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ARIZONA HOUSE OF REPRESENTATIVESFifty-seventh Legislature First Regular Session |
House: APPROP DP 11-6-0-2 |
HB 2962: general appropriations; FY2026
Sponsor: Representative Livingston (with permission of Committee on Rules), LD 28
House Engrossed
Overview
Appropriates monies for the operation of the state government in FY 2026.
History
The Arizona Legislature adopts a budget for each fiscal year (FY) that contains general appropriations. Article IV, Section 20, Part 2 of the Constitution of Arizona requires the General Appropriations Act (feed bill) to contain only appropriations for the different state departments, state institutions, public schools and interest on public debt. Statutory changes necessary to reconcile the appropriations made in the feed bill and other changes are drafted into separate budget bills prepared according to subject area.
Provisions
The tables below indicate state ongoing General Fund (GF) and other fund (OF) changes for appropriated state agencies in FY 2026 stated in terms of changes to the FY 2026 JLBC Baseline.
Major footnotes are stated in terms of changes to the FY 2025 General Appropriations Act.
|
Summary of Changes |
Fund |
Comments |
FY 2026 Changes to JLBC Baseline |
|
Arizona Department of Administration (ADOA) – School Facilities Division (SFD) (Sec. 6) |
|||
|
Building Renewal Grant Funding |
GF |
Onetime |
$183,300,000 |
|
Arizona Healthcare Cost Containment System (AHCCCS) (Sec. 9) |
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|
Enhanced Federal Medical Assistance Percentage (FMAP) Savings |
GF |
Onetime |
$(6,000,000) |
|
Prescription Drug Rebate Fund |
GF |
Ongoing shift |
$(150,000,000) FY 2026 $(100,000,000) FY 2027 $(100,000,000) FY 2028 |
|
Department of Economic Security (DES) (Sec. 27) |
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|
Formula Adjustments |
GF |
Ongoing |
$160,000,000 |
|
Enhanced FMAP Savings |
GF |
|
$(8,400,000) |
|
Community Based Services |
GF |
Community based services for high-cost developmental disability (DD) clients, ongoing |
$14,800,000 |
|
Formula Adjustment |
GF |
Backfill prior year DD actuarial loss |
$32,300,000 |
1. Allows DES, beginning April 1, 2026, to use up to $25,000,000 from the Budget Stabilization Fund (BSF) to provide funding for reimbursement grants.
2. Requires DES, before using BSF monies, to notify the Directors of the Joint Legislative Budget Committee (JLBC) and Governor's Office of Strategic Planning and Budgeting.
3. Requires the BSF appropriation to be fully reimbursed by September 1, 2026 and to be reimbursed in full as part of the closing process for FY 2026.
4. Prohibits the BSF appropriation from being used for additional programmatic expenditures.
FY 2025 Supplemental Appropriations and Adjustments (Sec. 95-102)
|
Fund |
Amount |
|
|
AHCCCS – Adjustments in Formula Requirements |
GF |
$(106,051,600) |
|
DES – Adjustments in Formula Requirements |
GF |
$(9,900,000) |
|
Arizona Department of Education (ADE) – Basic State Aid Formula |
GF |
$206,206,000 |
|
ADE – Statewide Assessment Expenses |
GF |
$2,000,000 |
|
Department of Forestry and Fire Management – Fire Expenses Repayment |
GF |
$11,180,800 |
|
Department of Health Services – State Hospital Operating Costs Shortfall |
OF |
$3,328,200 |
|
Secretary of State – Congressional District 7 Special Election |
GF |
$7,512,000 |
|
State Treasurer – Justice of the Peace Salary Adjustment |
GF |
$138,600 |
|
Arizona Department of Veterans' Services – State Homes for Veterans Trust Fund for Operating Costs |
GF |
$1,000,000 |
ADOA Counties FY 2026 Appropriation (Sec. 103)
5. Appropriates $7,150,650 from the state GF in FY 2026 to ADOA for equal distribution to counties with a population of fewer than 900,000 persons according to the 2020 U.S. Decennial Census (2020 Census) to maintain essential county services.
6. Appropriates $500,000 from the state GF in FY 2026 to ADOA for distribution to Graham County to maintain essential county services.
7. Appropriates $3,000,000 from the state GF in FY 2026 to ADOA for equal distribution to counties with a population of fewer than 300,000 persons according to the 2020 Census in order to supplement the cost of the Elected Officials' Retirement Plan.
Automation Projects Fund (APF) (Sec. 104)
8. Appropriates $19,256,800 in FY 2026 from the Department of Revenue (DOR) APF Subaccount to ADOA for the integrated tax system modernization project.
