Governor Katie Hobbs signed a $17.6 billion Arizona bipartisan budget Friday, narrowly avoiding a government shutdown and marking another year of steady spending increases under her administration. The new fiscal package includes funding increases for K-12 education, Medicaid, border security, and public safety—features that align closely with Hobbs’ original proposal but reflect bipartisan compromises with a Republican-led legislature.
Common Sense Institute Arizona’s Glenn Farley said the spending plan mirrors Hobbs’ earlier budgets in size and structure. While the governor initially proposed $16.8 billion in ongoing revenue, the final package includes $16.6 billion. Spending totals match Hobbs’ original $17.6 billion request, though allocations within the budget shifted during negotiations.
First responders will see pay increases, while K-12 schools receive approximately $600 million. Hundreds of millions are allocated toward Medicaid expansion. The budget also invests in new school buildings and increased child care funding, combining long-term obligations with targeted one-time expenditures.
Farley noted that while the total spending aligns with Hobbs’ goals, the “characteristics of the spending are very different” from Republican-led proposals, which Hobbs previously vetoed. The budget passed after both legislative chambers agreed to a compromise that reflects input from both parties.
The 2025 budget increases spending by 9.3% over the previous year but does so more conservatively than the 40% leap between fiscal years 2023 and 2024. Unlike last year’s budget, which left only a $10 million reserve, the new budget sets aside $200 million—giving the state more room to absorb potential revenue shortfalls.
Farley, who previously served as Gov. Doug Ducey’s chief economist, contrasted the Hobbs administration’s budget style with that of her predecessor. Ducey budgets typically advanced specific conservative policy goals, like Arizona’s flat tax or universal school choice. In contrast, Hobbs’ budgets spread funds more broadly, covering a wider range of programs and services.
This budget continues Hobbs’ trend of broad-based spending while securing GOP cooperation—a political balancing act in a state with divided government.
