Hobbs wants Arizona to give down-payment help, mortgage-rate relief

PHOENIX — Gov. Katie Hobbs asked lawmakers Monday to approve a new program she said will make home ownership more affordable for middle-income and rural homebuyers.

In her second State of the State address, the Democratic governor said she wants to expand down-payment assistance and mortgage-rate relief for families making 80% or less of an area median income. She said that figure for Phoenix would mean any family making less than $75,000 would qualify.

The proposal would require money. But gubernatorial staffers provided no details as to how much, nor where they would find the cash in a year when state revenues are running behind expenses.

There will be more specifics when Hobbs releases her proposed budget plan on Friday, said her press aide Christian Slater.

Other key goals Hobbs is asking lawmakers to approve include:

Expanding options for rural communities to regulate groundwater and approving a work-around of state water laws that have stymied new development in areas of Buckeye and Queen Creek that do not have a 100-year assured water supply.

Extending a program that allows the state to take money out of a special trust account to supplement state aid to schools to fund teacher salary increases, which would require not only legislative but voter approval.

More regulation and limits of the program that allows students to get vouchers of state funds, known as “empowerment scholarship accounts,’’ to attend private and parochial schools, although Republican legislative leaders already declared Hobbs’ demand dead on arrival.

Providing greater oversight of long-term-health-care and sober-living facilities, increasing the fines on violators and allowing Adult Protective Services to seek emergency protection orders.

Regulating the prices of some drugs and cracking down on what she called “price-gouging middle men in our health-care system’’ that boost the cost of prescription drugs.

Expanding access to health care through previously announced plans to double the size of the University of Arizona medical school, create an “engineering-focused medical school’’ at Arizona State University, and open a new medical school at Northern Arizona University to focus on rural and tribal needs.

Repealing the territorial-era law that outlaws abortions except to save the life of the mother. The Arizona Supreme Court is considering whether that law, or a competing one enacted a couple of years ago outlawing abortions after 15 weeks of pregnancy, is in effect and enforceable.

Abortion, contraception

The governor does not want the right to terminate a pregnancy dependent on what a majority of the seven-member state Supreme Court concludes.

“There are commonsense bills we can pass right now that will expand access to reproductive health care,’’ Hobbs said.

Aside from repealing the old law, Hobbs wants lawmakers to enact a “Right to Contraception Act.’’

She provided no details of what that would include.

But it presumably encompasses not just the right to terminate a pregnancy — the subject of an initiative drive to put that into the Arizona Constitution — but also precluding future legislation that could limit access to birth-control devices.

Immediate reactions

The voucher and abortion issues are repeats of Hobbs’ State of the State address last year, in which the proposals prompted a walkout of a large number of legislators in the Republican majority.

This year there was no walkout. But Sen. Anthony Kern, R-Glendale, stood up and turned his back to Hobbs during those parts of her address.

Other House and Senate Republicans sat pretty much stone-faced throughout the 45-minute speech, even when the governor mentioned generally popular issues such as affordable housing and updating the state’s 43-year-old groundwater law.

House Majority Leader Leo Biasiucci told Capitol Media Services there was no prior agreement to show no reactions. In fact, two Republicans did break ranks in a way.

Rep. Matt Gress stood up and applauded when Hobbs called on lawmakers to raise teacher pay. The Phoenix Republican, a former school board member, has a proposal of his own to add $4,000 to teacher salaries.

And Rep. David Cook, R-Globe, cheered when Hobbs mentioned the new medical school to help meet rural needs.

But Biasiucci said the lack of reaction from other GOP lawmakers should not come as a surprise.

“A big part of it is, we don’t know any of the stuff she is proposing,’’ said the Lake Havasu City Republican. “We haven’t seen anything. So until we see them, I don’t know how you get behind it.’’

They are taking a wait-and-see approach, Biasiucci said. Consider, he said, Hobbs’ desire to deal with rural water issues.

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“That’s a big deal in my district,’’ he said. “So, there could be good policies coming out.’’

But some other proposals, he said, are “non-starters.’’

“When you talk about legalizing abortion and getting rid of ESAs, I mean, that’s just not going to fly.”

By contrast, Hobbs’ fellow Democrats gave enthusiastic — and often standing — ovations to not only those proposals but pretty much everything the governor said.

Housing

One proposal that could have broad implications deals with affordable housing.

“I have personally felt the fear and uncertainty of not knowing how you’re going to make your next mortgage payment,’’ Hobbs said.

“Our state’s economy is strong and its opportunities are abundant,’’ she said. “However, we cannot ignore the fact that for Arizonans across all age, color and geographical boundaries, our housing affordability crisis has erased feelings of prosperity for too many.’’

Hobbs got lawmakers to make a one-time $150 million deposit last year into the Housing Trust Fund. She said that directly led to 15 new affordable developments, half in rural communities, creating more than a thousand units.

But there were no details about how she plans to provide down-payment assistance to some families or provide them with any relief from what have been mortgage interest rates hovering close to 7%.

Water

Closely linked to housing, Hobbs said, is water.

She specifically noted that Arizona’s historic 1980 Groundwater Management Act provided no guardrails for rural areas. The governor said she supports proposals from her Water Policy Council that would allow the Arizona Department of Water Resources to form some type of oversight districts in rural areas that could each decide what rules on groundwater pumping are appropriate.

Hobbs also said ADWR can enact new rules to provide relief for developers who were told last year they would not get permits for new subdivisions in Queen Creek and Buckeye in the Phoenix area because those areas do not have the legally required 100-year supply of groundwater.

She said there is a way for ADWR to “finalize a new pathway for water providers and communities who have historically relied on groundwater resources.’’ In essence, it would give developers an opportunity to achieve the 100-year supply designation — eventually — by finding new water sources.

Legislative approval, however, would be required for two of the governor’s proposals to amend the 1980 law.

One would address the fact that the 100-year requirement applies only to owner-occupied homes. Hobbs said that should be extended to build-to-rent subdivisions being erected.

The other would close loopholes that allow for “wildcat’’ development, where subdivisions skating around water-requirement laws.

Hobbs’ call for legislative action also came with a warning of sorts.

“To those of you who have spent years refusing to act: if you don’t, I will,’’ she said, but provided no specifics and didn’t say what unilateral authority she has to change water policy.

Prescription drugs

Another area she will need legislative cooperation is on making prescription drugs more affordable.

Hobbs wants some unspecified laws to regulate “pharmacy benefit managers’’ who handle prescriptions for insurance companies. Companies say the managers can negotiate lower prices with manufacturers, but there are accusations they add in their own profits without helping the ultimate customers.

Hobbs provided no explanation of how the state would regulate how much these pharmacy benefit managers can charge, or how it would have the legal authority.

She faces similar problems with her proposals to enact laws to require that Arizonans get advanced notice of price increases for medications, or a separate program she said would cap prices on commonly used drugs such as insulin. The Republican-controlled Legislature has proven hostile to any form of price control.

Medical schools

After the speech, Arizona Regents Chair Fred DuVal issued a statement thanking Hobbs for her “strong endorsement” of the board’s AZ Healthy Tomorrow initiative to train more doctors, nurses and health-care professionals needed in the state. “We will work with the governor and legislators to support the public and private investments necessary to educate, train and deploy these health-care workers to communities across Arizona,” he said.