State Agencies Demand Bigger Budgets, Regents Lead the Charge

Most of Arizona’s state agencies are seeking to regain funding cuts from earlier this year, as indicated by their budget requests for fiscal year 2026. These submissions have been directed to the Governor’s Office of Strategic Planning and Budgeting, despite lawmakers recently completing the fiscal year 2025 budget in June.

As agencies submit their proposals, many are aiming for substantial increases to fund essential objectives. These requests mark the beginning of a complex budget process, where Governor Katie Hobbs will utilize them to draft her budget proposal to the Legislature early next year. However, agencies are likely to receive far less than what they are requesting.

Hobbs expressed to the Arizona Capitol Times that thoughts on next year’s budget have occupied her since the current budget was signed. She noted the ongoing evaluation of agency budgets and anticipated revenue, emphasizing that the process remains a work in progress until the end of December.

The effectiveness of the budget cuts implemented this year remains uncertain, particularly in light of the state’s reported budget deficit due to lower-than-expected revenues. The latest report from the Joint Legislative Budget Committee highlights an increase in state revenues compared to last year, yet forecasts of a surplus are not guaranteed.

Despite the financial uncertainties, numerous agencies are requesting hundreds of millions of dollars from the state. Acknowledging economic conditions, some agencies have refrained from asking for increased funding, including the Department of Juvenile Corrections and the Department of Veterans Services.

Agencies such as the Arizona Commerce Authority and the Department of Health Services have yet to submit their budget requests, leaving uncertainties about their anticipated financial needs.

Among the notable requests, the Arizona Board of Regents has submitted a proposal for over $632 million to restore funding cut from its budget in June. This request aims not only to recover lost funds but also to provide support for new medical schools and scholarships. ABOR Chair Cecilia Mata emphasized the importance of this budget increase for educational opportunities in Arizona.

The Department of Economic Security has asked for an increase of over $302 million to manage rising caseloads among vulnerable populations. The agency anticipates that the termination of federal pandemic relief funding will impact its ability to adequately support child care access.

Notably, the Attorney General’s Office is the only agency requesting a reduction in funding for fiscal year 2026, anticipating a need for $4.7 million less than it received last year. This decision reflects adjustments in the agency’s financial strategy.

The Arizona Corporation Commission is seeking a restoration of $1.2 million from FY 2025, coupled with an additional $5.2 million to address staff salary concerns and turnover rates. The commission highlights the importance of retaining qualified staff, especially given a 20% annual turnover rate.

Similarly, the Judicial Branch is requesting funding to address staff salaries in light of a 15% turnover rate. This request includes around $4.3 million to enhance compensation and prevent potential layoffs of probation officers supervising a significant number of felons.

Lastly, the Arizona Department of Corrections, Rehabilitation and Reentry is asking for an additional $27 million to comply with a court order mandating improvements in prison conditions. This request addresses ongoing needs related to inmate care and operational costs.