When Katie Hobbs took office on January 2, 2023, Arizona had a large anticipated budget surplus. Contemporary reporting (including from the Associated Press and Politico in early 2023) described it as a projected surplus of about $1.8 billion. This reflected strong revenue performance, federal aid effects, and prior-year carryovers under the previous administration (with the FY2023 budget already enacted). Some outlets referenced figures closer to $2–2.5 billion for available one-time resources or structural surplus projections at the time.
In her January 2023 FY2024 executive budget proposal, Hobbs highlighted this strong position by planning a $250 million deposit into the rainy day fund (Budget Stabilization Fund), which would have brought the estimated FY2024 general fund ending balance to $1.6 billion —described as the highest in state history.
Currently (as of March 2026), Arizona does not have a budget surplus. The FY2026 budget is enacted and balanced, with General Fund revenues running ahead of the prior year (up ~3.7% year-to-date through January 2026 per the latest JLBC Monthly Fiscal Highlights, even if slightly below some monthly forecasts).
Governor Hobbs’ FY2027 executive budget proposal (released January 2026) projects:
- General Fund ending balance: $392 million.
- Rainy day fund (Budget Stabilization Fund): $1.68 billion.
- Combined total balances: ~$2.07 billion.
- A small positive structural balance (~$38 million).
Spending remains well under the constitutional appropriations limit, and recent JLBC reports show no structural shortfall in the baseline outlook (revenues have exceeded expectations in recent years after earlier pressures).
**Context on the shift**: There were projected shortfalls in 2024 (hundreds of millions for FY2024/FY2025, later described in some reports as up to ~$1 billion or more when factoring in tax conformity and school voucher/ESA expansion costs). These were addressed through enacted budgets with spending restraint, one-time adjustments, and stronger revenue performance. No ongoing deficit exists today—the state maintains positive balances and fiscal flexibility.
Figures can vary slightly by exact definition (e.g., general fund ending balance vs. structural surplus vs. total available one-time funds) and update with JLBC forecasts, but the direction is clear: large surplus at the start of Hobbs’ term → balanced budgets with reserves now. For the most precise official numbers, check the latest JLBC reports or the Governor’s Office of Strategic Planning and Budgeting.
Summary: $2.53 Billion surplus June 30, 2023
March 2026, $200 million surplus.
This means – $2.33 billion of surplus spent by Hobbs.
