Arizona’s 2023 56th Legislature, First Regular Session kicked off on Jan. 9, 2023, with nearly half of the Legislators holding their offices for the first time. With a Democrat Executive and Republican Majority Legislature, it became clear in the early hours of Session that this was going to be a very challenging session. It started with several Majority Members walking out and two simply standing up and turning their backs to Governor Hobbs during her State of the State address. In the wake of the Governor releasing her budget proposal, the Republican Majority, in protest, drafted and passed a “continuation” budget that would carry forward FY23 ongoing appropriations but did not include any of the Governor’s budget priorities. The budget package was promptly vetoed by the Governor. Only recently have budget meetings between the Minority and Majority begun.
Legislative activity got off to a slow start and was further delayed by the premature budget process. Both Houses were slow to get bills moved to the opposite Chamber. Bills are now being heard in the opposite chamber, but committee deadlines were extended. The AZ Bankers Association remains hopeful that the Legislature and the Executive can work out their differences and bring forward legislation and a budget that helps strengthen Arizona’s economic landscape. If they are unable to do so before the July 1 start of the fiscal year, the result will be a state government shutdown. Nobody wants to be still at work at the Arizona Capitol this summer.
As we had anticipated, opponents of the ESG policies held by both public and private businesses have introduced a number of legislative mandates telling banks who they can and cannot do business with. This is unacceptable to the banking industry. Advocacy and education on this topic continued in full force in daily meetings with legislators, educating them on the harm to the industry, the taxpayers, and the state as a whole. During Bankers Day at the Capitol in early March, top representatives within the Association ascended on the Capitol and met with more than a dozen legislators, educating them on the negative impacts that similar anti-ESG legislation are having on states like Texas and Florida. They delivered a clear message that it is not the place of government to tell corporations and their investors that they cannot invest in sustainable technologies and practices or improve their governance processes. Furthermore, we do not believe state governments should be intervening in the free market.
While the Arizona Bankers Association’s message was firmly delivered, those that would have stepped up to defeat these bills in the past are not willing to take the political hit. Instead, they are banking on the Governor to veto these bills. Roughly 88% of public companies and 67% of private companies have ESG initiatives in place, according to a December 2020 survey from NAVEX Global, a compliance software company. While we may not agree with our opponents on certain public perceptions or priorities, we cannot ignore their economic effects on purchasing decisions, the direction of new R&D, and the resulting effect on potential investments.
It is now more important than ever that the Arizona Bankers Association members and our business community partners ramp up efforts of education and advocacy, emphasizing the negative economic impacts these policies will have. The Arizona Bankers Association will continue to build on our long history of serving as the chief advocate for Arizona’s banking industry and will continue to fight.
