By Ethan Faverino |
Arizona Governor Katie Hobbs recently released her executive budget proposal for the 2026-2027 fiscal year, totaling $17.7 billion in general funding expenditures. The plan represents a $100 million increase over the $17.6 billion budget approval by the Arizona Legislature for the prior year. According to Glenn Farley, Research and Policy Director at Common Sense Institute Arizona (CSI), the proposal extends a pattern of substantial growth in state spending observed in recent years.
In a recent article, Farley told The Center Square, “This budget continues the trend of massive increases, really historically unprecedented increases in the state’s Medicaid-funded disability program run out of the Department of Economic Security (DES).”
Farley highlighted that the most significant expansions in the proposal stem from Arizona’s Medicaid program, K-12 education, and other health care-related initiatives.
A standout element is the marked growth in the state’s Medicaid-funded disability services program operated by DES, which supports home-based care for Arizonans with disabilities. Farley described these increases as “historically unprecedented,” noting a shift where the largest caseload surge now occurs in the DES disability program rather than traditional drivers like the Arizona Department of Education.
The budget addresses the needs of approximately 62,000 qualified Arizonans by expanding access to home-based services through adjusted subsidy structures for home-based providers. For FY26, the proposal allocates an additional $128.1 million from the general fund to DES, supplemented by $271.9 million in the Department Long Term Care System Fund (DLTCSF).
In FY27, ongoing funding increases include $298.8 million from the general fund and $673 million in the DLTCSF.
Farley noted that Governor Hobbs’ budgets have frequently relied on one-time funding sources rather than sustainable ongoing commitments, a pattern that limits long-term fiscal stability.
At the same time, the proposal conforms to recent federal adjustments under HR 1, which aim to restrain cost growth in Medicaid and SNAP by shifting greater responsibilities onto states.
While this alignment addresses federal requirements, it adds operational complexity without resolving underlying sustainability concerns in Arizona’s expanding health and disability services.
In contrast to the administration’s spending approach, Arizona Republicans introduced a tax relief plan earlier this year, projected to save Arizonans $1.1 billion over the next three years, which Governor Hobbs vetoed.
Farley, who served eight years under the prior administration, observed that budget finalization timelines have shifted under Hobbs from the typical time of March or April to May or June.
He further noted an unusually high volume of significant tax code changes this year, driven by federal updates to adjusted gross income calculations, including the addition of new deductions and exceptions.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
