Regional Area Road Fund
Maricopa Transportation Excise Tax
Fiscal Year 2001
Year-End Report

Arizona Department of Transportation
Financial Management Services
Office of Financial Planning
August 2001

REGIONAL AREA ROAD FUND
MARICOPA TRANSPORTATION EXCISE TAX
EXECUTIVE SUMMARY
The Maricopa County Transportation Excise Tax, often referred to as the "1/2 cent sales tax", is levied upon
business activities in Maricopa County, including retail sales, contracting, utilities, rental of real and personal
property, restaurant and bar receipts, and other activities. The transportation excise tax revenues are deposited in the
Maricopa County Regional Area Road Fund (RARF) which is administered by the Arizona Department of
Transportation. The revenues deposited into the RARF account are the principal source of funding for the Regional
Freeway System in Maricopa County and are dedicated by statute to the purchase of right-of-way, design and
construction of controlled access highways. The tax is expected to yield $3.8 billion for the period January 1986
through December 2005.

For FY 2001, the Maricopa County transportation excise tax
collections totaled $264.7 million, an increase of 6.5 percent over
the FY 2000 revenue level and 0.3 percent above the forecast. This
represents the slowest growth in excise tax collections since the
recession in FY 1992. Growth in FY 2001 occurred in “other” at
11.4 percent, rental of real property at 9.2 percent and utilities at
8.7 percent.

RARF COLLECTIONS
$350.0
$300.0
$250.0
$200.0
$150.0
$100.0

The U.S. economic environment changed significantly in FY2001
with a sharp decline in the stock market along with reduced
business and consumer spending. These factors played a key role
in the slower growth in excise tax collections in Maricopa County.
The Federal Reserve has aggressively reduced interest rates since
January 2001, which has aided the already strong residential and
commercial construction sectors.
PAGE 1

$50.0
$0.0
2000 ACT

2001 ACT

FISCAL YEAR

2001 EST

PERFORMANCE BY CATEGORY
RETAIL SALES:
Retail sales revenue was $131.6 million in FY 2001, an increase of
5.8 percent over FY 2000 and 1.1 percent below the estimate. As
noted on the chart to the right, the retail sales growth rate slowed
significantly to its lowest point since FY 1992. The heavy consumer
spending during FY 1998-2000 was deflated the second half of FY
2001 by the sharp downturn in the stock market and the resulting
economic uncertainty. Retail sales growth occurred in staples such as
clothing and food stores. In addition, vehicle sales remained strong.

RETAIL SALES
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
92

93

94

95

96

97

98

99

00

01

FISCAL YEAR

Retail sales for Maricopa County are predicted using three economic
indicators, wage and salary employment, personal income and
unemployment. The July 2001 Greater Phoenix Blue Chip consensus
estimates that the Maricopa County economy is expected to grow but
at a slower rate. The forecast for wage and salary employment
growth is estimated to be 3.2 percent in Calendar Year (CY) 2001
and CY 2002 compared to 4.8 and 3.9 percent in CY 1999 and CY
2000, respectively.

WAGE & SALARY EMPLOYMENT GROWTH
MARICOPA COUNTY
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%

Growth in personal income is estimated to be 6.4 percent in CY 2001
and 6.3 percent in CY 2002. This represents a mild softening in the

92
93
94
95
96
97
98
99
00
01
02
ACT ACT ACT ACT ACT ACT ACT ACT ACT EST EST

CALENDAR YEAR
Source: Greater Phoenix Blue Chip Economic Forecast, July 2001

PAGE 2

RETAIL SALES: Continued
personal income growth for Maricopa County, which ultimately leads to slower consumer spending. The growth in
personal income was 7.7 percent in CY 1999 and 7.1 percent in CY 2000. The unemployment rate is estimated to
reverse and move upward due to recent job cuts in the manufacturing and service sectors. The Maricopa County
unemployment rate is estimated at 3.4 percent in CY 2001 and 3.5 percent in CY 2002, which is lower than was
predicted in the Greater Phoenix Blue Chip consensus estimate dated June 2000.

