Governor Katie Hobbs released her executive budget for Fiscal Year 2026 this afternoon. The Executive Budget provides more details about the priorities the Governor outlined in her State of the State address on Monday.
It is important to note with a split government -- Republican controlled State Legislature and Democratic Governor -- that the executive budget is simply an outline of the Governor’s priorities. It is the Arizona Legislature that appropriates funds each year through a group of budget bills. Once those bills are signed by the Governor, they become the adopted state budget.
Notable items in the proposed Executive Budget include:
Child Care
● $100 million for child care in Arizona
● $3 million ongoing from the General Fund to the Early Childhood Development and Health Board (First Things First) to develop a public-private partnership among the State, employers, and families that reduces the cost of child care for working-class families
● $3 million ongoing from the General Fund to DES to create a grant program for youth ages 5-12 for afterschool and summer programming for working-class families. Increase Child Care Availability
● $3.5 million one-time from ARPA to DHS to provide coaching to grow the number of licensed child-care providers and child care slots
● $1 million ongoing from the General Fund to create a corporate tax credit with a sunset date after five years for businesses that provide child care for employees
● $500,000 one-time from ARPA to the Office of Economic Opportunity to expand the Microbusiness Loan Program to include child-care providers to upgrade their facilities and support their operations.
Housing
● $13 million for mortgage assistance
Adult Education and K-12 schools
● $2 million one-time from the General Fund to continue the Community College Adult Education Workforce Development Program, which provides opportunities for Arizonans to earn a high school diploma, an equivalency degree, industry recognized credential, or a community college degree.
● $2 million one-time from the General Fund for the Continuing High School and Workforce Training program, which leads to the issuance of a high school diploma and industry-recognized credentials. The Executive Budget appropriates this funding to ADE.
● $2 million one-time from the General Fund for the Adult Workforce Diploma program, which helps individuals who are at least 21 years of age earn a high school diploma and develop critical employability and career technical skills.
● Repeal ESAs for $150 million estimated savings
Arizona Commerce Authority
● $10 million to the Arizona Competes Fund
● $5 million for the Major Events Fund
Arizona Office of Tourism
● Funding levels remain nearly the same as this year
Universities
● $20 million increase in funding
Water
● $9.5million deposit into the Water Quality Fee Fund to ensure the cleanliness and safety of surface water, groundwater, and drinking water
● $300,000 to fund the maintenance of operation of the State’s Continuously Operating Reference Stations (CORS) network that provides critical ongoing data for monitoring of Arizona’s water supplies
● $33million to the Long-Term Water Augmentation Fund annually in FY 25, FY 26, and FY 27 to continue investments in long-term water supply development initiatives for the State