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ARIZONA HOUSE OF REPRESENTATIVES57th Legislature, 2nd Regular Session |
House: APPROP DP 11-7-0-0 | Third Read 33-22-5-0-0Senate: Third Read 16-12-2-0-0 |
HB 4138: 2026-2027; general appropriations act.
Sponsor: Representative Livingston, LD 28
Vetoed by the Governor
Overview
Appropriates monies for the operation of the state government in FY 2027.
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 General Fund (GF) and other fund (OF) changes for appropriated state agencies in FY 2027 stated in terms of changes to the FY 2027 JLBC Baseline.
Major footnotes are stated in terms of changes to the FY 2026 General Appropriations Act.
|
Summary of Changes |
Fund |
Comments |
FY 2027 Changes to JLBC Baseline |
|
Department of Administration (ADOA) (Sec. 4) |
1. Requires that ADOA distribute $377,100 for county support for corrections officer employer contributions in FY 2027 and specifies the amounts to be distributed to each county.
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ADOA – School Facilities Division (SFD) (Sec. 5) |
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|
Building Renewal Grant Funding |
GF |
Onetime |
$183,300,000 |
|
New School Construction Projects |
GF |
Onetime prior year project savings |
$(20,200,000) |
2. Allows SFD to use the unencumbered balance of $20,622,600 in the New School Facilities Fund for facilities and land costs for districts that received final approval on or before December 15, 2025.
|
Arizona Health Care Cost Containment System (AHCCCS) (Sec. 9) |
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|
Formula |
GF |
Ongoing |
$(42,000,000) |
|
Department of Child Safety (DCS) (Sec. 15) |
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|
Congregate Care |
GF |
Onetime |
$36,900,000 |
|
Extended Foster Care Comprehensive Service Model |
GF |
Onetime |
$8,200,000 |
|
Arizona Commerce Authority (ACA) (Sec. 17) |
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Eliminate Annual Competes Fund General Fund Deposit |
GF |
Ongoing |
$(500,000) |
|
Department of Corrections (DOC) (Sec. 21) |
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|
4% Correctional Officer Stipend |
GF |
Onetime |
$21,400,000 |
3. Requires the Director of DOC to award a onetime four percent stipend payment to an employee that is employed by the agency after July 3, 2026.
4. Requires the stipend be equal to four percent of the employee's annual salary level and the amount must be distributed evenly throughout each pay period in FY 2027.
5. Requires DOC to amend private prison bed contracts to increase per diem rates in FY 2027 on a onetime basis to provide an amount sufficient for a onetime four percent stipend to each correctional officer employed in a private prison that contracts with Arizona.
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Arizona Criminal Justice Commission (ACJC) (Sec. 22) |
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Victims of Crime Act Federal Backfill |
GF |
Onetime |
$2,250,000 |
|
Arizona State Schools for the Deaf and the Blind (ASDB) (Sec. 23) |
6. Requires, on or before September 1, 2026, ASDB to report to the Joint Legislative Budget Committee detailing the school's operations and budgetary changes since FY 2026.
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Department of Economic Security (DES) (Sec. 27) |
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Victims of Crime Act Federal Backfill |
GF |
Onetime |
$11,500,000 |
|
Child Care Assistance Program |
GF |
Onetime |
$44,800,000 |
|
Community Based Services |
GF |
Onetime; community-based services for high-cost developmental disability (DD) clients |
$17,900,000 |
|
Department of Education (ADE) (Sec. 29) |
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|
Formula |
GF |
Ongoing |
$(92,100,000) |
|
Unused Land Trust Balance One-Time Formula Offset |
GF |
Onetime |
$(8,000,000) |
|
3rd Year Low Income Weight Increase |
GF |
Onetime |
$37,000,000 |
|
3rd Year Additional Assistance Increase |
GF |
Onetime |
$29,000,000 |
|
School Meals |
GF |
Onetime |
$2,000,000 |
7. Specifies that, of the $29,000,000 appropriated for additional assistance, $23,142,00 is included for a onetime district additional assistance supplement and $5,858,00 is included for a onetime charter additional assistance supplement.
8. Requires ADE to distribute monies for district additional assistance and charter additional assistance on a proportional basis based on the district or charters additional assistance funding that each district or charter receives in FY 2027.
9. Allows a school district to budget the onetime district additional assistance in either the school district's maintenance and operation fund or unrestricted capital outlay fund.
10. Requires ADE to allocate $37,000,000 for onetime free and reduced-price lunch (FRPL) group B weight supplement in FY 2027.
11. Directs ADE to distribute the appropriated amount for onetime FRPL group B weight supplement to school districts and charter schools on a pro rata basis using the weighted student count for FRPL students in FY 2027 for the school district or charter school.