UNEMPLOYMENT RATE
MARICOPA COUNTY

PERSONAL INCOME
MARICOPA COUNTY

8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%

12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
92
93
94
95
96
97
98
99
ACT ACT ACT ACT ACT ACT ACT EST

00
EST

01
EST

02
EST

92
93
94
95
96
97
98
99
00
01
ACT ACT ACT ACT ACT ACT ACT ACT ACT EST

CALENDAR YEAR

02
EST

CALENDAR YEAR

Source: Greater Phoenix Blue Chip Economic Forecast, July 2001

Source: Greater Phoenix Blue Chip Economic Forecast, July 2001

CONTRACTING:
Contracting collections totaled $38.8 million in FY 2001, an increase of
3.8 percent over FY 2000 and 1.8 percent above the estimate. Similar to
the retail sales category, this growth represents the lowest year-over-year
growth since FY 1992. However, the contracting revenue growth in FY
2001 was the big surprise for excise tax collections since local
economists were predicting negative growth. The residential and
commercial construction sectors provided the unexpected growth during
the fiscal year.
PAGE 3

CONTRACTING
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
92

93

94

95

96

97

98

FISCAL YEAR

99

00

01

CONTRACTING: Continued
Maricopa County single-family housing permits decreased by 1.7 percent in CY 1999 and 2.2 percent in CY 2000.
With the help of lower mortgage rates and the continued influx of new residents, the downturn in the single-family
housing sector has been lower than expected. Single family housing permits are projected to decrease 8.2 percent
and 8.4 percent in CY 2001 and CY 2002, respectively. However, these estimates may be a bit pessimistic if
mortgage rates continue to move lower. Multi-family housing permits saw a 3.2 percent increase in CY 2000 and
are estimated to decrease by 8.9 percent in CY 2001 and 9.4 percent in CY 2002. Apartment vacancy rates are
expected to increase to 7.1 percent in CY 2001 and CY 2002 from 6.8 percent in CY 2000.
SINGLE FAMILY HOUSING PERMITS
MARICOPA COUNTY

MULTI-FAMILY HOUSING PERMITS
MARICOPA COUNTY

50.0%

250.0%

40.0%

200.0%

30.0%

150.0%

20.0%
100.0%
10.0%
50.0%

0.0%

0.0%

-10.0%

-50.0%

-20.0%

92
93
94
95
96
97
98
99
00
01
02
ACT ACT ACT ACT ACT ACT ACT ACT ACT EST EST

92
93
94
95
96
97
98
99
00
01
02
ACT ACT ACT ACT ACT ACT ACT ACT ACT EST EST
CALENDAR YEAR

CALENDAR YEAR

Source: Greater Phoenix Blue Chip Economic Forecast, April 2001

Source: Greater Phoenix Blue Chip Economic Forecast, April 2001

From January 1, 2001 through June 30, 2001, the Federal Reserve has lowered interest rates six times which has
impacted mortgage rates during the second half of FY 2001. In March 2001, the interest rate for a conventional 30
year fixed rate mortgage was 6.7 percent compared to 7.8 percent in March 2000. This 1.1 percent decrease in
interest rates has provided and will continue to provide for the better than expected growth in the Greater Phoenix
housing market.

PAGE 4

CONTRACTING: Continued
Construction employment increased 5.0 percent in CY 2000 compared to 7.6 percent in CY 1999. This is
attributable to the strong residential and commercial construction sectors. The forecast for construction employment
shows a decrease of 1.2 percent in CY 2001 and 2.4 percent in CY 2002.

CONSTRUCTION EMPLOYMENT
MARICOPA COUNTY

MORTGAGE INTEREST RATES
MARICOPA COUNTY
12

140
120

10

100
80

8

60
40

6

20
0

4
MAR
91

MAR MAR
92
93

MAR
94

MAR
95

MAR MAR
96
97

MAR
98

MAR
99

MAR
00

92
ACT

MAR
01

93
ACT

94
ACT

95
ACT

96
ACT

97
ACT

98
ACT

99
ACT

00
ACT

01
EST

02
EST

CALENDAR YEAR

Source: Arizona Business, May Issues

Source: Greater Phoenix Blue Chip Economic Forecast, July 2001

UTILITIES

UTILITIES:

12.0%
10.0%

For FY 2001, utility tax collections amounted to $17.9 million, an
increase of 8.7 percent over FY 2000 and 5.0 percent above the
estimate. The growth in utility tax revenue has benefited from the
healthy residential and commercial construction sectors along with
higher customer usage.

8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
92

93

94

95

96

97

98

FISCAL YEAR

PAGE 5

99

00

01

RESTAURANT AND BAR:

RESTAURANT & BAR

Restaurant and bar collections increased 6.9 percent to $21.4
million in FY 2001 which was 0.1 percent below the estimate.
However, restaurant and bar revenues were not immune to the
economic slowdown in the second half of the fiscal year. The 6.9
percent revenue growth is comparable to FY 1998, which also
experienced economic and financial uncertainty.

12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
92

93

94

95

96

97

98

99

00

01

FISCAL YEAR

RENTAL OF REAL PROPERTY:
Rental of real property tax collections in FY 2001 totaled $24.1
million, an increase of 9.2 percent over FY 2000 and 1.3 percent
above the forecast. This stronger than expected growth can be
attributed to the increasing number of current and new residents
electing to live in apartment housing as well as the demand for new
commercial structures. This category includes rental of
commercial, residential and transient lodging (hotel/motel)
facilities.

