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Arizona Governor Katie Hobbs intends to eliminate tax incentives for data centers, which currently receive exemptions from state and local sales taxes on equipment purchases. Hobbs stated that the incentives have fulfilled their purpose, as Arizona ranks among the top two global markets for data centers.

She will formally announce her position in her State of the State speech. Additionally, Hobbs plans to establish a bond fund to generate $300 million for affordable housing and impose a new tax on vacation rentals to assist low-income utility costs.

Legislative changes include a proposed $3.6 billion data center project facing local opposition and a $38 million annual revenue loss due to existing incentives. Hobbs also seeks a fee on water used by data centers to fund conservation efforts. The governor's stance on data center incentives may foster bipartisan cooperation as she prepares for a challenging reelection campaign.