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SB 1835

2026-2027; commerce

57th Legislature - Second Regular Session Introduced by Dave Farnsworth and 1 co-sponsor

The bill prioritizes lottery debt service, then directs set annual transfers to specific programs (health, child safety, homeless services) and the Heritage Fund, with pro rata adj

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Bill Summary · SB 1835

Summary of SB 1835 (Session 57th-2nd Regular, Arizona)

Overall purpose

SB 1835 proposes amendments to the Arizona Revised Statutes governing the use of monies in the state lottery fund, with specific changes to the allocation and distribution of lottery proceeds. The bill reorganizes and clarifies several funding streams tied to the state lottery fund, including debt service, mandatory transfers to state agencies, and annual distributions to various programs. It also repeals a previously amended section (5-572, as amended in 2024) and restates the section with updated provisions.

Key provisions and changes

  • Debt service priority (A)

    • Maintains a first lien on monies in the state lottery fund to secure the state lottery revenue bond debt service fund.
    • Debt service for revenue bonds is paid first from monies that would have otherwise gone to the state general fund, after operating costs and current-period requirements are met per bond documents.
    • After debt service needs are satisfied, remaining Lottery Fund monies fund the lottery commission’s expenses and operations.

  • Heritage fund transfer (B)

    • Annually, $10,000,000 of remaining lottery funds are deposited into the Arizona Game and Fish Commission Heritage Fund (as established by section 17-297).

  • Programmatic allocations (C)

    • After A and B, several annual allocations are specified:
    • $5,000,000 to the Department of Child Safety for the Healthy Families program (per section 8-481).
    • $4,000,000 to the Arizona Board of Regents for the Arizona Area Health Education System (per section 15-1643).
    • $3,000,000 to the Department of Health Services for teenage pregnancy prevention programs (Law 1995, ch. 190, sections 2-3).
    • $2,000,000 to the Department of Health Services for the Health Start program (section 36-697).
    • $2,000,000 to the Department of Health Services for the Disease Control Research Fund (section 36-274).
    • $1,000,000 to the Department of Health Services for the federal WIC (Women, Infants, and Children) program.
    • The annual allocations in this subsection are adjusted each year by changes in the GDP price deflator (as defined in 41-563) and are exempt from lapsing provisions under section 35-190. If funds are insufficient, allocations are reduced pro rata.

  • General fund transfer condition (D)

    • If the Lottery Director determines that funds available to the state general fund may not reach $84,150,000 in a fiscal year, the director must delay deposits to the Heritage Fund (B) until the state general fund reaches $84,150,000.

  • Emergency/homeless grants (E)

    • After A–D, up to $1,000,000 (or the remaining fund balance, whichever is less) is appropriated to the Department of Economic Security for grants to nonprofit and faith-based organizations for homeless emergency and transitional shelters and related services.
    • DES must report grant details and results to the Governor, the Speaker, and the President of the Senate by December 31 each year, with a copy to the Secretary of State.

  • Arizona Competes Fund and university funding (F)

    • After A–E and after depositing at least $99,640,000 into the state general fund, $1,750,000 is deposited into the Arizona Competes Fund (41-1545.01).
    • The remaining lottery fund balance goes to the University Capital Improvement Lease-to-Own and Bond Fund (15-1682.03), up to 80% of total annual lease-to-own and bond payments entered into by the Arizona Board of Regents.

  • Residual funds (G)

    • Any remaining monies in the Lottery Fund after all deposits and allocations described above go to the state general fund.

  • Legislative appropriation and transfer cadence (H–I)

    • Except for debt-service expenditures (subsection A), other expenditures under subsection A are subject to legislative appropriation.
    • The Lottery Commission must transfer the specified monies on a quarterly basis.

Who/what would be affected

  • State agencies and funds receiving annual lottery allocations:

    • Arizona Game and Fish Commission Heritage Fund
    • Department of Child Safety (Healthy Families)
    • Arizona Board of Regents (Arizona Area Health Education System)
    • Department of Health Services (Teenage pregnancy prevention, Health Start, Disease Control Research Fund, WIC program)
    • Department of Economic Security (homeless shelters and related services)
    • General state funds (through the timing rule and residual allocations)
    • Arizona Competes Fund
    • University Capital Improvement Lease-to-Own and Bond Fund

  • State revenue and debt management:

    • State lottery debt-service obligations continue to take priority in the Lottery Fund.
    • Debt service payments are prioritized over other uses within the Lottery Fund.

Procedural and timeline aspects

  • The bill specifies annual, formula-driven allocations that adjust with the GDP price deflator.
  • Some allocations are contingent on sufficient funds and may be reduced pro rata if funds are insufficient.
  • There is a condition-based trigger (D) regarding the minimum general fund transfer amount ($84,150,000) before certain heritage deposits are made.
  • Quarterly transfers from the Lottery Fund to the various programs and funds are mandated (I).
  • The bill repeals a prior 2024 amendment to § 5-572 and restates the section with the new structure (Section 2).

Effective date

The bill text does not specify an explicit effective date beyond normal legislative enactment; typically, such amendments take effect on a date defined in the act or upon passage unless otherwise stated.

Note: This summary focuses on the substantive changes and their practical impact on funding streams and agencies tied to the state lottery fund.

Compiled from official sources — confirm details with the bill’s official record.

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