PAGE 6

RENTAL OF REAL PROPERTY
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
92

93

94

95

96

97

98

FISCAL YEAR

99

00

01

RENTAL OF PERSONAL PROPERTY:

RENTAL OF PERSONAL PROPERTY

Rental of personal property receipts in FY 2001 totaled $14.4
million, an increase of 7.3 percent over the FY 2000 revenue level
and 0.8 percent above the estimate. Collections continue to benefit
from consumers opting for leasing motor vehicles, which accounts
for approximately 25 percent of new car sales. In addition, the
healthy residential and commercial construction sectors provided
additional demand for construction equipment leasing.

20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
92

93

94

95

96

97

98

99

00

01

FISCAL YEAR

OTHER:
For FY 2001, "Other" revenues totaled $16.5 million, an increase
of 11.4 percent over FY 2000 and 1.2 percent above the estimate.
The transporting/towing and communication sectors were the
largest contributors to the growth in revenues during FY 2001,
increasing 32.9 percent and 16.4 percent, respectively. The
communications sector has benefited from the growth in cellular
phone ownership along with consumer demand for voice mail and
second phone lines. The "other" revenue category also includes
collections from amusements, publishing and printing, advertising,
and pipelines for oil and gas.

PAGE 7

OTHER
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
92

93

94

95

96

97

98

FISCAL YEAR

99

00

01

REVENUE TREND ANALYSIS
MONTHLY RARF REVENUE TREND

ANNUAL RARF REVENUE TRENDS
30.000

14.0%

28.000
12.0%

26.000

10.0%

24.000
22.000

8.0%

20.000

6.0%

18.000
16.000

4.0%

14.000
12.000

2.0%

10.000
0.0%

JUL

92

93

94

95

96

97

98

99

00

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

APR

MAY JUN

01

FY 2001 Actuals

FISCAL YEAR

FY 2001 Estimate

FY 2000 Actuals

Transportation excise tax collections for FY 2001 amounted to $264.7 million, an increase of $16.1 million over
FY 2000. FY 2001 excise tax receipts posted the slowest growth rate since FY 1992. All revenue categories
showed increases over last year’s revenue levels. However, the first eight months of the fiscal year experienced
strong to moderate year-over-year growth while the last four months saw significantly slower growth. This
slower growth was attributable to the stock market downturn and the economic uncertainty. On the positive side,
Maricopa County has continued to benefit from population growth and healthy residential and commercial
construction activity.
The monthly seasonality of excise tax collections continues to follow consistent trends with sharp increases in
revenues in the months of December and January due to holiday retail sales.
PAGE 8

REVENUE PERFORMANCE
MARICOPA COUNTY TRANSPORTATION EXCISE TAX
FY 2001 ACTUAL
TOTAL= $264.7 MILLION
DISTRIBUTIONS

SOURCES
RENTAL OF
PERSONAL
PROPERTY
$14.4M
5.4%
RENTAL OF
REAL PROPERTY
$24.1M
9.1%

REGIONAL PUBLIC
TRANSIT SYSTEM
$7.2 M
2.7%

OTHER
$16.5M
6.2%
RETAIL SALES
$131.6M
49.7%

RESTAURANT
& BAR
$21.4M
8.1%

UTILITIES
$17.9M
6.8%

CONTRACTING
$38.8M
14.7%

REGIONAL FREEWAY
SYSTEM
$257.5 M
97.3%

PAGE 9

MARICOPA COUNTY REGIONAL AREA ROAD FUND
TRANSPORTATION EXCISE TAX
REVENUE COMPARISON STATEMENT
FY 2001
FY 2000
ACTUAL

FY 2001
ACTUAL

CHANGE

FY 2001
ESTIMATE

CHANGE

RETAIL SALES

$124,428,395

$131,607,841

5.8%

$133,014,000

-1.1%

CONTRACTING

37,383,996

38,820,028

3.8%

38,132,000

1.8%

UTILITIES

16,437,080

17,861,545

8.7%

17,012,000

5.0%

RESTAURANT & BAR

20,005,337

21,394,911

6.9%

21,426,000

-0.1%

RENTAL OF REAL PROPERTY

22,080,079

24,111,944

9.2%

23,802,000

1.3%

RENTAL OF PERSONAL PROPERTY

13,434,147

14,416,217

7.3%

14,307,000

0.8%

OTHER

14,826,955

16,509,954

11.4%

16,310,000

1.2%

TOTAL

$248,595,990

$264,722,440

6.5%

$264,003,000

0.3%

CATEGORY

NOTE: Division of collections to business categories is imputed based upon reported taxable income.

