Arizona Department of Transportation ARIZONA HIGHWAY USER REVENUE FUND Forecasting Process & Results FY 2009-2018 Financial Management Services September 2008 ARIZONA HIGHWAY USER REVENUE FUND OFFICIAL FORECAST UPDATE RISK ANALYSIS OF EXPECTED VALUES Introduction This document presents the forecast of expected values for the Arizona Highway User Revenue Fund for the period FY 2009-2018, as prepared by the Arizona Department of Transportation. Background The State of Arizona taxes motor fuels and collects a variety of fees relating to the registration and operation of motor vehicles in the state. These collections include gasoline and use fuel taxes, motor carrier fees, vehicle license taxes, motor vehicle registration fees, and other miscellaneous fees. These revenues are deposited in the Arizona Highway User Revenue Fund (HURF) and are then distributed to the cities, towns and counties of the State and to the State Highway Fund, which is administered by the Department. These taxes and fees represent the primary source of revenues available to the state for highway construction, improvements and other related expenses. Since 1986, the Department has estimated Highway Revenues for the State using a comprehensive regression-based econometric model. In 1989, the model was updated by Dr. Alberta Charney of the University of Arizona. The model relied on the estimates of certain “independent variables” to predict future tax revenues. The model’s revenue forecast was highly dependent on estimates of the independent variables. Any variability between estimated and actual values could lead to variances in the tax forecast. In order to deal with this variability, the Department introduced the Risk Analysis Process (RAP) in 1992. The RAP relies upon probability analysis and the independent evaluation of the model’s variables by an expert panel of economists. This results in a series of forecasts with specified probabilities of occurrence, rather than a single or “best guess” estimate. In 1997, Hickling Lewis Brod Inc. (HLB), working in conjunction with Dr. Dennis Hoffman of Arizona State University, developed a new forecasting model to incorporate certain economic data generated over the past ten years and evaluate the inclusion of independent variables absent from the 1989 model, to enhance the model’s forecasting accuracy. HLB also eliminated independent variables that were either not significant to the model or were not readily available. The new model also took into consideration 1997 legislation which eliminated the weight distance tax on motor carriers, increased weight and use fees for use class vehicles, and changed the point of taxation on fuel. In September 2000 and 2003, HLB reviewed the model and updated the equations. The independent variables contained in the model in 2003 included Arizona Real Income Growth Per Capita, Population Growth, Wage & Salary Employment Growth and Fleet Fuel Efficiency. In 