ARIZONA

MONTHLY FISCAL HIGHLIGHTS
March 2004
March General Fund revenues were $434.1 million. Collections were $71.0 million above the original FY 2004 forecast for the
month, bringing the total forecast variance after 9 months to $210.6 million. The 2 largest components of General Fund revenue
both grew strongly in March. Sales tax revenues increased by 10.8% and withholding tax collections increased by 9.9% in
comparison to March 2003.
Year-to-date collections of $4.6 billion are a total of 11.6% above last year. As we have noted in past months, adjusting for tax
amnesty revenues, the one-time federal cash assistance grant, judicial enhancement collections and Urban Revenue Sharing funds
provides a more accurate picture of economic growth. After making these adjustments, year-to-date collections are up 7.2% for the
first 9 months of the fiscal year compared to last year.
We will continue to measure individual revenue category collections against the original budget forecast until the Legislature enacts
a new budget. The January JLBC FY 2005 Budget has already incorporated most of the year-to-date surplus in the revised FY 2004
estimates. The new March collections are approximately $36.5 million above these revised estimates, bringing us to a year-to-date
total of $53.2 million above the January JLBC Budget Book forecast.
This report also includes a summary of the March JCCR meeting.
General Fund Revenues
Compared to Original and Revised FY 2004 Forecasts and FY 2003 Collections
($ in Millions)
FY 2004
Difference From
Difference From
Difference
Collections
6/03 Forecast 1/
1/04 Forecast 2/
from FY 2003 3/
March
$ 434.1
$ 71.0
$ 36.5
$ 66.8
Year-to-Date
1/
2/
3/
4/

$4,565.4

$210.6 4/

$ 53.2

$318.0

Original FY 2004 budget forecast (June 2003).
Revised FY 2004 forecast (January 2004).
Excludes federal cash assistance grant, URS, judicial enhancement and amnesty deposit.
By the end of the fiscal year, amnesty may generate an additional $22 million above forecast.

Sales Tax revenue in March increased by 10.8% (based on
preliminary numbers), bringing the year-to-date growth rate
up to 7.7%. Assuming the final March numbers are equal to
the preliminary numbers, sales tax collections are now $110.8
million above the budgeted forecast for the year. As
previously noted, the Department of Revenue implemented its
new computer system in January. This transition has delayed
final reconciliation of February and March receipts. The
figures shown are based on the best data available at print
time.
Individual Income Tax collections in March were up
substantially compared to last year.
Withholding tax
collections were up almost $20 million or 9.9%. The increase
could have been due in part to the fact that there were 2 more
processing days in March of this year compared to last year.
The $220.6 million in withholding is the single largest
monthly total since January 2001.

Final payments were up over $10 million or 38.4% and
refunds were about $31 million or (15.7)% less than last year.
In total, individual income tax collections were $61.6 million
above the budgeted forecast for the month, bringing the yearto-date variance to $36.9 million. As we enter the primary tax
filing months, the increase in final payments and decrease in
refunds reflect, at least in part, the under-withholding of tax
during the first half of the fiscal year.
Corporate Income Tax collections declined in March
compared to last year, with net revenue $(15.4) million below
March 2003. Collections for the month were very close to the
budgeted forecast, maintaining the year-to-date variance at
about $48.6 million above the forecast. A relatively high level
of refunds reduced net revenue. In addition, estimated
payments were $(10.5) million, or (19.7)% below last year.
Corporate income tax revenue for the fiscal year-to-date is still
running 28.3% ahead of last year’s results.

JLBC
This report has been prepared for the Arizona Legislature by the Joint Legislative Budget Committee Staff on April 26, 2004. This report can also be
found on our Website at http://www.azleg.state.az.us/jlbc.htm
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Joint Legislative Budget Committee

