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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
general appropriations; FY2026
Purpose
Makes session law changes relating to general appropriations necessary to implement the FY 2026 state budget.
Background
The Arizona Constitution prohibits substantive law from being included in the general appropriations, capital outlay appropriations and supplemental appropriations bills. However, it is often necessary to make statutory and session law changes to effectuate the budget. Thus, separate bills called budget reconciliation bills (BRBs) are introduced to enact these provisions. Because BRBs contain substantive law changes, the Arizona Constitution provides that they become effective on the general effective date, unless an emergency clause is enacted.
The Joint Legislative Budget Committee (JLBC) Baseline includes an estimate of spending necessary to meet requirements of statutory formulas and other obligations (hyperlink).
H.B. 2962 contains the budget provisions for changes relating to general appropriations.
Provisions
FY 2026 Ongoing Fund and Major Footnote Changes
Arizona Department of Administration (ADOA)
Ongoing General Fund (GF) and Other Fund (OF)
|
Summary of Changes |
Source |
Comments |
FY 2026 Changes |
|
School Facilities Division – Building Renewal Grants |
GF |
Onetime |
183,300,000 |
Major Footnote Changes
1. Requires ADOA, by March 31, 2026, to submit a report to the Director of JLBC and the Governor's Office of Strategic Planning and Budgeting (OSPB) on the amount that the Maricopa County Special Health Care District has agreed to send to ADOA for deposit in the state General Fund (state GF) in FY 2026.
2. Specifies that, if the amount that the Maricopa County Special Health Care District has agreed to send to ADOA for deposit in FY 2026 has changed from the amount sent in FY 2025, the report must include the reason for the change.
Arizona Health Care Cost Containment System (AHCCCS)
Ongoing General Fund (GF) and Other Fund (OF)
|
Summary of Changes |
Source |
Comments |
FY 2026 Changes |
|
Prescription Drug Rebate Fund – Ongoing Shift |
OF |
FY 2026 FY 2027 |
(150,000,000) (100,000,000) |
Major Footnote Changes
3. Requires AHCCCS, by March 31, 2026, submit a report to the Director of JLBC and OSPB on the amount of directed payments that the Maricopa County Special Health Care District will receive from the safety net services initiative in FY 2026, disaggregated by state match and federal match.
Ongoing General Fund (GF) and Other Fund (OF) Changes
|
Summary of Changes |
Source |
Comments |
FY 2026 Changes |
|
Formula |
GF |
|
160,000,000 |
|
Community Based Services – DD High-Cost Clients |
GF |
|
14,800,000 |
Major Footnote Changes
4. Requires the $32,300,000 appropriation for the Developmental Disabilities Reconciliation Payment to be used to process the reconciliation payment associated with an operating cost shortfall for the contract year ending on September 30, 2024.
Arizona Department of Education (ADE)
Major Footnote Changes
5. Requires ADE allocated the appropriated amount for the state aid supplement to districts and charter schools on a pro rata basis using the weighted student count for the school district or charter school for the fiscal year.
Arizona State Lottery Commission
Major Footnote Changes
6. Specifies an amount equal to a percentage of total ticket sales as determined by contract is appropriated to pay online vendor fees and the amount is currently estimated to be $17,747,100 or 1.079% of total ticket sales in FY 2026.
FY 2025 Supplemental Appropriations and Adjustments
General Fund (GF) and Other Fund (OF)
|
Agency |
Fund |
Amount |
|
AHCCCS – Formula Adjustments |
GF |
(106,051,600) |
|
DES – Formula Adjustments |
GF |
(9,900,000) |
|
ADE – Basic State Aid Formula |
GF |
206,206,000 |
|
ADE – Statewide Assessment Expenses |
GF |
2,000,000 |
|
Department of Forestry and Fire Management – Debt Owed to Federal Government for Wildfire Suppression Activities |
GF |
11,180,800 |
|
Department of Health Services – State Hospital Operating Costs Shortfall |
OF |
3,328,200 |
|
State Treasurer – Justice of the Peace Salary Adjustment |
GF |
138,600 |
|
Department of Veteran Services – Operating Costs Shortfall |
GF |
1,000,000 |
7. Appropriates $7,300,000 from the state GF in FY 2025 to the Secretary of State (SOS) to reimburse expenses incurred by Cochise, Maricopa, Pima, Pinal, Santa Cruz and Yuma counties for the administration of the special primary and special general elections to fill the vacancy in the U.S. House of Representatives for Arizona's Congressional District 7.
8. Appropriates $212,000 from the state GF in FY 2025 to the SOS for expenses incurred for the administration of the special primary and special general elections to fill the vacancy in the U.S. House of Representatives for Arizona's Congressional District 7.
9. Requires the SOS to reimburse a county for the additional cost of printing and mailing ballots and other election materials, compensation paid to election board and tally board officers serving during the special elections and for costs to administer the special elections.
10. Allows the SOS to advance a portion of the estimated expenses to the county and requires a county that receives an advance to provide subsequent documentation to the SOS.