2005, HDR\HLB developed a new forecasting model to incorporate additional economic data that would enhance the model’s forecasting accuracy. The Arizona Real Gross Domestic Product independent variable was added to the model to incorporate the impact of the Arizona economy on the commercial registration activities. The independent variables contained in the updated model now include: September 2008 1 • • • • • Arizona real income growth per capita Arizona population growth Arizona wage & salary employment growth Arizona real gross domestic product Arizona fleet fuel efficiency Risk Analysis Panel The Risk Analysis Process relies heavily on the judgments of an expert panel of economic and financial participants to provide information critical to the forecasting process. In August 2008, a panel of thirteen economic and finance experts representing public, private, and academic sectors submitted their individual estimates of the model’s independent variables and comments on the future economic outlook. The information gathered from the panelists was input into the model to produce a series of forecasts with associated probabilities of occurrence. The panelists’ inputs are reflected in the attached tables at the back of this report. Model Results This year’s panel inputs produced a mean forecast of $17,461.9 million for the period FY 2009-2018 with a compound growth rate of 5.0 percent. The Department’s Official Forecast for FY 2009-2018 totals $17,222.0 million with a compound growth rate of 4.8 percent. The Official Forecast incorporates the 50 percent confidence interval for each year of the forecast. The FY 2009 forecast of $1,387.0 million was developed in August 2008 by ADOT staff using time-series techniques, historical and projected growth rates from the model, and recent legislative changes. FY 2009 Official Forecast (Dollars in Millions) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Ave. CGR September 2008 Mean Forecast $1,385.1 $1,447.8 $1,525.0 $1,607.2 $1,690.9 $1,775.8 $1,865.6 $1,958.5 $2,053.4 $2,152.6 $17,461.9 5.0% Official Forecast $1,387.0 $1,441.4 $1,509.3 $1,584.8 $1,666.4 $1,746.7 $1,835.0 $1,926.9 $2,014.4 $2,110.0 $17,222.0 4.8% Confidence Level N/A 50% 50% 50% 50% 50% 50% 50% 50% 50% 2 For comparison purposes, the September 2007 Official Forecast and the September 2008 Official Forecast are shown below: FY 2009 Comparative Forecast (Dollars in Millions) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Ave. CGR Sep. 07 Official Forecast $1,509.8 $1,582.5 $1,663.7 $1,748.0 $1,839.5 $1,937.0 $2,038.3 $2,144.0 $2,256.5 $2,379.0 $19,098.3 5.2% Sep. 08 Official Forecast $1,387.0 $1,441.4 $1,509.3 $1,584.8 $1,666.4 $1,746.7 $1,835.0 $1,926.9 $2,014.4 $2,110.0 $17,222.0 4.8% Difference ($122.8) ($141.1) ($154.4) ($163.2) ($173.1) ($190.3) ($203.2) ($217.1) ($242.1) ($269.0) ($1,876.3) Summary The Department’s Official Forecast for FY 2009-2018 totals $17,222.0 million, a