Monthly Fiscal Highlights – March 2004

Recent Economic Indicators: The latest statistics on the
nation’s economy showed higher inflation and modest
economic growth.
The U.S. Consumer Price Index
continued to climb through the first three months of 2004,
with the increase driven by the steep rise in fuel prices.
Excluding the effects of food and energy costs, the core index
increased 1.6% from March 2003.
The U.S. Index of Leading Economic Indicators improved
0.3% in March after pausing in February. The positive
components included manufacturers’ new orders for consumer
goods, building permits, and vendor performance. The index
now has advanced 4.4% from its most recent low in March
2003. The Conference Board’s Consumer Confidence Index
was 88.3 last month, virtually unchanged from a revised 88.5
in February. The assessment of current conditions improved,
but consumers remained wary about their job prospects.
The three-month moving average of U.S. Semiconductor
Billings barely edged downward in February by (0.1)% to
$2.931 billion. While sales in the Western Hemisphere and
Japan were flat or falling, they were improving worldwide.
On the local front, the economic news was somewhat better.
The Arizona Index of Leading Economic Indicators gained
0.2% in February and stood 4.4% above its level from a year
ago. Residential building permits and delivery times boosted
the index, while new orders and inventories were among the
negative factors. On the down side, the Arizona Business
Conditions Index (BCI) dropped (7.0)% in March, with
declines posted across the board. Even so, the BCI remained
well above the 50% benchmark associated with an expanding
local economy.

The news on Arizona’s job market continued to improve. The
Department of Economic Security reported that the Arizona
unemployment rate dipped to a seasonally adjusted 4.9% in
March, the lowest reading since August 2001. Meanwhile, the
state's employers have added 45,100 workers since March
2003, with the construction industry contributing 15,200
positions to the total.
Overall, non-farm employment
increased 2.0% during the last 12 months.
The latest data from state government programs reflected
mixed results. The number of TANF recipients (3-month
average) declined to 123,050 in January, a (3.9)% drop from
the previous three-month period. While the caseload was
0.9% above last year’s level, it was (2.9)% below the forecast.
Average payments per client were 5.8% above the forecast for
the year to date.
AHCCCS caseloads were also running below the forecast.
The number of acute-care AHCCCS clients declined (1.7)%
during the last three months and stood (7.2)% below the
budgeted level. The Proposition 204 caseload decreased
(1.6)% during the latest three-month period, but the number of
clients remained 12.4% higher than a year ago.
The Department of Corrections’ inmate population grew
by an average of 160 inmates per month from January through
March, which was well above the budgeted rate of 118 new
inmates (net) per month. This was the first time in the current
fiscal year that the growth exceeded the forecast.

RECENT ECONOMIC INDICATORS
Indicator
Arizona
-Unemployment Rate
-Jobs
-Contracting Tax Receipts (3 month average)
-Retail Sales Tax Receipts (3 month average)
-Arizona Tourism Barometer
-Leading Indicators Index
-Business Conditions Index
(>50 signifies expansion)
-AHCCCS Recipients (3 month average)
Regular
Proposition 204
-TANF Recipients (3 month average)
-DOC Inmate Growth (3 month average)
U.S.
-Consumer Confidence Index
-Leading Indicators Index
-U.S. Semiconductor Billings
(3 month moving average)
-Consumer Price Index
(3 month moving average)

Current Value

Change From
Prior Period

Change From
Prior Year

March
March
November-January
November-January
January
February
March

4.9%
2.337 million
$48.4 million
$138.9 million
99.6
124.2
62.8

(0.3)%
0.4%
2.9%
14.6%
3.8%
0.2%
(7.0)%

(1.0)%
2.0%
11.0%
7.2%
2.5%
4.4%
23.4%

January–March
December–February
January–March

565,446
171,224
123,050
31,488

March
March
December–February

88.3
115.3
$2.931 billion

Time Period

January–March

186.3

(1.7)%
(1.6)%
(3.9)%
160 inmates

3.2%
12.4%
0.9%
1,439 inmates

(0.2)%
0.3%
(0.1)%

43.8%
4.4%
20.1%

0.6%

1.8%

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State of Arizona
General Fund Revenue: Change from Previous Year and Budgeted Forecast
March, 2004
Current Month

FY 2004 YTD (Nine Months)

Change From
Actual

March 2003

March 2004

Amount

Change from
Actual

Budget Forecast
Percent

Amount

Percent

March 2003

March 2004

Amount

Budget Forecast
Percent

Amount

Percent

Taxes
Sales and Use

$264,435,000

$25,838,160

Income - Individual

89,514,766

61,035,899

214.3

- Corporate

27,432,846

(15,440,162)

(36.0)