12. Allows a school district to budget the monies it receives from the onetime FRPL group B weight supplement in either the school district's maintenance and operation fund or unrestricted capital outlay fund.
13. Requires ADE to allocate monies for the onetime school meal grants to school districts and charter schools that participate in the National Lunch Program or School Breakfast Program under the National School Lunch and Child Nutrition Acts for grants to reduce or eliminate copayments that would be charged to eligible children for reduced-price meals.
14. Stipulates that, if there are insufficient monies to cover the school meal grant awards for all eligible grantees, ADE must reduce each grant proportionately to cover all eligible grantees.
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Department of Juvenile Corrections (ADJC) (Sec. 50) |
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4% Youth Correctional Officer Stipend |
GF |
Onetime |
$500,000 |
15. Requires the Director of ADJC to award a onetime four percent stipend payment to an employee that is employed by the agency after July 3, 2026.
16. Requires the stipend be equal to four percent of the employee's annual salary level and the amount must be distributed evenly throughout each pay period in FY 2027.
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Department of Public Safety (DPS) (Sec. 75) |
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Victims of Crime Act Federal Backfill |
GF |
Onetime |
$9,300,000 |
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Secretary of State (SOS) (Sec. 81) |
17. Requires the Secretary of State to submit a monthly report to the Joint Legislative Budget Committee and Governor's Office of Strategic Planning and Budgeting detailing actual expenditures from the Election Services line item in the previous month and year-to-date expenditures.
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Arizona Office of Tourism |
18. Eliminates the General Fund appropriation to the Office of Tourism.
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Universities (Sec. 88 - 90) |
19. Declares it is the Legislature's intent for the School of Civic and Economic Thought and Leadership at Arizona State University, the Economic Policy Institute at Northern Arizona University and for the Center for the Philosophy of Freedom at the University of Arizona maintain the same funding level as FY 2026, except the universities may allocate the lump sum reduction of no more than 5% as prescribed by this Legislation.
FY 2020 Appropriation Adjustment (Sec. 94)
20. Reduces the following amount from the GF in FY 2026 to the following agencies:
|
Agency |
Amount |
|
ADE – Teacher Development Pilot Program (FY 2020) |
$(344,300) |
FY 2021 Appropriation Adjustment (Sec. 95)
21. Reduces the following amount from the GF in FY 2026 to the following agencies:
|
Agency |
Amount |
|
ADE – Teacher Development Pilot Program (FY 2021) |
$(400,000) |
FY 2022 Appropriation Adjustment (Sec. 96)
22. Reduces the following amounts from the GF in FY 2026 to the following agencies:
|
Agency |
Amount |
|
ADE – Teacher Development Pilot Program (FY 2022) |
$(400,000) |
|
ADOA – Retirement of the Financing Agreements (FY 2022) |
$(5,037,800) |
FY 2023 Appropriation Adjustment (Sec. 97)
23. Reduces the following amount from the GF in FY 2026 to the following agencies:
|
Agency |
Amount |
|
DVS – Tribal Ceremonies (FY 2023) |
$(1,000,000) |
FY 2024 Appropriation Adjustment (Sec. 98)
24. Reduces the following amounts from the GF in FY 2026 to the following agencies:
|
Agency |
Amount |
|
DOC – Transitional and Reentry Housing (FY 2024) |
$(3,733,300) |
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DPS – Civil Air Patrol Infrastructure (FY 2024) |
$(2,300,000) |
|
DPS – Major Incident Division (FY 2024) |
$(1,323,200) |
FY 2025 Appropriation Adjustment (Sec. 99)
25. Reduces the following amounts from the GF in FY 2026 to the following agencies:
|
Agency |
Amount |
|
AHCCCS – Graduate Medical Education (FY 2025) |
$(4,298,100) |
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DPS – Major Incident Division (FY 2025) |
$(6,433,200) |
FY 2026 Appropriation Adjustment (Sec. 104 - 105)
26. Reduces the following amounts from the GF in FY 2026 to the following agencies:
|
Agency |
Amount |
|
SOS – Special Election Expenses (FY 2026) |
$(1,215,200) |
|
ADE – Basic State Aid Formula |
$(31,859,000) |
FY 2026 Supplemental Appropriations and Adjustments (Sec. 100 - 103)
|
Agency |
Fund |
Amount |
|
AHCCCS - Formula |
GF |
$64,528,400 |
|
AHCCCS - Formula |
EA |
$340,175,800 |
|
DES - Developmental Disabilities Formula |
GF |
$96,818,700 |
|
DES - Developmental Disabilities Formula |
EA |
$241,928,300 |
|
DPS – Operating Expenditures |
OF |
$4,750,000 |
27. Exempts the $4,750,000 supplemental appropriation to DPS for operating expenditures from lapsing.
28. Declares the Legislature's intent that ADOA not enter into any agreements to pay for any federal reimbursements related to excess balances in the Special Employee Health Insurance Trust Fund unless proposed agreements have been reviewed by JLBC.
