By admin 
PHOENIX (AZFamily) — After months of negotiating, the Arizona budget battle is finally over.
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The Legislature passed the budget package, and Gov. Katie Hobbs is set to sign it.
In an emailed statement, Hobbs said the spending focuses on helping families and putting Arizona first with a $1.4 billion tax cut over four years.
“With this budget, we are cutting taxes for working families, raising the standard deduction and ending taxes on tips and overtime, delivering a tax deduction for seniors and expanding the child tax credit,” she said.
That tax cut includes $762 million as part of a “middle class tax cuts package” and $147.6 million in expanded child tax credit and child care tax credit, the governor’s office said.
Republicans said seniors will receive an additional $6,000 tax deduction and expanded charitable deductions.
Hobbs added the deal includes investment in border security, public safety and efforts to protect Colorado River rights.
“When I meet with Arizonans, they tell me they want their elected officials to work together to lower costs, create jobs, keep their communities safe, and expand opportunity and freedom in every corner of our state. Today, I’m proud to say that we have delivered,” Hobbs said.
Hobbs’ office said $2 million is set aside to fight the drug cartels through Operation Desert Guardian and $13.2 million is to help local border enforcement stop drug trafficking.
Republicans said Thursday the budget drops spending by $68 million and rejects or modifies over $3 billion in proposed executive tax increases, fees and spending over the next three years.
Senate GOP lawmakers said the budget makes Arizona the only state in the nation to fully adopt President Trump’s federal tax package at the state level.
While the state school voucher program remains untouched, the budget package includes a three-year pause on tax exemptions for new data centers totaling $57 million.
Senate Republicans said the budget includes strengthening the way Medicaid and SNAP eligibility is verified to reduce waste and make sure taxpayer money is protected.
“By adding stronger eligibility checks to Medicaid and SNAP, we’re making sure these programs work as intended and that every taxpayer dollar is spent with integrity,” said Senate Majority Leader John Kavanagh.
However, critics say the budget eliminates up to $10 million from social service programs, including food assistance, unemployment benefits and Meals on Wheels programs that serve seniors in need.
Dana Marie Kennedy, the state director for AARP Arizona, said the proposed state budget cuts could put thousands more at risk, including seniors.
The package also sets aside $112 million for corrections operations, including a 4% pay boost for correctional officers. Other services included in the budget are:
- $58 million for child safety operations, including foster care coaching and guardian contract costs
- $25.5 million for county support programs, probation services, reentry efforts and sheriff’s assistance
- $10 million for wildfire suppression efforts
- $4.3 million to help rural hospitals
“My bipartisan Arizona First budget will make our state stronger, safer, and more prosperous,” said Governor Katie Hobbs. “With this budget, we are cutting taxes for working families, raising the standard deduction and ending taxes on tips and overtime, delivering a tax deduction for seniors and expanding the child tax credit. We’re investing in public safety and border security to keep our communities safe and disrupt cartel operations. We are ensuring our state is prepared to fight wildfires and giving Arizona the resources we need to fight for our Colorado River water. We protected funding for public education while delivering free school meals for the children of working class families and protecting food assistance over the summer.
“When I meet with Arizonans, they tell me they want their elected officials to work together to lower costs, create jobs, keep their communities safe, and expand opportunity and freedom in every corner of our state. Today, I’m proud to say that we have delivered.”
Once signed, Governor Hobbs will have signed four balanced, bipartisan budgets that have cut taxes for everyday Arizonans.
“I’m proud that every year I’ve been governor, I have negotiated and signed bipartisan and balanced budgets that have cut taxes for Arizona veterans, small businesses, and middle class families,” continued Governor Hobbs. “As our families struggle with high costs because of Washington’s misguided policies, every year we have put more money in Arizonans’ pockets. I’ll keep fighting to lower costs and ensure that working class families in Arizona can get ahead.”