decrease of $1,876.3 million from the September 2007 Official Forecast. The Risk Analysis Process panel members forecasted lower growth for the independent variables (Arizona Real Per Capita Personal Income, Arizona Wage and Salary Employment, Arizona Population and Arizona Real Gross Domestic Product) through FY 2010 when compared to their September 2007 inputs. The RAP panel members were concerned with the housing and credit markets affect on the Arizona economy in FY 2009 and FY 2010 but expect a rebound to begin in FY 2011. Supplementary Information The remaining pages of this report present supplementary information on the detailed results of the Risk Analysis Process, the Department’s model and the values of the independent variables forecast by the expert panel. While the Official Forecast period is FY 2009-2018, panel inputs were requested for FY 2009-2013, 2016, 2021 and 2026. Data displayed for other than the requested years, has been extrapolated. September 2008 3 September 2008 HURF OFFICIAL REVENUE FORECAST With Category Detail and Confidence Interval By Fiscal Year (Current Dollars in Millions) Fiscal Year Percentile 2008 Actual 2009 50% 2010 50% 2011 50% 2012 50% 2013 50% 2014 50% 2015 50% 2016 50% 2017 50% 2018 50% Gasoline Tax $492.5 $498.9 $514.1 $528.7 $546.6 $562.7 $578.5 $597.9 $614.4 $629.8 $643.2 Use Fuel Tax 207.9 210.9 209.8 213.9 219.9 226.7 233.8 241.2 249.0 256.1 263.9 40.2 41.6 43.7 45.4 47.1 49.0 50.9 52.8 54.9 56.9 59.1 Vehicle License Tax 385.2 408.9 439.4 478.6 519.8 567.3 614.0 664.6 720.9 774.3 836.8 Registration 162.8 168.5 172.3 177.6 183.0 189.0 194.5 200.2 206.2 212.2 218.4 56.0 58.2 62.1 65.1 68.4 71.7 75.0 78.3 81.5 85.1 88.6 Motor Carrier Fee Other Total $1,344.5 $1,387.0 $1,441.4 $1,509.3 $1,584.8 $1,666.4 $1,746.7 $1,835.0 $1,926.9 $2,014.4 $2,110.0 4 September 2008 HURF TOTAL TAX REVENUE RISK ANALYSIS RESULTS (Current Dollars in Millions) Fiscal Year Mean 10% 20% 30% 40% 50% 60% 70% 80% 90% 2009 $1,385.1 $1,496.1 $1,461.5 $1,433.1 $1,406.6 $1,384.8 $1,359.2 $1,333.7 $1,302.6 $1,276.5 2010 1,447.8 1,669.4 1,594.2 1,535.3 1,489.1 1,441.4 1,397.7 1,352.8 1,297.8 1,234.7 2011 1,525.0 1,834.9 1,721.4 1,641.8 1,573.9 1,509.3 1,448.3 1,390.1 1,320.1 1,236.1 2012 1,607.2 1,979.0 1,837.1 1,737.0 1,658.9 1,584.8 1,513.4 1,442.3 1,368.0 1,270.5 2013 1,690.9 2,102.6 1,947.4 1,835.6 1,744.4 1,666.4 1,587.1 1,509.9 1,424.6 1,320.5 2014 1,775.8 2,225.3 2,053.3 1,932.4 1,831.3 1,746.7 1,659.0 1,577.8 1,486.2 1,373.1 2015 1,865.6 2,347.8 2,168.1 2,031.4 1,926.1 1,835.0 1,735.4 1,653.1 1,558.7 1,431.1 2016 1,958.5 2,486.6 2,278.0 2,138.5 2,021.6 1,926.9 1,818.2 1,727.6 1,627.4 1,493.3 2017 2,053.4 2,617.5 2,397.3 2,241.4 2,123.5 2,014.4 1,907.8 1,808.9 1,695.2 1,550.4 2018 2,152.6 2,755.3 2,518.0 2,355.1 2,231.2 2,110.0 1,993.8 1,887.6 1,768.2 1,616.5 5 September 2008 HURF OFFICIAL REVENUE FORECAST DISTRIBUTION (Current Dollars in Millions) Fiscal Year HURF $1,387.0 2009 