DES (Sec. 106)
29. Continues to allow DES, beginning April 1, 2027, to use up to $25,000,000 from the Budget Stabilization Fund (BSF) to provide funding for reimbursement grants.
30. Requires DES, before using the BSF monies, to notify the Director of JLBC and the Director of OSPB.
31. Requires the BSF appropriation to be fully reimbursed by September 1, 2027, and to be reimbursed in full as part of the closing process for FY 2027.
32. Prohibits the BSF appropriation from being used for additional programmatic expenditures.
FY 2027 Lump Sum Reductions (Sec. 107)
33. Reduces the following GF monies from the lump sum appropriations of the following budget units in FY 2027.
|
Agency |
Lump Sum Reductions |
|
Department of Administration |
$(967,200) |
|
ADOA – School Facilities Division |
$(78,200) |
|
Office of Administrative Hearings |
$(46,300) |
|
Department of Agriculture |
$(763,400) |
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AHCCCS |
$(10,576,400) |
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Attorney General |
$(1,292,900) |
|
Board for Charter Schools |
$(134,900) |
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Arizona Commerce Authority |
$(127,500) |
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Community Colleges |
$(814,100) |
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Corporation Commission |
$(37,000) |
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Criminal Justice Commission |
$(230,000) |
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Office of Economic Opportunity |
$(24,800) |
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Department of Economic Security |
$(9,909,100) |
|
Board of Education |
$(165,900) |
|
Department of Education |
$(7,120,400) |
|
Department of Emergency & Military Affairs |
$(564,500) |
|
State Board of Equalization |
$(35,600) |
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Board of Executive Clemency |
$(72,900) |
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Department of Forestry & Fire Management |
$(2,170,400) |
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Department of Gaming |
$(310,200) |
|
Governor's Office |
$(456,400) |
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Governor's Office of Strategic Planning and Budgeting |
$(138,300) |
|
Department of Health Services |
$(5,717,600) |
|
Arizona Historical Society |
$(142,500) |
|
Prescott Historical Society |
$(47,200) |
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Department of Homeland Security |
$(500,000) |
|
Industrial Commission |
$(4,200) |
|
Department of Insurance & Financial Institutions |
$(299,400) |
|
Judiciary – Supreme Court |
$(1,273,900) |
|
Judiciary – Court of Appeals |
$(688,900) |
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Judiciary – Superior Court |
$(4,210,600) |
|
Department of Juvenile Corrections |
$(1,465,500) |
|
Land Department |
$(579,700) |
|
Auditor General |
$(1,291,100) |
|
House of Representatives |
$(907,800) |
|
Joint Legislative Budget Committee |
$(148,200) |
|
Legislative Council |
$(452,900) |
|
Ombudsman – Citizens Aide Office |
$(77,000) |
|
Senate |
$(806,500) |
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Mine Inspector |
$(107,900) |
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Natural Resource Conservation Board |
$(19,500) |
|
Navigable Streams Commission |
$(6,700) |
|
Real Estate Department |
$(150,200) |
|
Department of Revenue |
$(2,862,000) |
|
Secretary of State |
$(692,200) |
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Board of Tax Appeals |
$(15,300) |
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State Treasurer |
$(85,800) |
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Office of Tribal Relations |
$(3,200) |
|
Arizona Board of Regents |
$(2,733,000) |
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Arizona State University |
$(16,142,600) |
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Northern Arizona University |
$(5,561,700) |
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University of Arizona – Main |
$(10,670,800) |
|
University of Arizona – Health Services |
$(3,771,400) |
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Department of Veterans' Services |
$(569,800) |
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Department of Water Resources |
$(1,199,500) |
Debt Service Payment (Sec. 108)
