AZ Legislative Update – Senate Appropriations Passes Bipartisan FY 2026 Budget Package
Posted by [email protected] on Jun. 18, 2025 / Subscribe 0
Yesterday, the Arizona Senate Appropriations Committee passed the bipartisan FY 2026 budget which was drafted in coordination with Governor Katie Hobbs.
The proposed $17.6 billion package, structured as 16 separate bills, is approximately $300 million more than the House GOP budget plan, largely due to increased Medicaid funding.
Key funding areas include:
- Medicaid & Health Care
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- Additional $260 million in Medicaid, compared to the House version.
- No new Medicaid work/education mandates, rejecting the House’s more restrictive proposal.
- Eliminates proposed $100 million hospital tax extension, easing cost pressures on providers.
- AHCCCS is exempt from rulemaking for two years to implement a hospital assessment program, effective retroactively from July 1, 2024
- A $15 million state General Fund appropriation boosts the outpatient behavioral-health fee schedule by 5%, with reporting to JLBC due by Nov 15, 2025
- Continues 12‑month postpartum Medicaid coverage (initially approved under a waiver in April 2023).
- Additional $260 million in Medicaid, compared to the House version.
- K-12 Education
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- $100 million increase in total K-12 funding over the House, including boosts to basic aid, maintenance, and instructional supports.
- Basic State Aid receives a meaningful bump – supporting districts’ core instructional budget
- Resumes funding for building renewal grants – targeted at school maintenance, textbooks, technology, and transportation.
- $3.8 million allocated for School Meals Grants
- $15 million added to the Arizona Teachers Academy to train and recruit new educators
- $3 million one-time funding to support dual-enrollment programs administered via the Office of Economic Opportunity, expanding access to college credit while still in high school.
- $100 million increase in total K-12 funding over the House, including boosts to basic aid, maintenance, and instructional supports.
- Adult Education
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- $7 million allocated specifically for adult education programs absent from the House plan
- $7 million allocated specifically for adult education programs absent from the House plan
- Childcare
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- $40 million in new child-care funding targeting low-income working parents
- $40 million in new child-care funding targeting low-income working parents
- Homelessness
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- Includes funding for homelessness initiatives requested by the Governor
- Includes funding for homelessness initiatives requested by the Governor
- Public Safety & Border Security
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- Raises for Department of Public Safety personnel and funding for enhanced border security efforts
- Raises for Department of Public Safety personnel and funding for enhanced border security efforts
- Transportation
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- Fully funds road infrastructure including the Riggs Road overpass and broader Interstate 10 improvements
- $1 million dedicated to defend Arizona’s share of Colorado River water rights
The Senate bipartisan budget package will go before the full Senate tomorrow where it is expected to easily pass and then it will be transmitted to the House for consideration as early as Thursday.
While House Republican leadership prefer their version of the budget, we do anticipate that there should be enough support and political pressure to get the bipartisan Senate version through the House and hopefully end the session, sine die later this week.
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