The General Fund Hunger Games
Let the budget games begin … The ESA divide widens … And you can redownload Disney+.
About three months ago, Arizona’s lawmakers nearly shut down the state government amid a budget standoff.
The process for next year’s budget has already started, and there is a lot more to figure out this time around.
The fiscal year 2027 budget1 has to account for up to an estimated $400 million in new costs that President Donald Trump’s “One Big Beautiful Bill,” or H.R. 1, passed on to Arizona.
While we won’t see Gov. Katie Hobbs’ budget proposal until January, each state agency had to submit its budget request at the beginning of this month.
Hobbs’ budget director told state agency heads in July to limit their General Fund budget increases to no more than 2% over what they were allocated in the budget passed this year.
The General Fund is the state’s main checking account, primarily funded by income and sales taxes. A handful of agencies get the lion’s share of it.
The FY26 budget that passed this year, for example, allocated $17.6 billion in General Fund spending. Three departments — Education, AHCCCS and Economic Security — received more than 70% of it.
That doesn’t leave much room to maneuver.
Next fiscal year, however, a lot of agencies have to contend with millions in lost federal funding, and they want to use the General Fund to make up for it.
State agencies rarely get all the spending items they ask for in their budget requests. But the Legislature’s financial experts at the JLBC provide a single, standardized number for each request: the additional General Fund dollars an agency is asking for.
That figure is a quick way to see which agencies are in the greatest need, or which are the boldest in asking for more money during a shaky budget year.
Here are the top five requestors.
AHCCCS
FY27 General Fund request:2$3 billion
General Fund increase:3 $429.9 million
Arizona’s Medicaid program isn’t just bracing for cuts under H.R. 1 — it’s absorbing the fallout of federal rule changes that force costly new compliance rules.
AHCCCS administers Medicaid to low-income Arizonans, and about 2 million people are currently enrolled.
But H.R. 1’s new Medicaid rules could leave tens of thousands without AHCCCS and blow a multi-million-dollar hole in Arizona’s Medicaid funding once they’re fully enforced.
AHCCCS requests $18.8 million for new H.R. 1 regulations alone.
Under the new rules, AHCCCS has to redetermine eligibility for the expansion population (those who qualify for Medicaid under the Affordable Care Act) every six months.
The expansion population will also be subject to new work requirements, which is a lot of administrative work for state employees. About $11.6 million of the agency’s General Fund ask is to hire 320 full-time employees.
H.R. 1 has a lot of other provisions that will require a complete rewiring of the Medicaid system, like lowering the federal match rate and capping how much states can pay providers or tax hospitals. For now, AHCCCS’s immediate budget ask is to cover the staff and systems needed to police eligibility under the new rules.
Universities
General Fund increase: $279.3 million
Arizona’s three public universities each have their own budget proposal, but the JLBC grouped them together as the second-largest General Fund requestor.
Arizona State University’s FY27 budget request isn’t posted online, but the University of Arizona wants about $310 million total from the General Fund, and Northern Arizona University requested about $180 million total4.
The Arizona Promise Program, a guaranteed scholarship for state residents and one of Hobbs’ top priorities, accounts for $50 million of the universities’ collective General Fund request. Another $55 million is for water research and education programs.
Department of Economic Security
FY27 General Fund request: $2.1 billion
General Fund increase: $257.5 million
As Arizona’s catch-all social services agency, DES is poised to take one of the hardest hits from looming federal cuts.
The agency handles eligibility and enrollment functions for some Medicaid groups, so it will have to redetermine eligibility alongside AHCCCS. The feds are also imposing new work and eligibility requirements for the SNAP (food stamp) program that DES runs.
DES is asking for $42 million to cover increased SNAP costs.
Under H.R.1, Arizona’s error rate in processing SNAP benefits affects how much of the program’s overhead the state has to cover. DES is asking for another $26 million this year to hire staff to cut down on mistakes before the bill gets bigger.
The agency also wants more than $13 million to backfill federal funding for Adult Protective Services.
Department of Education
FY27 General Fund request: $8.5 billion
General Fund increase: $212.5 million
Superintendent of Public Instruction Tom Horne doesn’t have many incoming federal changes to worry about, but he’s still asking for the third-largest General Fund increase of all state agencies.
Horne wants $180 million for the School Safety Program, which gives grants to schools for safety officers, counselors and social workers. State auditors found in August that the Education Department didn’t properly oversee the program.
About $2 million of the General Fund request is for 12 employees to review Empowerment Scholarship Account purchases.
Another $8.5 million is to backfill expiring federal funding for Project Momentum, which helps improve school districts’ performance. And $7 million is to cover more expensive state assessment contracts.
Corrections
FY27 General Fund request: $1.7 billion
General Fund increase: $111 million
The Corrections Department’s largest General Fund spending request is nearly $39 million for inflation-based increases in healthcare costs for inmates. The department contracts with NaphCare, a private prison healthcare provider, and is under a federal court injunction to keep its healthcare staffing at certain levels.
Corrections also wants to spend $35 million on “statewide security infrastructure” like better Wi-Fi, security cameras and Tasers.