1,441.4 2010 1,509.3 2011 1,584.8 2012 1,666.4 2013 1,746.7 2014 1,835.0 2015 1,926.9 2016 2,014.4 2017 2,110.0 2018 $17,222.0 Total DPS/ ESP /1 $86.6 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 11.0 $185.6 DPS Parity Net HURF Comp. Fund /2 $1,300.4 ($3.1) 1,430.4 (3.4) 1,498.3 (3.6) 1,573.8 (4.0) 1,655.4 (4.3) 1,735.7 (4.7) 1,824.0 (5.1) 1,915.9 (5.5) 2,003.4 (5.9) 2,099.0 (6.4) $17,036.4 ($45.9) ADOT 50.5% /3 $645.2 719.0 753.0 790.8 831.6 871.9 916.1 962.0 1,005.8 1,053.6 $8,549.1 Cities/Towns Cities +300K 27.5% 3% $357.6 $39.0 393.3 42.9 412.0 44.9 432.8 47.2 455.2 49.7 477.3 52.1 501.6 54.7 526.9 57.5 550.9 60.1 577.2 63.0 $4,685.0 $511.1 Counties 19% $247.1 271.8 284.7 299.0 314.5 329.8 346.6 364.0 380.7 398.8 $3,236.9 6 NOTES: FY 2009 HURF estimate based on August 2008 Forecast. FY 2010-2018 HURF estimate based on September 2008 Official Forecast. /1. The DPS/ESP includes $1 million for Economic Strength Project (ESP) each year. The DPS transfer in FY 2009 is $84.9 million and $10 million each year thereafter, but is subject to change. FY 2009 includes a $617,000 appropriation to MVD for the registration compliance program per Laws 2008, Chapter 285 (HB 220 /2. Per Laws 2005, Chapter 306 (SB 1119), 1.51 percent of the state highway fund share of HURF VLT is transferred to the DPS Parity Compensation Fund. /3 Net of the DPS Parity Compensation Fund. Includes a $8.4 million transfer from the state highway fund share of HURF VLT to the state general fund in FY 2009 per Laws 2008, Chapter 285 (HB 2209). OFFICIAL FORECAST RESULTS Millions of Current Dollars (Current Dollars in Millions) Fiscal Official Mean 80% Conf. 20% Conf. Year Forecast Forecast Interval Interval 2009 $1,387.0 $1,385.1 $1,302.6 $1,461.5 2010 1,441.4 1,447.8 1,297.8 1,594.2 2011 1,509.3 1,525.0 1,320.1 1,721.4 2012 1,584.8 1,607.2 1,368.0 1,837.1 2013 1,666.4 1,690.9 1,424.6 1,947.4 2014 1,746.7 1,775.8 1,486.2 2,053.3 2015 1,835.0 1,865.6 1,558.7 2,168.1 2016 1,926.9 1,958.5 1,627.4 2,278.0 2017 2,014.4 2,053.4 1,695.2 2,397.3 2018 2,110.0 2,152.6 1,768.2 2,518.0 Total $17,222.0 $17,462.0 $14,848.8 $19,976.2 $2,800 $2,700 $2,600 $2,500 $2,400 $2,300 $2,200 $2,100 $2,000 $1,900 $1,800 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 2009 2010 2011 Official September 2008 2012 2013 Mean 2014 2015 80% Conf. 2016 2017 2018 20% Conf. 7 ARIZONA REAL INCOME PER CAPITA 4.0% 3.5% Growth Rate 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fiscal Year Median Lower 10% Upper 10% ARIZONA POPULATION GROWTH 6.0% 5.0% Growth Rate 4.0% 3.0% 2.0% 1.0% 0.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fiscal Year Median September 2008 Lower 10% Upper 10% 8 ARIZONA WAGE & SALARY EMPLOYMENT 8.0% 7.0% 6.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fiscal Year Median Lower 10% Upper 10% ARIZONA GROSS DOMESTIC PRODUCT 8.0% 7.0% 6.0% Growth Rate Growth Rate 5.