefront heading into 2027.

State and local governments are also preparing for Arizona's September 12 General Effective Date, this includes HB2999, which created a new framework for local housing affordability districts to encourage housing development and increase supply. Legislative study committees and state agencies continue their interim work that could shape legislation next year.

Looking Ahead to 2027

Policy discussions for the 2027 legislative session are already underway, with water, housing affordability, economic development, and implementation of new laws expected to remain key issues when lawmakers return in January.

Monthly Fiscal Highlights

JLBC's July and August Monthly Fiscal Highlights show Arizona ended FY 2026 with approximately $17.2 billion in General Fund revenue, up 2.8% from the prior year and $376 million above the baseline forecast, most of that however has already been incorporated into the enacted budget. FY 2027 began ahead of expectations, with July General Fund revenues totaling $1.35 billion, $47 million above the enacted budget forecast, largely driven by stronger sales tax collections. 

Housing indicators remain mixed. The July report showed residential construction taxable sales down 16.1% year over year through May, while the August report showed the 12-month total of single-family building permits down 19.2% year over year in June. Multifamily permits, however, increased 1.0% over the same period. Arizona's unemployment rate remained at 4.9% in June, while total employment was up 0.9% from the prior year.

Arizona General Election Takes Shape

Arizona officially canvassed the July 21 Primary Election results on August 6, setting the stage for the November 3 General Election. Governor Katie Hobbs will face Republican nominee Andy Biggs and No Labels nominee Teri Ann Hourihan.

Arizona will also elect a Lieutenant Governor for the first time, with each gubernatorial nominee selecting a running mate. Hobbs selected former Mesa Mayor John Giles, Biggs selected former State Senator Sine Kerr, and Hourihan selected nonprofit executive and small business owner Angela Harrolle Mohan.

Legislative races will also be closely watched, with competitive House and Senate districts determining whether Republicans maintain their current majorities at the Capitol. The General Election will be held on November 3, 2026.

Ballot Measures Face Legal Challenges

Arizona's November ballot has continued to take shape throughout August as courts considered challenges to proposed ballot measures.

One significant development came this month when the Arizona Supreme Court upheld a ruling removing Proposition 212, the Protect Education Act, from the November ballot after a signature challenge left the initiative without enough valid signatures to qualify.

Other election-related litigation has focused on measures referred to the ballot by the Legislature and the language that will be presented to voters. A judge blocked a proposal referred by the legislature that aimed to prevent schools supporting teacher unions, finding that it would also affect police and firefighter unions.

Arizona voters are set to consider eight statewide ballot propositions on November 3, 2026. All eight were referred to voters by the Legislature; there are no citizen initiatives currently on the ballot.

• Proposition 141 – Vehicle Mileage Taxes: Prohibits state and local taxes or fees based on vehicle miles traveled and restricts mileage monitoring.
• Proposition 142 – Preferential Treatment and Discrimination: Expands constitutional restrictions on government discrimination and preferential treatment, including certain race- and ethnicity-based programs.
• Proposition 144 – Election Requirements: Establishes voter ID and other election requirements, including provisions related to ballot tabulation and foreign election spending.
• Proposition 316 – Local Grocery Taxes: Requires voter approval for new or increased local grocery taxes and caps the rate at 2%.
• Proposition 317 – Drug Cartels: Designates drug cartels as terrorist organizations under state law.
• Proposition 318 – Student Athletics: Establishes sex-based requirements for school athletics and certain private spaces.
• Proposition 319 – Photo Enforcement: Restricts new photo-enforcement systems and requires voter approval for continued use of existing systems.
• Proposition 320 – School District Spending: Requires certain school districts to direct at least 60% of operational spending to classroom instruction.