Property
Luxury
Insurance Premium
Estate
Other Taxes
Sub-Total Taxes

10.8 %

$15,986,853

$2,427,533,448

$174,598,461

61,608,505

220.8

6.4 %

1,629,092,520

73,588,643

7.7 %
4.7

$110,786,573
36,908,734

4.8 %
2.3

64,126

0.2

268,107,570

59,137,556

28.3

48,648,316

22.2
18.1

651,617

206,101

46.3

(18,988)

(2.8)

21,957,338

3,561,778

19.4

3,370,019

5,037,354

681,359

14.7

(498,221)

(9.7)

45,141,464

(4,108,235)

(8.4)

(4,678,711)

(9.5)

62,720,124

(4,088,354)

(6.1)

(1,417,822)

(2.2)

157,742,795

24,104,131

18.0

15,136,386

10.6

1,414,827

(1,955,933)

(58.0)

(4,156,873)

(74.6)

29,359,653

(48,536,295)

(62.3)

(20,785,647)

(41.5)

765,367

(1,280,023)

(62.6)

92.8

2,597,192

(3,774,519)

(59.2)

(974,908)

(27.3)

16.8 %

368,467

$451,971,901

$64,997,047

$71,936,047

Lottery

2,437,300

406,700

20.0

0

License, Fees and Permits

2,121,867

(29,779)

(1.4)

141,668

18.9 %

$4,581,531,980

$278,571,520

0.0

29,441,800

4,201,500

7.2

17,615,843

6.5 %

$188,410,762

4.3 %

Other Revenue

Interest

939,953

(515,606)

16.6
(2.8)

0

0.0

1,271,387

7.8
42.4

(94,169)

(9.1)

(924,770)

(49.6)

20,583,581

8,534,741

70.8

6,125,849

Sales and Services

3,518,003

554,905

18.7

99,621

2.9

36,427,993

1,431,355

4.1

(1,405,093)

(3.7)

Other Miscellaneous

3,322,291

1,247,398

60.1

577,818

21.1

26,925,807

15,600,432

137.7

9,870,080

57.9

Disproportionate Share
Transfers and Reimbursements

0

TOTAL BASE REVENUE

0.0

(195,720)

(44.7)

0

(75,233)

(100.0)

BSF Transfer for Alt. Fuels
Sub-Total Other Revenue

0

241,701

12,581,115

1,814,102

16.8 %

$464,553,016

$66,811,149

16.8 %

0
(795,565)
0
(901,228)
$71,034,819

0.0

5,625,187

5,625,187

0.0

5,625,187

0.0

(76.7)

14,041,709

7,845,941

126.6

529,830

3.9

(3,323,406)

(95.1)

171,080

0.0

0.0

171,080

(6.7) %

150,833,000

39,400,144

35.4 %

22,188,320

17.2 %

18.0 %

$4,732,364,980

$317,971,664

7.2 %

$210,599,082

4.7 %

One-Time Revenue
Urban Revenue Sharing

(15.2)

0

0.0

(273,798,873)

49,120,416

(15.2)

0

0.0

Tax Amnesty

0

0

0.0

0

0.0

15,080,406

15,080,406

0.0

0

0.0

Federal Cash Assistance

0

0

0.0

0

0.0

87,234,214

87,234,214

0.0

0

0.0

Judicial Enhancement

0

0

0.0

0

0.0

4,584,725

4,584,725

0.0

0

0.0

(15.2)

0

0.0

(48.3)

0

0.0

Sub-Total Transfers In
TOTAL REVENUE

(30,422,097)

(30,422,097)
$434,130,919

5,457,824

5,457,824
$72,268,973

20.0 %

$71,034,819

19.6 %

(166,899,528)
$4,565,465,452

VP% = Percent change from comparable period in prior year
VF% = Variance from forecast
F% = Forecast percent change for the fiscal year.
R% = Average percent change from comparable period in prior year which must be attained over remaining months to realize the forecast for year.