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fiscal Year Median September 2008 Lower 10% Upper 10% 9 PANELIST MEAN DATA VALUES Income Growth FY 2009 Upper 10% Lower 10% Median FY 2010 Upper 10% Lower 10% Median FY 2011 Upper 10% Lower 10% Median FY 2012 Upper 10% Lower 10% Median FY 2013 Upper 10% Lower 10% Median FY 2016 Upper 10% Lower 10% Median FY 2021 Upper 10% Lower 10% Median FY 2026 Upper 10% Lower 10% Median Population Wage & Salary Growth Employ. Growth AZ GDP Growth 0.65 -2.05 -0.82 2.77 1.59 2.25 2.11 -0.93 0.78 2.85 -0.37 1.26 2.44 -0.53 0.98 3.00 1.78 2.45 3.71 0.41 2.25 4.51 0.89 2.71 3.05 0.03 1.62 3.29 1.89 2.58 5.13 1.35 3.38 5.55 1.88 3.72 2.98 0.25 1.74 3.39 1.97 2.65 5.40 1.43 3.58 5.69 2.06 3.91 2.91 0.28 1.64 3.26 1.91 2.61 5.15 1.18 3.33 5.43 1.98 3.74 2.75 0.04 1.33 3.06 1.71 2.39 4.89 0.88 2.93 5.31 1.65 3.38 2.77 -0.08 1.32 2.91 1.40 2.20 4.77 0.65 2.66 5.25 1.36 3.22 2.87 -0.12 1.34 2.79 1.12 2.02 4.72 0.54 2.56 5.29 1.35 3.18 All data in the above table are percentage growth rates. September 2008 10 ARIZONA REAL PER CAPITA INCOME GROWTH 2009 2010 2011 2012 2013 2016 2021 Panelist 1 Upper 10% 2.00 3.00 3.20 3.40 3.00 2.50 2.50 Lower 10% -2.00 -1.00 0.00 0.50 0.40 -0.10 -0.10 Median -1.00 1.00 2.00 3.00 2.00 1.20 1.20 Panelist 2 Upper 10% 0.80 3.10 3.80 3.80 3.40 3.40 3.20 Lower 10% -1.70 -0.20 0.70 0.70 0.80 0.80 0.50 Median -0.20 1.60 2.30 2.40 2.20 2.20 2.00 Panelist 3 Upper 10% 0.00 0.50 1.00 2.50 2.50 2.50 2.50 Lower 10% -2.00 -2.00 -1.50 0.50 1.00 1.00 1.00 Median -1.50 -1.00 0.00 2.00 2.00 2.00 2.00 Panelist 4 Upper 10% -0.80 3.30 3.80 3.40 3.40 3.40 3.90 Lower 10% -3.30 -0.80 -0.30 -0.40 -0.10 -0.10 0.40 Median -1.80 0.80 1.30 1.90 2.10 1.90 2.00 Panelist 5 Upper 10% 1.00 3.00 3.00 2.70 2.60 2.60 2.60 Lower 10% -2.50 -1.50 -1.50 -1.50 -1.50 -1.50 -1.50 Median -1.00 0.50 0.50 0.50 0.50 0.50 0.50 Panelist 6 Upper 10% 0.50 0.80 2.00 2.50 3.00 2.50 1.50 Lower 10% -2.00 -1.80 -0.50 0.00 0.50 0.00 -0.50 Median -0.50 -0.20 1.00 1.50 2.00 1.00 0.50 Panelist 7 Upper 10% 2.10 2.90 3.30 3.40 3.40 3.00 3.20 Lower 10% -1.00 -0.50 0.00 0.10 0.20 -0.20 -0.60 Median 0.50 1.60 1.90 1.80 1.70 1.40 1.00 Panelist 8 Upper 10% 0.60 3.00 3.50 2.80 2.50 2.30 2.50 Lower 10% -1.00 1.00 1.50 0.80 0.50 0.30 0.50 Median -0.40 2.00 2.50 1.80 1.50 1.30 1.50 Panelist 9 Upper 10% 0.70 1.00 2.00 2.50 2.50 2.50 3.00 Lower 10% -2.50 -1.50 -1.40 -1.00 -1.00 -1.00 -1.00 Median -1.50 0.00 0.80 1.00 1.00 0.50 0.50 Panelist 10 Upper 10% 0.00 1.30 2.00 2.00 2.00 2.00 2.00 Lower 10% -2.00 -0.70 -1.00 -0.50 0.00 0.00 0.00 Median -0.80 0.30 -0.20 0.00 0.30 0.50 0.50 Panelist 11 Upper 10% 1.00 3.50 4.00 4.00 4.00 3.50 3.00 Lower 10% -2.50 1.00 1.50 2.00 2.00 1.50 1.00 Median -1.00 2.00 3.00 3.00 3.00 2.50 2.50 Panelist 12 Upper 10% 0.60 3.30 4.10 2.80 2.60 2.60 3.20 Lower 10% -1.60 1.10 1.90 0.60 0.40 -0.50 -0.20 Median -0.50 2.20 3.00 1.70 1.50 1.10 1.50 Panelist 13 Upper 10% 0.00 3.00 4.00 3.00 3.00 3.00 3.00 Lower 10% -2.50 0.00 1.10 1.50 0.50 0.30 -0.50 Median -1.00 2.00 3.00 2.00 1.50 1.30 1.50 All data in the above table are percentage growth rates. September 2008 2026 2.50 -0.10 1.20 3.20 -0.10 2.00 2.50 0.80 1.90 3.90 0.40 2.00 2.60 -1.50 0.50 2.00 0.00 1.00 3.40 -1.00 1.00 2.50 0.50 1.50 3.00 -1.00 0.50 2.00 0.00 0.50 3.00 1.00 2.00 3.70 -0.10 1.50 3.00 -0.50 1.50 11 ARIZONA POPULATION GROWTH 2009 2010 2011 2012 2013 2016 2021 Panelist 1 2.40 2.80 4.00 4.50 1.00 3.10 3.00 Upper 10% 0.50 0.60 0.70 1.00 1.00 1.00 0.70 Lower 10% 1.70 1.80 2.40 2.30 2.30 2.10 2.00 Median Panelist 2 3.00 3.10 3.20 3.30 3.30 3.00 3.00 Upper 10% 1.60 1.90 2.50 2.20 2.20 1.30 1.00 Lower 10% 2.40 2.80 2.90 2.80 2.80 2.20 1.90 Median Panelist 3 2.25 2.50 3.00 3.50 3.20 3.00 3.00 Upper 10% 1.25 1.50 1.75 2.00 2.00 1.80 1.70 Lower 10% 2.00 2.20 2.50 2.70 2.60 2.20 2.10 Median Panelist 4 2.60 3.10 3.30 4.10 4.00 3.90 3.40 Upper 10% 1.00 1.10 1.30 2.40 2.30 2.00 1.10 Lower 10% 1.70 2.10 2.30 3.40 3.20 2.90 2.60 Median Panelist 5 3.20 3.50 3.40 3.30 3.20 3.00 2.80 Upper 10% 1.80 2.10 2.00 1.90 1.80 1.40 1.00 Lower 10% 2.30 2.70 2.70 2.70 2.70 2.70 2.70 Median Panelist 6 2.80 2.70 2.70 2.80 2.80 3.10 2.80 Upper 10% 2.20 2.10 2.10 2.20 2.20 2.50 2.20 Lower 10% 2.60 2.50 2.50 2.60 2.60 2.80 2.50 Median Panelist 7 3.10 3.50 3.50 3.40 3.30 3.20 3.10 Upper 10% 1.80 1.90 2.00 1.90 1.90 1.70 1.50 Lower 10% 2.50 2.70 2.70 2.60 2.50 2.30 2.00 Median Panelist 8 2.50 2.40 2.50 2.40 2.30 2.30 2.10 Upper 10% 2.00 2.00 1.90 1.80 1.70 1.70 1.50 Lower 10% 2.20 2.30 2.20 2.10 2.00 2.00 1.80 Median Panelist 9 2.50 2.50 3.50 3.50 3.50 3.00 3.00 Upper 10% 1.00 1.50 1.50 2.00 2.00 2.00 2.00 Lower 10% 2.00 2.10 2.30 2.60 3.00 2.50 2.50 Median Panelist 10 2.90 3.00 3.00 3.00 3.00 3.00 3.00 Upper 10% 1.80 2.00 2.00 1.50 1.50 1.50 1.50 Lower 10% 2.70 2.40 2.20 2.00 2.00 2.00 2.00 Median Panelist 11 3.00 3.50 4.00 4.00 3.50 3.20 3.00 Upper 10% 2.00 2.50 2.50 2.50 2.00 2.00 1.50 Lower 10% 2.50 3.00 3.50 3.50 3.00 2.70 2.50 Median Panelist 12 3.10 3.40 3.30 3.20 3.20 3.00 2.80 Upper 10% 1.70 2.00 1.90 1.80 1.80 1.40 1.00 Lower 10% 2.40 2.70 2.60 2.50 2.50 2.20 1.90 Median Panelist 13 2.70 3.00 3.30 3.00 3.00 3.00 2.80 Upper 10% 2.00 2.00 2.50 2.40 2.40 2.00 1.50 Lower 10% 2.30 2.50 2.80 2.70 2.70 2.50 2.10 Median All data in the above table are percentage growth rates. September 2008 2026 3.00 0.70 2.00 3.00 1.00 1.60 2.80 1.50 2.00 3.10 0.90 2.40 2.70 0.50 2.70 2.50 1.50 2.00 3.10 0.60 2.00 1.90 1.30 1.60 3.00 2.00 2.50 3.00 1.50 2.00 3.00 1.00 2.00 2.70 0.50 1.60 2.50 1.50 1.80 12 ARIZONA WAGE & SALARY EMPLOYMENT GROWTH 2009 2010 2011 2012 2013 2016 2021 2026 Panelist 1 Upper 10% Lower 10% Median Panelist 2 Upper 10% Lower 10% Median Panelist 3 Upper 10% Lower 10% Median Panelist 4 Upper 10% Lower 10% Median Panelist 5 Upper 10% Lower 10% Median Panelist 6 Upper 10% Lower 10% Median Panelist 7 Upper 10% Lower 10% Median Panelist 8 Upper 10% Lower 10% Median Panelist 9 Upper 10% Lower 10% Median Panelist 