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FY2024 Arizona Agency Budget Requests: Key Takeaways and Highlights

FY2024 Arizona Agency Budget Requests: Key Takeaways and Highlights

With the election behind us and Governor Hobbs set to take office in January, we thought it would be helpful to take a look, we wanted to remind you Traversant Group is busy putting together its FY2024 budget analysis and I wanted to share some of my key takeaways that I think you might find interesting.

Tech Spending is Down

Overall, the amount of tech-related spending priorities declined from last September. One example is the Arizona Department of Administration (ADOA), which provides centralized support services and technology oversight for state agency operations. In FY2023, the department requested more than $60 million in technology-related spending. By comparison, the FY2024 ADOA budget request includes $21 million for two ongoing technology projects.

The reason for the conservative spending may be twofold: 

  1. Last year, agencies submitted generous spending asks that were buoyed by record revenues, incoming federal stimulus dollars and the fact that it was Governor Ducey’s final budget. State officials shared a “go big or go home” mindset.   
  2. It’s also important to remember the upcoming election (who could forget?). With a guaranteed change in administration, agency officials have taken a conservative approach to spending. A new governor may mean added scrutiny of agency operations.

Silver Linings

While government contractors may feel deflated by this news, there is some positive news as well. First, several projects did make it into the agency budget requests. The state’s Medicaid agency, the Arizona Health Care Cost Containment System (AHCCCS), intends to leverage $7M federal funding to begin the replacement of the Prepaid Medicaid Management System. With a match in state funding, the total FY24 spending is projected to be $10M.

Here are some other noteworthy highlights:

  • $10M to continue support of the federal State and Local Cybersecurity Grant Program at the Arizona Department of Homeland Security.
  • $44.1M in total funding for a number of public safety projects, including the replacement of microwave radios, site builds and trunk radio suites at the Department of Public Safety.
  • $1.5M in funding for the continuation of the IT modernization and cloud migration project at the Department of Agriculture.
  • $1M in funding to establish a database to screen and access recidivism data across counties at the Arizona Criminal Justice Commission.
  • $7M to replace the legacy eCorp System at the Arizona Corporation Commission.
  • $2.5M for cybersecurity and IT infrastructure enhancements at the Department of Economic Security.

What Lies Ahead 

Another factor to keep in mind is that Arizona continues to beat revenue targets. The state’s bank accounts have $233M more in revenues than expected since July 1, 2022. The state’s General Fund collected $1.26 billion in August, which is 17.1% higher than last year. Corporate income taxes set a new state record of $39.2 million, a 118.7% increase compared to last year. Provided the economy continues to perform well, the state government will have dollars to spend.

Finally, while no one can predict what Arizona’s 24th governor will prioritize in her executive budget proposal, the FY2024 agency requests represent a slice of the total spending. Provided that the rosy economic outlook continues, agencies may leverage operational funds to pursue other projects either by purchasing off an existing contract, or by procurement.

Stay tuned to Traversant Group’s blog for updates throughout the budget cycle. And, if you would like some help figuring out a government sales strategy for your project, just give us a call. This is our specialty.

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