Hobbs signs ‘Ag-to-Urban’ bill, paves way for new water management
On June 30, Gov. Katie Hobbs signed SB 1611 into law, allowing central Arizona farmers to sell land and groundwater rights to developers. The legislation aims to conserve groundwater, promote growth, create jobs, and lower new home costs. It follows a moratorium on new 100-year assured water supply certificates in the Phoenix and Pinal areas due to insufficient groundwater. While the law now covers only those regions, Tucson could be included if a similar development halt occurs. Builders in suburban Maricopa and Pinal counties have struggled with halted projects as groundwater becomes their main source amid Colorado River cutbacks. Hobbs and bipartisan lawmakers called the move “historic” for its balance of growth and conservation.
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Kavanagh Replaces Shamp
In the wake of the state budget negotiations, Republicans in the Senate made a change in leadership. Senate Majority Leader Janae Shamp was replaced by Senator John Kavanagh.
Kavanagh was the prime negotiator on the compromise budget. Shamp gained recognition for her involvement with the MAGA and MAHA movements.
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May Jobs & Labor Force Update
Arizona lost 3,500 jobs in May—ranking 46th among all states and D.C. for monthly job growth. This marks one of the slowest months for job gains in 2025.
Arizona’s labor force participation rate dipped to 61.4% in May, continuing a downward trend, and remains below the national average of 62.5%.
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Arizona Jobs & Labor Force Update - June 2025
Arizona lost 8,400 jobs in June
Ranking 46th in the nation for job growth.
That’s two straight months of job losses, while the national economy continues to grow.
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What Small Businesses Need to Know about Taxes and Tariffs
The One Big Beautiful Bill Act prevented a massive tax increase from occurring at the end of 2025 and made key tax provisions permanent, including:
- 20% qualified business income (QBI) deduction for pass-through businesses (LLCs and S Corps)
- 100% bonus depreciation for new capital investments
- Increased interest deductibility limits
- Immediate R&D expensing, retroactive to January 2022, for businesses with less than $31 million in gross receipts
Small businesses can now claim up to 50% (previously 40%) of the cost of offering on-site or off-site childcare for employees. They can also pool with other local businesses to access tax credits for shared childcare services.
Tariff challenges: While the tax law offers certainty to small businesses, they continue to struggle amid rising tariffs, looming new tariffs, and ongoing uncertainty around trade.
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Arizona’s inflation is cooling
Key Trends:
Phoenix’s inflation rate is now just 0.2% (YoY)
• Lowest among all 23 metro areas tracked
• U.S. average: 2.7%
• Phoenix’s slowdown is largely driven by declining shelter costs
Shelter inflation turned negative
• Year-over-year shelter prices dropped –0.7% in Phoenix
• All other categories (excluding shelter) rose +0.7%, still modest compared to national trends
Cumulative inflation remains high
• Since June 2019, prices in Phoenix have climbed by +29.7%
• That’s over 3 percentage points higher than the national average of +26.0% over the same period
• The average household now spends $1,507 more per month than five years ago
Cooling, but not cured
• Phoenix’s drop in inflation reflects real progress—but pressure remains, especially in core services
• Federal deficit spending, rising again after pandemic-era highs, continues to risk future price instability
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The Labor Department is looking to lighten workplace regulations with sweeping rule changes and repeals
The Labor Department says the goal is to reduce costly, burdensome rules imposed under previous administrations, and to deliver on President Trump's commitment to restore American prosperity through deregulation.
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U.S. Chamber Commends White House AI Action Plan
The Trump Administration’s AI Action Plan aims to solidify U.S. global leadership in artificial intelligence by addressing regulatory challenges and fostering innovation.
The plan outlines key steps to accelerate AI development and deployment, including:
- Streamlining permitting for critical AI infrastructure.
- Addressing conflicting state-level laws and regulatory overreach.
- Ensuring reliable and affordable energy for businesses and consumers.
- Advancing U.S. leadership in AI diplomacy.
Neil Bradley, Executive Vice President and Chief Policy Officer of the U.S. Chamber of Commerce, praised the plan, stating it sets a gold standard for responsible and transformative AI technologies. He emphasized its potential to drive economic growth across sectors like small business, energy, and healthcare.
The Chamber has pledged to collaborate with the administration to implement the plan and foster a competitive, innovation-driven AI ecosystem
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Arizona budget faces potential hit from federal tax changes
President Donald Trump’s “One Big Beautiful Bill” will cost Arizona $381 million to conform to federal tax changes, according to a Joint Legislative Budget Committee report published last week. JLBC’s analysis of the federal budget reconciliation bill, published on July 10, also estimates an additional $250 million cost to the state in fiscal year 2027 and a $280 million cost in fiscal year 2028 to conform to federal tax changes. The JLBC document doesn’t include a cost analysis of the bill’s changes to the Supplemental Nutrition Assistance Program and Medicaid yet, but JLBC staff will update the document after they have completed their estimates of those programs.
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The "One Big Beautiful Bill Act"
Want to know what the bill includes?
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Arizona Just Approved a Major Water Transfer—Here’s What the Data Says
The state just approved its first-ever rural-to-urban water transfer, allowing Buckeye and Queen Creek to tap into the Harquahala basin groundwater to support new construction. But this isn’t a long-term solution—and the data tells us why.
Arizona has doubled its population and tripled its GDP since 1985—but total water use has declined by 16%.
- Agricultural users consume over 800 gallons per person per day. Meanwhile, residential, commercial, and industrial users use less than 200 gallons per person per day.
- Each acre-foot of water in Maricopa County produces $110,000 in GDP.
- Keeping the Phoenix AMA moratorium in place could cost Arizona 18,600 jobs and $2 billion in GDP by 2035.
- Augmenting the Valley’s supply by just 300,000 acre-feet could generate $4.7 billion in economic output.
The new transfer will help Buckeye build 17,000 new homes—but it won’t solve Arizona’s broader water challenge. There are only three rural basins eligible for these transfers, and they come with political, legal, and financial hurdles. The real opportunity lies in:
- Building infrastructure to access high-return water sources
- Encouraging flexible water markets and reuse systems
- Prioritizing data transparency and strategic investment
We’re not out of water. But we are at a turning point. Growth in Arizona depends on bold, innovative infrastructure.
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The governor clears the desk of all bills for the session
Bill Introduced
Bills Vetoed
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