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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
capital outlay; 2026-2027; appropriations
Purpose
Makes session law changes relating to capital outlay necessary to implement the FY 2027 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.
S.B. 1834 contains the budget reconciliation provisions for changes relating to capital outlay.
Provisions
Building Renewal
1. Appropriates the following amounts in FY 2027 to the following state agencies from the specified funds for major maintenance and repair activities for state buildings:
|
Agency |
Fund Source |
Amount |
|
Arizona Department of Administration (ADOA) |
Capital Outlay Stabilization Fund (COSF) |
$16,800,000 |
|
Arizona Department of Corrections, Rehabilitation and Reentry (ADCRR) |
ADCRR Building Renewal Fund |
$5,864,300 |
|
Arizona Game and Fish Department (AZGFD) |
AZGFD Fund |
$1,932,900 |
|
Arizona State Lottery Commission |
State Lottery Fund |
$237,800 |
|
Arizona Department of Transportation (ADOT) |
State Highway Fund (SHF) |
$22,990,400 |
|
State Aviation Fund |
$394,900 |
2. Requires ADOA to allocate appropriated monies to state agencies for necessary building renewal.
3. Reduces the ADOA appropriation for building renewal by the difference between the appropriated monies and the balance in the COSF, if monies in the COSF are insufficient to fund the $16,800,000 appropriation.
4. Allows ADOA to use monies appropriated for building renewal in FY 2027 for building projects related to retrofitting facilities for space consolidation initiatives.
5. Prohibits ADCRR from spending any of the FY 2027 appropriation for building renewal on personal services or overhead expenses related to managing funded projects.
Statewide Highway Construction
6. Appropriates $432,663,000 in FY 2027 from the SHF to ADOT to:
a) plan and construct state highways, including the national system of interstate highways within the state, the state primary or secondary system, the county primary or secondary system and urban rural routes;
b) acquire rights-of-way; and
c) provide for the cost of contracted field administration and engineering on construction projects and debt service payments on bonds issued for highway construction.
7. Exempts the $432,663,000 appropriation to ADOT from review by the Joint Committee on Capital Review (JCCR).
8. Appropriates balances and collections in the SHF that exceed the specific amounts appropriated by the FY 2027 General Appropriations Act and Capital Outlay BRB to ADOT for authorized purposes.
9. Requires ADOT, by November 1, 2026, to report to the Directors of the Joint Legislative Budget Committee (JLBC) and the Governor's Office of Strategic Planning and Budgeting (OSPB) on:
a) ADOT's actual prior year, estimated current year and upcoming budget year highway construction expenses from all fund sources;
b) capital outlay information for FYs 2026, 2027 and 2028; and
c) ADOT's estimated outstanding debt principal balance at the end of FY 2028 and the estimated debt service payment amounts for each of FYs 2028 through 2031.
10. Requires ADOT's highway construction expenses report to:
a) include fund sources from bond proceeds and appropriated, federal, local agency, state highway and regional area road monies; and
b) be in the same format as the prior year unless the Directors of JLBC and OSPB have approved modifications to the format.
11. Requires ADOT's reported capital outlay information to be in the same format as tables two, three and seven of ADOT's capital outlay estimates in the FY 2026 Appropriations Report.
12. Requires ADOT's report on estimated outstanding debt principal balance and service payments to:
a) include SHF statewide construction bonds, Highway User Revenue Fund bonds, Maricopa and Pima Associations of Governments controlled access bonds, Maricopa Regional Area Road Fund bonds and grant anticipation notes; and
b) be comparable to the information reported for ADOT in the FY 2026 Appropriations Report.
Airport Planning and Development
13. Appropriates $29,048,900 from the State Aviation Fund in FY 2027 to ADOT to plan, construct, develop and improve state, county, city or town airports, as determined by the State Transportation Board.
14. Exempts the $29,048,900 appropriation to ADOT from JCCR review.
15. Appropriates any balances and collections in the State Aviation Fund that exceed the specific amounts appropriated by the FY 2027 General Appropriations Act and Capital Outlay BRB to ADOT in FY 2027 for authorized purposes.
16. Requires ADOT, by December 31, 2026, to report to the JLBC staff on the status of all aviation grant awards and distributions.
17. Requires the report on aviation grants to delineate projects by individual airport and fiscal year, including any future-year commitments.
Miscellaneous
18. Appropriates $26,300,000 from the state GF in FY 2029 to the State Match Advantage for Rural Transportation Fund.
19. Transfers, by June 30, 2026, the FY 2026 reduction of $2,500,000 made to the appropriation for the rehabilitation of pavement along U.S. Route 191 between Armory Road and East Safford from the SHF to the state General Fund (state GF) for the support and maintenance of state agencies.
20. Appropriates $25,000,000 from the state GF in FY 2029, rather than FY 2028, to the Arizona Department of Veterans' Services to construct and establish a veterans' home facility in the northwestern portion of Arizona.
21. Allows ADOA to spend up to five percent of all capital outlay appropriations, excluding distributions to nonstate agencies, for expenditures for project management of building renewal and capital projects.
22. Prohibits ADOA from spending any other capital outlay appropriations:
a) on personal services or employee-related expenditures; or
b) for maintenance contracts on building components and equipment without JCCR review.
23. Prohibits any capital outlay appropriations from being spent for personal services or employee-related expenditures of state employees, excluding services provided as part of the Inmate Construction Program for correctional facilities.
24. Becomes effective on signature of the Governor.
Prepared by Senate Research
April 27, 2026
LMM/KS/hk