PAGE 10

MARICOPA COUNTY REGIONAL AREA ROAD FUND
TRANSPORTATION EXCISE TAX
REVENUES COLLECTED BY CATEGORY
FY 1986 - 2001
(Dollars in Thousands)
FISCAL
YEAR

RETAIL
SALES

CONTRACTING

UTILITIES

RESTAURANT
& BAR

RENTAL
REAL
PROPERTY

1986 *
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001

$19,244
48,085
51,405
53,927
55,798
56,769
59,108
64,033
72,737
81,546
90,454
96,281
104,073
113,528
124,428
131,608

$5,716
14,849
14,188
13,947
13,286
12,715
11,688
13,385
17,039
21,107
24,284
26,948
30,610
35,632
37,384
38,820

$3,073
8,542
9,535
10,336
10,685
11,353
10,999
11,874
12,680
13,132
14,198
14,583
15,101
15,680
16,437
17,862

$3,682
7,579
8,379
8,795
9,282
9,655
10,280
11,171
12,166
13,291
14,739
15,821
16,917
18,304
20,005
21,395

$1,923
6,822
5,994
8,952
10,808
11,091
11,707
12,993
13,414
14,660
16,822
18,298
19,552
20,266
22,080
24,112

$1,733
4,172
4,728
4,883
5,289
5,708
6,043
6,672
7,002
8,198
8,734
10,074
11,539
12,787
13,434
14,416

$1,615
4,782
4,961
5,410
5,653
6,044
6,671
7,145
7,808
8,384
9,183
10,252
11,472
13,272
14,827
16,510

$36,986
94,831
99,190
106,250
110,801
113,335
116,496
127,273
142,846
160,318
178,413
192,257
209,263
229,470
248,596
264,722

TOTAL

$1,223,024

$331,598

$196,070

$201,462

$219,494

$125,412

$133,989

$2,431,048

COMPOUND ANNUAL GROWTH RATE (FY 1987 - FY 2001) = 7.6%
*The tax became effective January 1, 1986

PAGE 11

RENTAL
PERSONAL
PROPERTY

OTHER

TOTAL

PERCENT
CHANGE

4.6%
7.1%
4.3%
2.3%
2.8%
9.3%
12.2%
12.2%
11.3%
7.8%
8.8%
9.7%
8.3%
6.5%

ARIZONA TRANSACTION PRIVILEGE TAX
EXCISE TAX RATES
FY 2001

Taxable Activity
Retail Sales
Contracting
Rental of Real Property
(including hotels & motels)
Restaurants and Bars
Utilities
Rental of Personal Property
Communication
Amusements
Publishing and Printing
Other
Mining
Wholesale Feed

Percent of Total
Maricopa County
Transaction Privilege
Tax Collections

Transaction
Privilege
Tax Rate

Transportation
Excise Tax Rate

49.72%
14.66%
9.11%

5.00%
5.00%
1.82%*

0.50%
0.50%
0.512%

8.08%
6.75%
5.45%
3.72%
1.08%
0.78%
0.65%
0.00%
0.00%

5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
3.125%
0%**

0.50%
0.50%
0.50%
0.50%
0.50%
0.50%
0.50%
0.3125%
0.00%

* In 1990 and 1993, legislation reduced the transaction privilege tax rate for real property rentals, however, for transportation excise
tax purposes, the rate was retained at its prior level.
** In 1994, legislation repealed the transaction privilege tax for livestock and poultry feed, salts, vitamins and other additives for
livestock and poultry. The tax rate was reduced to zero on July 17, 1994 and then the tax classification was repealed on
October 1, 1994.
PAGE 12

REVENUE CATEGORY DEFINITIONS
RETAIL SALES

Includes retail sales of automobiles, durable goods and other general merchandise,
apparel, building materials, furniture and other tangible personal property. The
tax on food was repealed in July, 1980.

CONTRACTING

Includes prime contracting and dealership of manufactured buildings and
owner-builder operations.

UTILITIES

Includes producing and/or furnishing to consumers electricity, natural or
artificial gas and water.

RESTAURANT
AND BAR

Includes operations of restaurants and drinking establishments.

RENTAL OF
REAL PROPERTY

Includes leasing or renting real property, hotels and motels.

RENTAL OF
PERSONAL
PROPERTY
OTHER

Includes leasing or renting tangible personal property such as leased vehicles and
construction equipment.
Includes operations of amusement places, intrastate telecommunication services,
job printing, engraving, embossing and publication, publication of newspapers,
magazines and other periodicals, intrastate transportation of persons, freight or
property, and intrastate operation of pipelines for oil or natural or artificial gas.

PAGE 13