Enacted Budget – Fiscal Year 2027
Arizona Governor Katie Hobbs signed the state’s fiscal 2027 budget into law on June 13. General fund spending in the enacted budget totals $18.29 billion in fiscal 2027, including $17.33 billion in ongoing expenditures and $952 million in one-time expenditures. This reflects a 3.1 percent increase in general fund spending, including a 4.8 percent increase in ongoing expenditures, compared to fiscal 2026 levels. The enacted budget assumes ongoing net general fund revenue, after tax conformity, newly enacted revenue adjustments and urban revenue sharing, of $17.57 billion, a 5.2 percent increase over fiscal 2026 ongoing net revenue, and a beginning balance of $773 million. After accounting for one-time revenues and transfers, the fiscal 2027 enacted budget projects a $42 million general fund ending balance and an ongoing, or structural, balance of $239 million.
The bipartisan Arizona First budget provides tax relief for working families, includes a three-year moratorium on new data center tax incentives, and makes targeted investments in border security, health care, public safety, education, and water security, according to the governor. The enacted budget implements a higher standard deduction, creates a new senior deduction, and eliminates income taxes on tips and overtime, as well as expands the child tax credit next year. For education, the budget increases weighted funding for low-income students and other K-12 assistance, as well as provides support for school meals, school facilities and building renewal grants, and other targeted education programs. For public safety and criminal justice, the budget continues correctional officer stipends as ongoing funding, funds correctional officer body cameras, backfills Victims of Crime Act federal funding and supports county reentry assistance. The budget also supports young adults transitioning out of foster care, funds childcare subsidies, and makes investments to protect developmental disability services. For health care, the spending plan funds administrative capacity to respond to new federal Medicaid eligibility requirements, as well as rural hospital aid and the 9-8-8 behavioral crisis hotline. The budget also increases cybersecurity state and local grants, continues to fund cooling centers for heat relief, allocates funds for wildfire suppression efforts, and deposits funds into the Colorado River Litigation Fund. To achieve cost savings, the enacted budget reduces unfunded vacant FTE positions and makes a one-time 2.5 percent operating reduction for non-exempt state agencies.