9. Requires the DOR APF Subaccount appropriation to be spent on an integrated tax system modernization project that meets specified criteria.
Debt Service Payments (Sec. 106-107)
10. Allocates $26,497,400 of state GF revenue in FY 2026 to the Arizona Convention Center Development Fund.
11. Asserts that the Rio Nuevo Multipurpose Facility District is estimated to receive $19,000,000 from a portion of state transaction privilege tax revenues in FY 2026 and that the actual amount of distribution will be made as outlined in statute.
Fund Transfers (Sec. 108-110)
12. Transfers, by July 1, 2026, $15,000,000 from the State Highway Fund to the state GF in FY 2026 to provide adequate support and maintenance for agencies of this state.
13. Specifies that the $15,000,000 transferred from the State Highway Fund reflects the interest income earned from investment of State Highway Fund monies from a portion of revenues derived from the state GF portion of transaction privilege tax revenues that were transferred in the FY 2023 state budget.
14. Transfers $2,000,000 from monies collected due to the vehicle license tax to the State Highway Fund in FY 2026.
15. Transfers the following amounts in FY 2026 from the outlined sources for deposit into the APF to implement the integrated tax system modernization project:
a) $11,725,500 from the state GF; and
b) $7,531,300 from the Integrated Tax System Project Fund.
Department of Corrections (ADCRR) Opioid Remediation Fund (Sec. 111)
16. Appropriates $40,000,000 from the Consumer Remediation Subaccount of the Consumer Restitution and Remediation Revolving Fund in FY 2026 to the Attorney General (AG) and specifies that the monies consist of opioid claims-related litigation or settlements.
17. Requires the AG, by July 3, 2025 or if sufficient monies are not available on July 3, 2025, within three calendar days after sufficient monies become available, to transfer the $40,000,000 to the ADCRR Opioid Remediation Fund.
18. Requires ADCRR to use the monies in the specified opioid-related fund only for past and current costs for care, treatment, programs and other expenditures for individuals with opioid use disorder and any co-occurring substance use disorder or mental health conditions or for any other approved purposes prescribed in a court order or a settlement funds agreement that is entered into by the state and other parties to the opioid litigation.
19. Prohibits the AG from imposing any conditions on the transfer of the monies in the ADCRR Opioid Remediation Fund.
20. Stipulates that if the AG does not transfer the full amounts specified by July 3, 2025, the ADOA General Accounting Office must directly transfer the amount from the subaccount to the ADCRR Opioid Remediation Fund.
21. Exempts the $40,000,000 transferred to the AG from lapsing.
Payment Deferrals (Sec. 112)
22. Continues to defer $800,727,700 in Basic State Aid (BSA) and additional state aid (ASA) payments from ADE in FY 2026 until after June 30, 2026, but no later than July 12, 2026, and excludes charter schools and school districts with a student count less than 4,000 pupils from the deferral.
23. Requires ADE to make the deferral by reducing the apportionment of state aid for each month in the fiscal year by the same amount.
24. Requires ADE to disburse the FY 2027 appropriations of $800,727,700 to the counties for school districts starting July 1, 2026 and no later than July 12, 2026, in amounts equal to the reductions in the apportionment of BSA and ASA.
25. Requires school districts to include, in the revenue estimates used for computing FY 2026 tax rates, the deferred appropriation monies that the districts will receive.
State Operating Adjustments (Sec. 113-114)
|
GF |
OF |
Total |
|
|
Employer Health Insurance Contribution Reduction |
$(140,000,000) |
$(41,551,600 |
$(181,551,600) |
|
Employer Health Insurance Contribution Increase |
$140,000,000 |
$50,000,000 |
$190,000,000 |
|
State Fleet Rate Reduction |
$(3,299,000) |
$(1,453,600) |
$(4,752,600) |
26. Outlines statewide adjustment instructions and procedures.
27. Outlines the FY 2026 individual agency charges (totaling $1,798,500) for general agency counsel provided by the AG.
FY 2027 Appropriations (Sec. 115)
28. Appropriates $94,137,900 from the state GF in FY 2027 for a onetime deposit in the New School Facilities Fund.
29. Instructs SFD to use monies only for facilities that will be constructed for school districts that received final approval from SFD by December 15, 2024.
Miscellaneous (Sec. 116-125)
30. Declares the Legislature intends that all departments, agencies and budget units receiving appropriations continue to report actual, estimated and requested expenditures in a specified format.
31. Contains various reporting requirements.
32. Defines terms.
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HB 2962
Initials JB Page 0 House Engrossed
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