GOVERNOR HOBBS’ ARIZONA FIRST BUDGET DELIVERS OPPORTUNITY, FREEDOM, SECURITY FOR ARIZONA
The Arizona First Budget Cuts Taxes for Working Families, Stops the Data Center Tax Credit
• $1.4 billion: Tax cut for working families
o $762 million: Governor Hobbs’ Middle Class Tax Cuts Package
o $147.6 million: Expanded child tax credit and a tax credit for childcare expenses
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• $57 million: Amount saved through the data center tax credit moratorium
The Arizona First Budget Secures the Border and Keeps Communities Safe
• $2 million: Continue Operation Desert Guardian and disrupt cartel and transnational criminal activity throughout Arizona
• $7 million: Public safety and border security allocations for Sheriffs
• Protected the Border Security Fund to support Governor Hobbs’ strengthened law enforcement efforts to reduce the flow of illegal drugs into the state
• $13.2 million: Local Border Support to stop drug trafficking and border related crimes
The Arizona First Budget Protects Colorado River Water and Arizona’s Natural Resources
• $6 million: Colorado River Litigation Fund
• $10 million: DFFM wildfire suppression funding
• $10 million: Emergency relief funding for Gila County after historic funding
• $400,000: Heat relief cooling centers
The Arizona First Budget Protects Arizonans From Losing Access to Healthcare and Food Assistance
• $61 million: HR1 implementation to fight waste, fraud and abuse and ensure Arizonans can access Medicaid and SNAP
• $1.8 million: Sun Bucks to feed 640,000 children during summer months
• $4 million: Double Up Food Bucks
• Protects funding for the Department of Child Safety and Guardian Casework system
The Arizona First Budget Invests in Education
• $4 million: Free school meals
• $37 million: Low-income school funding through the Free and Reduced Lunch Opportunity Weight
• $29 million: District Additional Assistance to support school maintenance and operations
• $183.3 million: School Facilities and Building Renewal
The Arizona First Budget Creates Jobs
• Protects Rio Nuevo and economic development projects in Southern Arizona
• Protects 21,000 jobs coming to Arizona through the COMPETES Fund
Arizona workers, families, seniors, veterans, and taxpayers are poised to keep more of their hard-earned money under the FY 2027 state budget approved by the Arizona Senate today. The $18.29 billion budget delivers more than $1.4 billion in tax relief over four years, eliminates state income taxes on tips and overtime pay, creates new tax relief for families facing rising childcare costs, and makes Arizona the only state in the nation to fully adopt President Trump’s federal tax package at the state level. The plan also strengthens public safety, supports child protection services, combats waste in government programs, and maintains a responsible spending framework.
Arizonans will see direct benefits from the budget, including:
• No state income tax on tips.
• No state income tax on overtime pay.
• A larger standard deduction for taxpayers.
• A new childcare expense deduction for working families.
• An increased child tax credit.
• An additional $6,000 deduction for seniors.
• Expanded charitable deductions.
• Property tax relief for disabled veterans.
• Continued educational choice through Empowerment Scholarship Accounts.
• Additional support for child safety services and foster care programs, including $58 million in targeted funding.
• Increased funding for correctional officers, including a 4 percent stipend, and additional support for crime victim assistance.
• New investments in wildfire suppression and emergency response.
• Support for rural hospitals and critical access healthcare providers.
• Stronger eligibility verification for Medicaid and SNAP to reduce waste and protect taxpayer dollars.
“Arizona is now the only state in the nation fully adopting President Trump’s tax package, and that means workers, families, seniors, and veterans get to keep more of their hard-earned money,” said Senate President Warren Petersen. “This budget delivers meaningful tax relief while maintaining the services Arizonans rely on and preserving Arizona’s reputation as the best place in America to live, work, and raise a family.”
“We approached this budget the same way Arizona families manage their own finances, with discipline and priorities,” said Senate Appropriations Chairman David Farnsworth. “We reduced ongoing spending, identified efficiencies across government, and kept spending growth below the combined rate of population and economic growth while maintaining our core responsibilities.”
“Arizonans expect leaders to solve problems, not score political points,” said Senate President Pro Tempore T.J. Shope. “This agreement reflects months of work to find common ground, protect key priorities, and deliver a budget that serves communities across our state.”
“By adding stronger eligibility checks to Medicaid and SNAP, we’re making sure these programs work as intended and that every taxpayer dollar is spent with integrity,” said Senate Majority Leader John Kavanagh.
“Public safety isn’t optional,” said Senate Majority Whip Frank Carroll. “This budget stands behind correctional officers, supports victims of crime, invests in child protection, and strengthens wildfire and emergency response efforts across Arizona.”
The budget also incorporates stronger verification standards for public assistance programs, reduces ongoing spending, and preserves Arizona’s strong fiscal position while funding critical public safety, healthcare, and child welfare priorities. Actual revenues outperformed projections by approximately $900 million over three years, helping make this tax relief possible without raising taxes or reducing core services.
The agreement comes more than a month after Gov. Hobbs vetoed the original budget, which included cuts to most state agencies except for the Arizona Department of Public Safety and the Arizona Department of Child Safety. Gov. Hobbs criticized cuts to a kids’ food program, child services and state forestry.
Arizona Democrats also claimed the GOP plan primarily benefited the wealthy and corporations, using examples like tax breaks for data centers.
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