Key Points: 

• State agencies submitted budget requests for fiscal year 2027

• Requests include salary increases, new task forces, advertising campaigns and more

• Hobbs has already warned agencies it will be a challenging budget year

Arizona’s state agencies have submitted their budget requests for fiscal year 2027 to Gov. Katie Hobbs, kicking off next year’s spending process. 

State agencies are asking the governor and Legislature to bankroll an array of new initiatives. Those include salary increases for state employees, a Human Trafficking Task Force, gambling prevention measures, advertising campaigns and more. 

But the FY2027 budget process has been complicated by federal spending and tax cuts enacted by President Donald Trump’s “Big Beautiful Bill” and the depletion of federal Covid recovery dollars. The Governor’s Office urged agencies in July to cap requests from the state’s general fund at no more than a 2% increase from what they were appropriated from the general fund in the FY2026 budget.

“We’re facing a tough budget year and we’re faced with a lot of uncertainty coming from the federal government,” Hobbs said. “We want to act responsibly and ensure that we’re safeguarding taxpayer dollars and not increasing budgets to a level that’s not sustainable, knowing that we’re going into a tough year.”

Sen. John Kavanagh, who chaired the Senate Appropriations Committee and shepherded the budget through this year, said he expects the state will have little to no extra funds next year. Though, he said, that could be a blessing in diguise.

“It makes it easier,” Kavanagh said. “You can’t argue over nothing.” 

Hobbs’ office will use the agency budget requests to create the executive budget she will present to the Legislature in January 2026 for the FY2027 budget year. Funding would begin next July 1. Here is what agencies are hoping to get from the state budget next year.

Attorney General

Attorney General Kris Mayes outlined six budget priorities that will require an additional $6.5 million from the general fund in FY2027.

First, Mayes is asking for $1.9 million per year from the general fund and $3.4 million per year from other fee-based funds at her disposal to support a 5% salary increase for attorneys, agents and legal staff. 

Mayes’ office is also hoping to use $1.7 million from the general fund to create nine new positions to support fentanyl prosecutions, which are on the rise in the state. The proposed three prosecutors, two investigators and four support staff “will allow the AGO to prosecute more fentanyl distributors and reduce case backlogs, accelerate charging decisions, and increase conviction rates.” 

The attorney general also wants $2.3 million from the general fund and ten new staff positions to create a Human Trafficking Task Force. It would focus on identifying and rescuing victims, coordinating investigations with other jurisdictions, prosecuting traffickers and connecting survivors with care and support. 

Secretary of State

Secretary of State Adrian Fontes did not abide by Hobbs’ 2% general fund increase limit and is asking for nearly $21 million for ten different funding priorities in both FY2026 and FY2027. 

Fontes’ biggest ask is $9.4 million and seven new staff positions in the current fiscal year to address aging cybersecurity infrastructure, which led to a cyberattack on the agency’s candidate portal earlier this year. He is also requesting $3.7 million per year starting in FY2027 for cybersecurity.

Fontes also wants $8 million to administer the 2026 election, $350,000 for a security detail for himself and $750,000 for conflict counsel when Mayes’ office cannot represent his agency, among other administrative requests. 

The Corporation Commission

The Arizona Corporation Commission, tasked with regulating the state’s utility companies, railroads, pipelines and securities, is asking for around $825,000 from the state’s general fund in FY2027. The money will go toward a new staff position dedicated to federal energy issues and upkeep for the commission’s online document filing system. 

The commission also offered three different proposals for funding its Railroad Safety Program, which it noted has been underfunded for more than a decade. According to the commission’s budget request, the Railroad Safety Program has been supplemented by the Utility Assessment fee, which is meant to fund the commission’s utilities division.

Additionally, the commission plans to ask the Legislature to increase the limit of the Utility Assessment. The fee, which collects 0.25% of operating revenues over $500,000 from the state’s utilities, funds about half of the commission’s operations and the Residential Utility Consumer Office. 

In its budget request, the commission said the current Utility Assessment is no longer bringing in enough revenue to sustain the commission’s utility division and RUCO, a separate agency dedicated to representing utility customers in rate cases. 

The Judicial Branch

Arizona’s courts are also asking for salary increases for their employees, according to the budget request from the Administrative Office of the Courts. It is asking for $5.8 million per year from the general fund to implement a 10% salary increase across the state court system. 

“Our latest review found that Judicial Branch employees are paid 19% below the comparable court job market, making it increasingly difficult to recruit and retain a skilled workforce,” the budget request notes.

In addition to the salary increases, the courts want $100,000 more per year for security, $15,000 more per year to operate the Commission on Judicial Conduct and a one-time $10.1 million appropriation for probation officer payroll. 

The Department of Environmental Quality

The agency tasked with keeping Arizona’s water, air and environment clean sent a laundry list of requests to Hobbs’ office, detailing 18 different funding priorities for FY2027. Its largest ask is a $9.5 million ongoing request to fully fund the Water Quality Fee Fund, which provides money to several different areas of the department.

ADEQ is also asking for around $3.9 million to backfill Clean Air Act funding that was cut by the federal rescission package passed in July.

“These reductions would likely result in Arizona not meeting multiple requirements of the Clean Air Act,” the budget request states. 

The Department of Gaming

The Department of Gaming isn’t seeking an increase in its general fund appropriation for FY2027, but it will ask the Legislature to expand its spending authority so it can develop new programs to prevent problem gambling.

According to ADG’s budget request, it wants to spend nearly $1 million to expand programs at the Division of Problem Gambling. ADG has several ideas for support programs, including a peer recovery program, financial counseling services and an Arizona College Athlete Wellbeing Program.

The funding would come from the department’s Division of Problem Gambling Sub Fund, which is collected from the gambling industry and tribal gaming enterprises. 

The Department of Water Resources

After lawmakers and Hobbs came to a compromise on Ag-to-Urban groundwater legislation this session, the Department of Water Resources says it will need around $300,000 from the state’s general fund and three new staff positions to implement the program. 

ADWR’s budget request notes that it will likely need more than 20 new staff positions in the coming years to help landowners transition their farm land into urban land that can be used for housing. 

The department is also requesting $200,000 from the general fund and two new staff positions to support the regulation of the state’s seven Active Management Areas, basins where groundwater usage is heavily monitored and governed.

The Department of Forestry and Fire Management

The department charged with fighting Arizona’s wildfires is sounding the alarm on its lack of funding, requesting $27 million in general fund money and changes to state statutes to ensure it can continue fire suppression efforts.

The request details a “funding cliff created by state statute” due to an outdated funding formula and requirements that prevent the Legislature from appropriating more than $3 million from the state general fund into the fire suppression revolving fund. 

“Without sufficient funding to reimburse vendors and fire department cooperators, wildfire suppression activities would be severely hampered as most would refuse to continue to help if they weren’t getting reimbursed,” the budget request states. 

Arizona State Lottery

The state lottery system is entirely funded by the sale of lottery tickets and scratchoff games, but the agency is asking the Legislature to approve $6 million in spending from those revenues for advertising its products. According to the Lottery’s budget request, its advertising budget has not increased in the past 15 years. 

“The requested marketing funds are projected to generate up to an additional $26.6 million in transfers and will further the Lottery’s mission of maximizing funding for state programs,” Lottery Executive Director Alec Thomson said in the request.