The department asked for another $27 million to give 4% raises to corrections workers to address high turnover.
E-S-A not E-A-S-Y: An East Valley woman who uses a voucher for her disabled son is calling for legislators to make cuts to the state’s Empowerment Scholarship Accounts as a way to blunt looming cuts and service reductions to Arizona’s Division of Developmental Disabilities, 12News’ Craig Harris reports. Meanwhile, Wickenburg Unified School District decided students who receive ESA funds will not be allowed to participate in school sports or activities, writes the Wickenburg Sun’s Taylor Schwartz-Olson. As ESAs continue to cause a stir across the state, Substacker Fourth Estate 48 found private Gilbert Christian Schools and Northwest Christian School collected more than $16 million total this year.
LOOKOUT basic liberals: LGBTQ+ voters in Southern Arizona have been raising questions about how Daniel Hernandez, an out gay man, used identity as a political platform, and whether his CD7 primary campaign actually represented the views most LGBTQ+ residents in the region hold, LOOKOUT’s Tori Gantz reports. A LOOKOUT review from April found LGBTQ+ residents favored more progressive ideas, like those of Adelita Grijalva and Deja Foxx.
There’s money in superintendent-ing: An ABC15 analysis of school administrator contracts and salary data from across the state found one state superintendent could make almost half a million dollars this year in salary and other compensation, writes Melissa Blasius. A different analysis from the Goldwater Institute found there are as many as ten different ways school districts hide the true level of pay for superintendents.
Kids can’t read: Phoenix libraries have moved sex-ed and puberty books to adult shelves, Stacy Mantle reports for the Daily Independent. The Maricopa County Library District’s decision has reignited debates over censorship, parental rights and access to information. Sam Helmick, the president of the American Library Association, warned that the restriction or removal of books can be a threat to freedom.
Water is a privilege: The U.S. Bureau of Reclamation decided Arizona will see an 18% reduction of its Colorado River water allocation next year, KTAR’s Heidi Hommel reports. The state currently gets around 40% of its water supply from the Colorado River, and the 2026 cut will mainly impact agriculture. Low reservoir levels have led to continuous cuts over the past several years.
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In other, other news
ASU plans to experiment with facial recognition system to streamline student football admission (Dane Palmer / Cronkite News) … The University Club, a favorite local haunt for politicos and other movers and shakers, has closed after decades as a successful members-only club in Phoenix (Lauren Gilger / KJZZ) … Kris Mayes joined a coalition of attorneys general opposing a proposed class action settlement with Capital One (Herald Review) … Tempe has been a trend setter for cities testing wastewater for early warnings on opioid use (Tufan Neupane / Cronkite News).
Every legislative session has its fair share of questionable bills, proposals and talks. But once in a blue moon, lawmakers pull off something surprisingly sensible.
Tomorrow, the vast majority of the 265 bills that Gov. Katie Hobbs signed into law will become active.
That even includes some transparency laws like this one.
Speaking of new laws taking effect this week, Skywolf, our legislative tracking software, is doing a series of webinars you can pop into to hear about how it can help you track bills and make sense of the madness at the Capitol.
Today, we’ll show you a workflow designed specifically for policy professionals working at municipalities.
Tomorrow, we’ve got a webinar designed specifically for associations.
Jimmy Kimmel was back on the air on Tuesday — for most of the country, at least.
If you didn’t catch the show, it’s worth a few minutes of your time to see him gloat and muse on the threat to free speech that his brief removal represented.
“This show is not important. What is important is that we get to live in a country that allows us to have a show like this,” he said.
The show also included some great cuts of Donald Trump talking about the importance of free speech, juxtaposed against clips of Trump saying Kimmel got canceled because he had “no ratings.”
“I do tonight,” Kimmel shot back to wild applause.
The late-night talk show host also cracked that he had to agree to one condition to return: He had to read a statement from Disney.
“To reactivate your Disney+ and Hulu account, open the Disney+ app on your smart tv,” he joked.
But the threat against free speech from Trump isn’t over, Kimmel noted. Trump still wants to fire him, his staff and other late-night hosts.
And it doesn’t stop with the comedians — the Trump administration is suing and bullying journalists, most recently by creating a new policy requiring journalists with Pentagon credentials to sign a pledge promising not to report information that the Pentagon doesn’t approve.
“I know it’s not as interesting as muzzling a comedian, but it is so important to have a free press and it is nuts that we’re not paying more attention to it,” he said.
That’s the budget lawmakers need to approve next year, which will take effect on July 1, 2026.
This is the total amount of General Fund money an agency requested for FY27, which includes the baseline amount they were already approved for in this year’s budget.
This is the amount of not-yet-appropriated General Fund money an agency requested for FY27.
That’s each university’s total General Fund request for FY27, which includes what they were already allocated on top of the increase they’re requesting.
Congratulations to Jen Fifield on her move to Pro Publica. She has been a steady, reliable source for Arizona voting information ever since her days with the Republic. Good to see the whole nation will benefit from her expertise and integrity.
Looking at District schools budgets and charter, ESA, are completely different. The requirements for district schools is much more rigorous. That costs money.