Key Points:

• State agencies request salary increases for staff in their fiscal year 2027 budget requests

• Gov. Katie Hobbs’ proposal for a 2% to 3% raise for all state employees was rejected earlier this year

• Agencies say years of rejected raise requests are leading to high turnover rates and low employee morale

Several state agencies are requesting salary increases for their staff after a proposal for a 2% to 3% raise for all state employees fell through earlier this year.

According to agency budget requests submitted to the Governor’s Office for fiscal year 2027 — which starts July 1, 2026 — several state entities are requesting employee salary increases ranging anywhere from 4% to 10%. 

All of the agencies asking for salary increases cited high turnover rates and low employee morale, with some requests noting that employees are actively seeking employment elsewhere or working two jobs to meet basic needs. Smaller agencies, like the Board of Dental Examiners and the Arizona Historical Society, are particularly struggling with low salaries. 

“The (Board of Dental Examiners) staff are currently disappointed due to the lack of pay increases, the increasing workload, and reading the news about other state agency salary increases that rely on (the board’s) shared 15% to the general fund,” the board’s request states. “While staff members continue to work overtime, when available, this has not alleviated the issues. They are tired and frustrated by the lack of resources.”

Gov. Katie Hobbs proposed enacting a 2% to 3% raise for all state employees in her executive budget proposal, but the raise was not included in the budget she ultimately signed for fiscal year 2026. Hobbs told the Arizona Capitol Times that it is too early to speak of specific budget plans for next year, but state employee pay is something she is always looking to increase.

“This is a huge challenge and one of the things that keeps me up at night,” Hobbs said. “My message to state employees is that I appreciate the work you do on behalf of Arizonans every day. I know it is not easy, and we’re doing what we can to make sure that you’re compensated for what you do.”

Many of the agencies asking for salary increases for their employees are fee-funded and would use the revenue from those fees to fund pay bumps, avoiding any costs to taxpayers. Requests for a 5% increase at the Board of Dental Examiners and 10% increases at the Board of Pharmacy and the Board of Chiropractic Examiners would not dip into the state’s general fund, which is supported by income and sales taxes. 

However, excess revenue generated by the boards goes into the general fund, meaning any increase funded by fees would take money away from the revenue lawmakers and the governor use to fund new initiatives or cover costs at other agencies. And Hobbs is already warning that there will not be much general fund money to go around next year with federal spending cuts and the dwindling of Covid recovery funds. 

That isn’t stopping agencies from asking for pay raises financed by the state’s general fund though. 

The Arizona Historical Society’s request for a 10% increase would cost around $310,500 annually from the general fund. But AHS says raises are necessary because it estimates one quarter of its staff will resign without them.

“Many of the agency’s staff have been forced into secondary employment to meet their basic needs,” AHS’s request states.

Other, larger agencies are also asking for general fund money to support staff salary increases. The Department of Juvenile Corrections and the Department of Corrections, Rehabilitation and Reentry are asking for 4% raises, while the Attorney General’s Office and the Administrative Office of the Courts are asking for 5% and 10% raises respectively.

ADCRR submitted the largest general fund request for salary increases at $26 million. The Administrative Office of the Courts, which encompasses the Superior Court, Court of Appeals and Supreme Court, asked for one of the largest pay bumps at a cost of $5.8 million to the general fund. 

The AOC said in its budget request that many of its staff are currently underpaid.

“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 AOC request noted. 

Almost all of the agencies asking for salary increases attribute low employee pay to a combination of inflation, the Covid pandemic and other economic factors. But some agencies noted that their requests for pay increases have been ignored for years, allowing the cost of living to outpace salaries. 

The last statewide salary increase of 10% was enacted in fiscal year 2023. State troopers and firefighters saw a 5% and 10% pay raise respectively in the current fiscal year. 

The requests for state employee salary increases also come after lawmakers discussed raising their own pay during the 2025 session. Sen. John Kavanagh, R-Fountain Hills, championed a measure that would have asked voters to approve raising lawmaker salaries from $24,000 to $48,000, while other lawmakers also offered proposals for increasing their pay. 

But most proposals for pay increases for lawmakers have also gone ignored for years, making it unlikely that either elected officials or state employees can expect a raise anytime soon.