156,019,761
$473,991,425

11.6 %

$210,599,082

4.8 %

Joint Legislative Budget Committee

JCCR MEETING
At its March 26th meeting, the Joint Committee on Capital
Review considered the following issues:
ADOA/ADC Prison Expansion Lease-Purchase Projects –
The JCCR reviewed and approved the 1,000-bed prison
expansion projects and issuance of Certificates of Participation
(COPs) in the amount of $33.3 million to finance the projects.
As envisioned by the 2nd Special Session, the issuance will
fund expansion of 200 beds at ASPC – Douglas, 500 beds at
ASPC – Perryville, and 300 beds at ASPC – Tucson. ADOA
anticipates construction will begin in May 2004 with an
occupancy date of December 2004. The COPs will be repaid
over a 15-year period with a total payment of $45 million.
The Committee also requested that ADOA and ADC report by
June 1, 2004 on the construction schedule for the 1,000 state
beds and the timeline for contract finalization and projected
opening dates of 1,000 new private prison beds.
ADOA Refinancing – The JCCR reviewed and approved the
refinancing of the 1993B Certificates of Participation (COPs)
issuance. The Committee requested ADOA report back on the
interest rate, debt service schedule, costs, and estimated
savings of the refinanced COPs after the issuance. One-time
savings are estimated to be $991,400.
GITA/ADOA Telecommunications Privatization Request
for Proposals (RFP) – The JCCR favorably reviewed,
effective April 2, the Request for Proposals (RFP) for
Telecommunications Privatization, and added stipulations
related to further review and reporting of pricing, costs and
savings information, contract term, agency schedules and
technical changes. Additional Committee review is required
before finalizing the telecommunications contract.
ASU Lease-Purchase and Bond Projects – The JCCR
favorably reviewed the issuance of Certificates of
Participation (COPs) in the amount of $92 million for the
construction of 2 Interdisciplinary Science and Technology
buildings at ASU-Main Campus. These 2 projects are the
result of the 2003 University Research Infrastructure
legislation. The COPs will be repaid over a 25-year period
using some of the COP issuance to make interest only
payments on the debt service through FY 2008, after which
General Fund appropriations from Laws 2003, Chapter 267
will be used to make the payments.
The Committee favorably reviewed the issuance of revenue
bonds in the amount of $22 million for the Information
Technology/Telecommunications Infrastructure Upgrades

Monthly Fiscal Highlights – March 2004
project at ASU. The bonds will be repaid over a 10-year
period from tuition collections and indirect cost recovery
monies. The project will upgrade and enhance the ASU
computer networks and voice, data, and video distribution
systems.

The Committee favorably reviewed the issuance of revenue
bonds in the amount of $11.2 million for the Phase 3
Infrastructure Improvement Projects and the revised scope of
the Arizona Biodesign Institute. The bond issuance includes
$7.4 million for the infrastructure improvements and $3.8
million for the Biodesign Institute. The bonds will be repaid
over a 30-year period from tuition collections and indirect cost
recovery monies. The Infrastructure Improvement Projects
include utility delivery systems, campus sewer systems, storm
water control, and electrical system upgrades. The revised
scope of Phase I of the Biodesign Institute, favorably reviewed
in December 2002, will convert 10,000 square feet already
under construction into specialized animal facilities and add
3,800 square feet of modular space.
UofA Lease-Purchase Projects – The JCCR favorably
reviewed the issuance of Certificates of Participation (COPs)
in the amount of $21.6 million for construction of the
Highland Avenue Parking Structure and Phase I of the
Residential Life Building Renewal at the University of
Arizona (UofA). The COPs will be repaid over a 25-year
period using auxiliary revenues generated from parking fees
and dorm fees. The Committee requested the UofA submit for
review any additions that expand the scope of the project by
$100,000 or 10% of the contingency amount.
School Facilities Board Report on New School
Construction – The JCCR favorably reviewed the School
Facilities Board (SFB) report on new school construction.
Previously heard at the December 2003 meeting, the
Committee deferred action and requested SFB to submit
additional information on new school construction cost
estimates for FY 2005. SFB estimates that it will oversee 64
new school construction projects and spend $319.7 million in
FY 2005.
SFB New School Construction Projects – The JCCR
favorably reviewed the SFB revised list of $49.2 million in
new school construction projects to be financed with the
remaining $50 million in lease-purchase authority. The
Committee gave a favorable review of the list of potential
projects at its December 2003 meeting, contingent on SFB
returning to report actual projects included in the agreement.
The list includes 7 projects in 5 school districts.

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