10 Upper 10% Lower 10% Median Panelist 11 Upper 10% Lower 10% Median Panelist 12 Upper 10% Lower 10% Median Panelist 13 Upper 10% Lower 10% Median 2.50 3.50 5.00 6.50 6.50 5.00 4.50 4.50 -0.10 0.00 1.00 2.00 2.00 1.00 0.50 0.50 1.00 2.00 3.00 4.50 4.50 3.00 2.50 2.50 3.70 5.10 5.90 5.40 5.00 5.10 5.20 5.30 -1.00 0.90 1.20 0.90 0.50 0.20 -0.10 -0.20 1.30 2.90 3.80 3.20 2.70 2.70 2.50 2.50 1.00 3.00 4.50 6.00 6.50 6.00 6.00 6.00 -0.50 0.00 1.50 1.50 2.00 2.00 2.00 2.00 0.50 1.50 3.50 3.00 4.00 4.00 3.75 3.00 -0.50 2.50 4.50 5.50 5.50 5.50 5.50 5.00 -2.00 0.00 0.50 1.00 1.00 1.00 1.00 1.00 -1.00 1.00 2.50 4.00 4.00 3.50 2.80 2.80 3.10 5.00 6.50 5.80 4.90 5.00 4.90 5.10 -1.00 -1.00 -1.00 -1.00 -1.00 -1.00 -1.00 -1.00 1.10 3.00 3.00 3.00 3.00 2.50 2.50 2.50 1.50 3.00 4.00 6.00 5.50 4.50 3.50 3.00 -1.50 0.00 1.00 2.50 2.00 1.50 0.50 0.00 0.50 2.00 3.00 4.50 4.00 3.50 2.50 2.00 4.00 5.10 5.30 5.50 5.60 5.70 5.90 6.80 -1.00 1.20 1.70 1.60 1.20 0.60 0.30 -0.20 3.50 3.30 3.50 3.40 3.00 2.90 2.50 2.50 2.00 3.50 4.50 4.00 3.50 3.50 3.50 3.50 0.00 1.50 2.50 2.00 1.50 1.50 1.50 1.50 1.00 2.50 3.50 3.00 2.50 2.50 2.50 2.50 1.00 2.00 3.50 5.00 5.00 4.50 4.50 4.00 -1.50 0.50 0.00 1.00 1.00 1.00 1.00 1.00 -0.50 0.00 1.50 3.50 3.50 2.50 2.50 2.50 2.00 5.00 5.00 4.00 4.00 4.00 4.00 4.00 0.00 1.00 3.00 2.00 2.00 2.00 2.00 2.00 1.00 3.00 5.00 3.50 3.00 3.00 3.00 3.00 3.00 4.80 6.30 5.60 4.80 4.90 4.80 5.00 -1.00 0.80 2.30 1.60 0.80 0.30 0.00 -0.20 1.00 2.80 4.30 3.60 2.80 2.60 2.40 2.40 2.00 2.00 6.50 5.50 5.00 5.00 5.00 4.50 -1.50 1.00 2.50 2.00 1.20 0.50 0.10 0.10 0.00 3.00 5.00 3.80 3.00 2.50 2.50 2.50 All data in the above table are percentage growth rates. September 2008 13 ARIZONA GROSS STATE PRODUCT GROWTH 2009 2010 2011 2012 2013 2016 2021 Panelist 1 3.00 4.50 6.00 6.00 5.50 5.20 5.20 Upper 10% -0.50 0.00 2.00 2.00 1.50 1.00 1.00 Lower 10% 1.00 2.00 5.00 5.00 4.00 3.50 3.50 Median Panelist 2 3.00 5.90 6.80 6.50 6.50 6.40 6.30 Upper 10% 0.80 1.50 3.50 3.00 2.90 1.10 1.00 Lower 10% 2.00 3.40 5.00 4.90 4.80 4.00 3.90 Median Panelist 3 3.50 4.00 6.00 6.00 5.50 5.00 5.00 Upper 10% 0.50 0.50 1.50 2.00 2.00 2.50 2.50 Lower 10% 1.50 1.75 3.00 4.00 4.50 4.50 4.00 Median Panelist 4 3.50 5.00 5.00 5.50 5.50 5.50 5.50 Upper 10% -2.50 -0.50 0.50 1.00 1.00 1.00 1.00 Lower 10% 0.50 2.50 3.50 4.00 4.00 3.50 3.00 Median Panelist 5 3.30 4.50 4.50 4.50 4.50 4.50 4.50 Upper 10% 0.50 1.00 1.00 1.00 1.00 1.00 1.00 Lower 10% 1.50 2.00 2.00 2.00 2.00 2.00 2.00 Median Panelist 6 1.50 3.00 5.00 5.50 4.80 4.50 4.30 Upper 10% -1.50 0.00 1.50 2.50 2.30 2.50 2.30 Lower 10% 0.50 2.00 3.50 4.00 3.80 3.50 3.30 Median Panelist 7 4.00 4.80 5.70 6.00 6.30 6.50 7.00 Upper 10% 1.00 2.00 2.50 2.60 2.40 1.70 1.00 Lower 10% 3.10 3.70 4.10 4.30 4.30 4.00 3.80 Median Panelist 8 3.90 5.50 6.50 6.00 5.50 5.50 5.50 Upper 10% -0.10 1.50 2.50 2.00 1.50 1.50 1.50 Lower 10% 1.90 3.50 4.50 4.00 3.50 3.50 3.50 Median Panelist 9 1.50 4.00 4.50 5.00 5.00 5.00 4.00 