Arizona Gov. Katie Hobbs’ 2026 fiscal year budget proposal includes ESA program overhaul

PHOENIX — Arizona Gov. Katie Hobbs released her 2026 fiscal year budget proposal on Friday and it contained a school voucher program overhaul that would save the state an estimated $150 million.

The $17.8 billion proposal would significantly change the functionality of the empowerment scholarship accounts (ESA) program, reduce child care costs, bolster fire prevention services and more.

Hobbs signed a $16.1 billion budget for fiscal year 2025 in June 2024.

Major details of 2026 fiscal year budget

Hobbs’ plan would limit ESA funding based on family income.

Families that make over $200,000 per year would get no funding, according to the proposal. Other families would also receive a smaller percentage of funding.

Under the proposal, the number of children per family wouldn’t matter and parents would have to provide income data.

Here’s how the funding would be distributed:

• Families that make over $200,000: 0%
• Families that make less than $200,000: 25%
• Families that make less than $160,000: 50%
• Families that make less than $130,000: 75%
• Families that make less than $100,000: 100%

Hobbs projects 94,841 students to use the ESA program in fiscal year 2026. As of Nov. 18, 83,032 students were utilizing the program.

The total cost of the program for the upcoming fiscal year, which begins in June, is projected to be $963 million.

Also on the education front, Hobbs said she wants a May special election to extend Prop 123. Funding for it, which pays for school funding among other things, is set to expire in July.

If extended, $285 million set aside for public education would go into the general fund.

Additionally, the budget proposal includes nearly $160 million in one-time funding for new school construction and land acquisition.

Other elements of 2026 fiscal year budget

Hobbs also wants to make investments into lowering housing costs, child care costs and bolstering support to stop the flow of fentanyl.

Here are some of the other pieces of the budget proposal:

• $10 million in grant funding to extend the Arizona Low Income Housing Tax Credit program by six years through 2031.
• $15 million deposit into the Housing Trust Fund grant funding.
• $5 million in grant funding for the Homes for Heroes program.
• $5 million in American Rescue Plan Act funding for the AZ is Home program.
• $48.7 million in one-time support for the Child Care Assistance program.
• $15 million in one-time funding for the Stopping Arizona’s Fentanyl Epidemic.
• $30 million grant funding for fire suppression.
• 15% pay raise for state firefighting positions.

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