34. Allocates $26,997,100 of state GF revenue in FY 2026 to the Arizona Convention Center Development Fund.
Fund Transfers (Sec. 109 - 110)
35. Transfers the following amounts from the following fund sources to the state GF by June 30, 2026 for the purpose of providing adequate support and maintenance for agencies of this state:
|
Fund |
FY 2026 |
FY 2027 |
|
|
Arizona Department of Administration |
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Risk Management Fund |
$24,300,000 |
|
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Construction Insurance Fund |
$8,500,000 |
|
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Attorney General |
|
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Consumer Protection – Consumer Fraud Revolving Fund |
$3,000,000 |
|
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Arizona Board of Regents |
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Technology And Research Initiative Fund |
$24,900,000 |
|
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Arizona Commerce Authority |
|
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Arizona Competes Fund |
$63,300,000 |
|
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Corporation Commission |
|
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Securities Regulatory and Enforcement Fund |
$16,900,000 |
|
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Utility Regulation Revolving Fund |
$6,800,000 |
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Department of Corrections |
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Prison Construction and Operations Fund |
$10,000,000 |
|
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Corrections Fund |
$4,400,000 |
|
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Transition Program Fund |
$2,200,000 |
|
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Department of Environmental Quality |
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Underground Storage Tank Revolving Fund |
$8,700,000 |
|
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Recycling Fund |
$4,000,000 |
|
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Arizona Game and Fish Department |
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Heritage Land Acquisition Fund |
$10,000,000 |
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Watercraft Licensing Fund |
$3,400,000 |
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Department of Health Services |
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Health Services Lottery Fund |
$5,100,000 |
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Arizona Department of Housing |
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Housing Trust Fund |
$14,400,000 |
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Industrial Commission |
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ICA Admin Fund |
$6,700,000 |
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Department of Insurance & Financial Institutions |
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Automobile Theft Authority Fund |
$5,800,000 |
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Land Department |
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Trust Land Management Fund |
$21,200,000 |
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Arizona State Parks Board |
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State Parks Revenue Fund |
$11,900,000 |
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Off-Highway Vehicle Recreation Fund |
$10,000,000 |
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Arizona State Parks Heritage Fund |
$2,600,000 |
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Department of Revenue |
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Department of Revenue Administrative Fund |
$5,000,000 |
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Supreme Court |
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Judicial Collection and Enhancement Fund |
$9,600,000 |
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Department of Transportation |
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SMART Rural Transportation Fund |
$26,300,000 |
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Motor Vehicle Liability Ins. Enforcement Fund |
$16,200,000 |
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State Vehicle Replacement Fund |
$5,000,000 |
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Water Infrastructure Finance Authority |
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Water Supply Development Revolving Fund |
$30,000,000 |
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36. Transfers $9,700,000, by July 1, 2027, 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.
37. Specifies that the $9,700,000 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.
Payment Deferrals (Sec. 111-112)
38. Appropriates $40,000,000 from the Consumer Remediation Subaccount of the Consumer Restitution and Remediation Revolving Fund in FY 2027 to the AG and specifies that the monies consist of opioid claims-related litigation or settlements.
39. Requires the AG, by July 8, 2026, or if sufficient monies are not available on July 8, 2026, within three calendar days after sufficient monies become available, to transfer the $40,000,000 to the DOC Opioid Remediation Fund.
40. Requires DOC 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, a settlement funds agreement that is entered into by the state and other parties to the opioid litigation.
41. Prohibits the AG from imposing any conditions on the transfer of the monies in the DOC Opioid Remediation Fund.
42. Stipulates that, if the AG does not transfer the full amounts specified by July 8, 2026, the ADOA General Accounting Office must directly transfer the amount from the subaccount to the DOC Opioid Remediation Fund.
43. Exempts the AG monies from lapsing.
44. Continues to defer $800,727,700 in Basic State Aid (BSA) and additional state aid (ASA) payments from ADE in FY 2027 until after June 30, 2027, but no later than July 12, 2027, and excludes charter schools and school districts with a student count less than 4,000 pupils from the deferral.
45. Requires ADE to make the deferral by reducing the apportionment of state aid for each month in the fiscal year by the same amount.
46. Requires ADE to disburse the FY 2028 appropriations of $800,727,700 to the counties for the school districts starting July 1, 2027, and no later than July 12, 2027, in amounts equal to the reductions in the apportionment of BSA and ASA.
47. Requires school districts to include, in the revenue estimates used for computing FY 2027 tax rates, the deferred appropriation monies that the districts will receive.
Statewide Adjustments (Sec. 113 - 114)
|
Area of Adjustment |
GF |
OF |
Total |
|
Employer Health Insurance Contribution Reduction |
$(194,788,900) |
$(45,788,900) |
$(240,665,300) |
|
Employer Health Insurance Contribution Increase |
$228,363,200 |
$55,000,000 |
$283,363,200 |
|
State Fleet Operations Adjustment |
$(5,205,900) |
$10,000 |
$(5,195,900) |
|
State Fleet Replacement |
$(2,422,400) |
$(2,700,000) |
$(5,122,400) |
|
Agency Risk Management |
$(19,999,600) |
$(5,888,700) |
$(25,888,300) |
|
Agency Retirement Adjustment |
$(3,135,800) |
$(271,500) |
$(3,407,300) |
48. Outlines statewide adjustment instructions and procedures.
49. Outlines the FY 2027 individual agency charges totaling $1,798,500 for general agency counsel provided by the AG.
Miscellaneous (Sec. 115 - 125)
50. 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.
51. Contains various reporting requirements.
52. Defines terms.
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Initials DS HB 4138
5/11/2026 Page 0 Vetoed by the Governor
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