11. Requires the clerk of the board of supervisors, by November 30, 2025, to submit to the SOS for approval itemized claims, together with documentation verified by the clerk, for expenses incurred or to be incurred by the county recorder and the county elections department.
12. Requires the SOS, on approval of a claim, to submit the claim to ADOA for payment to the county from the $7,300,000 appropriation.
13. Caps the reimbursement of expenses by county as follows:
a) Cochise County, $139,500;
b) Maricopa County, $906,900;
c) Pima County, $5,597,700;
d) Pinal County, $66,100;
e) Santa Cruz County, $240,600; and
f) Yuma County, $349,200.
14. Requires the SOS, by March 1, 2026, to submit a report to JLBC and OSPB on the reimbursements made.
15. Exempts the appropriations from lapsing and reverts all unexpended and unencumbered monies to the state GF on December 31, 2025.
Additional FY 2026 Appropriations and Adjustments
Arizona Department of Administration (ADOA)
16. 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.
17. Appropriates $500,000 from the state GF in FY 2026 to ADOA for distribution to Graham County to maintain essential county services.
18. 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 to supplement the cost of the Elected Officials' Retirement Plan (EORP).
19. Prohibits the counties from using the distributed FY 2026 $3,000,000 appropriation for anything other than employer contributions to EORP.
20. Appropriates the following amounts in FY 2026 from the APF subaccounts to ADOA for the following automation and information technology projects:
|
Project |
Subaccount |
Amount |
|
Integrated Tax System Modernization Project |
Arizona Department of Revenue (ADOR) Subaccount |
19,256,800 |
21. Requires ADOA to submit a quarterly report to JLBC on implementing projects approved by the Information Technology Authorization Committee that includes the project expenditures, deliverables, timeline for completion and current status.
22. Exempts the FY 2026 appropriations from the APF from lapsing until June 30, 2027.
23. 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.
24. Requires DES, before using the BSF monies, to notify the Director of JLBC and the Director of OSPB.
25. 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.
26. Prohibits the BSF appropriation from being used for additional programmatic expenditures.
28. 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
29. Transfers $15,000,000, by July 1, 2026, from the State Highway Fund to the state GF in FY 2026 for the purposes of providing adequate support and maintenance for agencies of this state.
30. 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 transferred in the FY 2023 state budget.
31. Transfers $2,000,000 from vehicle license tax to the state GF and allows the deposit to be made in even monthly installments.
32. Transfers the following amounts in FY 2026 from outlined sources to APF projects subaccounts and specifies that the transfers are not appropriations from the APF and only direct appropriations from the APF are appropriations:
|
Project |
Source |
Subaccount |
Amount |
|
Integrated Tax System Modernization |
State GF |
ADOR subaccount |
11,725,500 |
|
ADOR Integrated Tax System Project Fund |
7,531,300 |
Attorney General (AG)
33. Appropriates $40,000,000 from the Consumer Remediation Subaccount of the Consumer Restitution and Remediation Revolving Fund in FY 2026 to the AG and specifies that the monies consist of opioid claims-related litigation or settlements.
34. 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 Arizona Department of Corrections, Rehabilitation and Reentry (ADCRR) Opioid Remediation Fund.
35. Prohibits the AG from imposing any conditions on the transfer of the monies in the ADCRR Opioid Remediation Fund.
36. 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.
37. Exempts the AG monies from lapsing.
Payment Deferrals
38. 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.
39. Requires ADE to make the deferral by reducing the apportionment of state aid for each month in the fiscal year by the same amount.
40. Requires ADE to disburse the FY 2027 appropriations of $800,727,700 to the counties for the 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.
41. 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.
Statewide Operating Adjustments
General Fund (GF) and Other Fund (OF)
|
Area of Adjustment |
GF |
OF |
Total |
|
Employer Health Insurance Contribution Reduction |
(140,000,000) |
(41,551,600) |
(181,551,600) |
|
State Fleet Reduction |
(3,299,000) |
(1,453,600) |
(4,752,600) |
|
Employer Health Insurance Contribution Increase |
140,000,000 |
50,000,000 |
190,000,000 |
42. Prescribes statewide adjustments procedures and instructions.
43. Outlines the FY 2026 individual agency charges totaling $1,798,500 for general agency counsel provided by the AG.
FY 2027 Appropriations
44. Appropriates $94,137,900 from the state GF in FY 2027 for a onetime deposit in the New School Facilities Fund.
45. Requires the School Facilities Division to only use the monies for facilities that will be constructed for school districts that received final approval on or before December 15, 2024.
Miscellaneous
46. Declares the Legislature's intent that all departments, agencies and budget units receiving appropriations continue to report actual, estimated and requested expenditures in a specified format.
47. Contains other reporting requirements.
49. Becomes effective on the signature of the Governor.
House Action
APPROP 6/24/25 DP 11-6-0-2
3rd Read 6/24/25 31-25-4
Prepared by Senate Research
June 24, 2025
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