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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
VETOED
FACT SHEET FOR H.B.
4147/S.b. 1840
2026-2027; human services.
Purpose
Makes statutory and session law changes relating to human services 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.
H.B. 4147 contains the budget reconciliation provisions for changes relating to human services.
Provisions
Supplemental Nutrition Assistance Program (SNAP) Payment Error Rate
1. Requires the Department of Economic Security (DES), by December 30, 2030, to reduce the SNAP payment error rate to no more than three percent.
2. Requires DES, beginning in FY 2027, to submit a quarterly report to the Legislature, within 30 days after the end of the quarter, detailing DES's monthly progress towards reducing the payment error rate, including strategies used and barriers encountered.
3. Requires DES, if it fails to meet the annual interim targets or final target, to:
a) submit a corrective action plan to the Legislature within 60 days that includes an analysis of why the targets were not met and timeliness for correcting the payment error rate;
b) pay 50 percent of any federal liabilities imposed due to the excess payment error rate, with the remaining federal liabilities being paid out of the state General Fund; and
c) implement a corrective action plan.
4. Requires the Auditor General, by November 15, 2027, to complete a special audit determining what factors contributed to the payment error rate, including recommendations to reduce the payment error rate.
5. Specifies that, if DES fails to comply with the Auditor General's corrective plan, DES administrative funding is reduced by 10 percent until resolved.
6. Directs DES to implement the Auditor General's recommendations within 12 months, unless the recommendations are waived by the Joint Legislative Budget Committee.
7. Allows the Auditor General to request that DES submit a written status report regarding implementation of the special audit recommendations.
8. Allows the Legislature to allocate additional funding for program improvements if DES corrects the payment error rate ahead of schedule.
9. Repeals SNAP payment error rate requirements on January 1, 2033.
SNAP Fund
10. Establishes the SNAP Fund consisting of monies collected by DES from federal deposits under SNAP.
11. Specifies that monies in the SNAP Fund are continuously appropriated.
12. Requires DES to deposit all federal monies received under SNAP, including the federal administrative share and the federal benefit share, in the SNAP Fund before expenditure.
SNAP Eligibility and Enrollment
13. Prohibits DES from establishing a gross income limit of more than 185 percent of the federal poverty level for SNAP recipients who are in eligible households that are categorically eligible for public assistance or general assistance.
14. Requires DES, when determining or evaluating SNAP eligibility, to:
a) enter into a data matching agreement with the Arizona Department of Revenue (ADOR) to identify households with lottery or gambling winnings of $3,000 or more; and
b) treat the data obtained as verified on receipt, as permissible under federal law.
15. Requires DES, to the extent that ADOR data is not verified on receipt, to refer households with lottery or gambling winnings that are equal to or greater than the resource limit for elderly or disabled households as defined under federal law to DES for further investigation.
16. Requires DES, on at least a monthly basis, to review information that identifies individuals who have had a change in circumstances that may affect SNAP eligibility as provided by:
a) the Department of Health Services (DHS); and
b) the Arizona Department of Corrections, Rehabilitation and Reentry.
17. Requires DES, on at least a monthly basis, to review DES information that identifies individuals who have had a change in circumstances that may affect SNAP eligibility, including potential changes in residency as identified by out-of-state electronic benefit transfer (EBT) card transactions.
18. Requires DES, on at least a quarterly basis, to review DES's information that identifies individuals who have had a change in circumstances that may affect SNAP eligibility, including potential changes in residency, unemployment benefits, employment status or wages.
19. Requires DES, on at least a quarterly basis, to review information that is provided by ADOR and that identifies households that have had a change in circumstances that may affect SNAP eligibility, including potential changes in income, wages or residency, as identified by tax records.
20. Requires DES to post on the DES website on a quarterly basis the following aggregate amounts obtained from noncompliance and fraud investigations related to SNAP, excluding confidential and personally identifiable information:
a) the number of SNAP cases that were investigated for international program violations or fraud;
b) the number of SNAP cases that were referred to the Attorney General's Office for prosecution;
c) the amount of improper payments and expenditures;
d) the amount of monies recovered;
e) the amount of monies spent for improper payments and ineligible recipients as a percentage of cases that were investigated and reviewed; and
f) the amount of monies spent by the EBT card that occurred outside of Arizona, categorized by state.
21. Requires DHS and DES, to assess a recipient's continued eligibility for SNAP, to review:
a) earned income information, death registration information, incarceration records, supplemental security income information, beneficiary records, earnings information and pension information that is maintained by the U.S. Social Security Administration;
b) income and employment information that is maintained in the National Directory of New Hires database and child support enforcement data that is maintained by the U.S. Department of Health and Human Services;
c) payment and earnings information that is maintained by the U.S. Department of Housing and Urban Development; and
d) national fleeing felon information that is maintained by the Federal Bureau of Investigation.
22. Requires DES to review an individual's case if DES receives information that identifies an individual who is enrolled in SNAP and indicates a change in circumstances that may affect that individual's SNAP eligibility.
EBT Transactions
23. Requires DES to use the data from an EBT card to identify any individual who has made a purchase exclusively out-of-state over a 90-day period.
24. Requires DES to contact the identified individual within 30 days to determine whether that individual resides in Arizona.
25. Requires DES to terminate assistance, including SNAP benefits, to the individual within 30 days after contact if the individual does not reside in Arizona.
26. Requires DES, within 15 days after the individual's assistance has been terminated, to refer the individual to the U.S. Attorney's Office for the district of Arizona.
Temporary Assistance for Needy Families (TANF)
27. Continues to require DES in FY 2027 to screen and test each adult recipient who:
a) is eligible for TANF cash benefits; and
b) DES has reasonable cause to believe engages in the illegal use of controlled substances.
28. Continues to render any TANF recipient who tests positive for the use of a controlled substance that was not prescribed for the recipient by a licensed health care provider as ineligible to receive TANF benefits for a period of one year.
Miscellaneous
29. Defines terms.
30. Becomes effective on the general effective date.
Governor's Veto Message
The Governor indicates in her veto message that H.B. 4147, and this version of the FY 2027 state budget as a whole, would cause Arizona to default on its debt obligations, endanger vulnerable children, cut public safety funding and provide tax breaks for billionaires, data centers and special interests. The Governor outlines her specific concerns, including cuts to funding for specified agencies and programs, and invites the Legislature to return to the negotiating table.
House Action Senate Action
APPROP 4/28/26 DP 11-7-0-0 ATT 4/28/26 DP 6-4-0
3rd Read 4/29/26 33-20-7 3rd Read 5/4/26 16-12-2
(H.B. 4147 was substituted for S.B. 1840 on 3rd Read)
Vetoed by the Governor 5/5/26
Prepared by Senate Research
May 7, 2026
MM/SDR/hk