Upper 10% -1.00 0.00 1.50 2.00 2.50 2.00 1.50 Lower 10% 0.50 2.50 3.00 3.50 3.50 3.00 3.00 Median Panelist 10 3.00 3.50 4.00 4.00 4.00 4.00 4.00 Upper 10% -1.50 -1.00 -0.50 -0.50 -0.50 -0.50 -0.50 Lower 10% 1.00 1.40 1.00 0.50 0.60 0.60 0.60 Median Panelist 11 2.00 4.00 5.00 6.00 6.00 5.00 4.50 Upper 10% 0.00 1.50 2.00 3.00 4.00 3.00 2.50 Lower 10% 1.00 3.00 4.00 5.00 5.00 4.00 3.50 Median Panelist 12 2.80 5.90 6.20 6.00 5.50 5.90 6.50 Upper 10% 0.00 3.10 3.40 3.20 2.70 1.70 0.90 Lower 10% 1.40 4.50 4.80 4.60 4.10 3.80 3.70 Median Panelist 13 2.00 4.00 7.00 7.00 6.00 6.00 6.00 Upper 10% -0.50 2.00 3.00 3.00 2.50 3.00 2.00 Lower 10% 0.50 3.00 5.00 5.00 4.50 4.00 4.00 Median All data in the above table are percentage growth rates. September 2008 2026 5.20 1.00 3.50 6.30 1.00 3.80 5.00 2.50 4.00 5.50 1.00 3.00 4.50 1.00 2.00 4.20 2.20 3.20 7.50 0.80 3.50 5.50 1.50 3.50 4.00 1.50 3.00 4.00 -0.50 0.60 4.50 2.50 3.50 6.60 1.00 3.80 6.00 2.00 4.00 14 HISTORICAL DATA ARIZONA REAL PER CAPITA INCOME GROWTH Using Phoenix CPI to Measure Inflation (Annual Percent Change) HISTORICAL DATA BY FISCAL YEAR (July 1 through June 30) 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 3.3% 1.6% -4.2% -3.6% 1.1% 3.4% 2.0% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 -0.8% -1.2% -2.8% -0.5% 4.7% 3.5% 1.4% 1.4% 1.2% 0.5% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 -0.2% -2.5% -1.4% -0.4% 0.1% 0.4% 0.0% -0.1% 1.3% 1.1% 2000 2001 2002 2003 2004 2005 2006 2007 2008 * 2009 1.8% 1.9% -0.2% -0.1% 1.6% 2.4% 1.8% 1.3% -0.5% * Estimate HISTORICAL DATA - GRAPHED 0.06 0.06 10.0% 0.1 0.1 0.06 Percent PercentChange Change Percent Change 8.0% 0.08 0.08 0.04 0.04 0.04 6.0% 0.06 0.06 4.0% 0.04 0.04 0.02 0.02 2.0% 0.02 0.02 0.0% 00 -2.0% -0.02 -0.02 -0.02 -0.02 -4.0% -0.04 -0.04 -6.0% -0.06 -0.06 -0.04 -0.04 -8.0% -0.08 -0.08 -10.0% -0.06 -0.1 -0.1 -0.06 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 01 05 02 06 7375 74 7476 75 75 75 76 76 76 77 77 77 78 78 78 7979 79 8080 80 81 81 82 82 82 8382 83 83 8483 84 85 84 86 85 86 87 86 87 88 87 88 89 88 89 9088 89 90 9190 92 9191 93 92 95 92 94 93 93 95 94 96 94 95 97 95 96 98 96 97 99 97 98 00 98 99 01 99 00 02 00 01 0399 01 02 0400 02 03 05 03 04 06 05 07 04 74 78 79 80 81 82 83 84 85 86 87 90 91 92 93 94 98 99 00 01 02 03 04 05 06 07 08 73 74 7577 76 77 78 79 8081 81 84 85 86 87 89 90 91 92 93 94 95 96 97 98 73 74 75 76 77 78 79 80 81 82 83 8485 8588 8689 87 88 89 90 91 9296 9397 94 95 96 97 98 99 00 01 02 03 FiscalYear Year Fiscal HISTORICAL DATA - ANALYSIS Period 5 Years 10 Years Full Period September 2008 Historical Min. Max. Mean -0.5% 2.4% 1.3% -0.5% 2.4% 1.1% -4.2% 4.7% 0.5% Std. 80% Range Dev. Lower Upper 1.1% 0.2% 2.2% 1.0% -0.3% 2.0% 1.9% -2.0% 2.9% 15 HISTORICAL DATA ARIZONA POPULATION GROWTH (Annual Percent Change) HISTORICAL DATA BY FISCAL YEAR (July 1 through June 30) 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 4.5% 3.4% 2.3% 1.8% 1.9% 2.0% 2.2% 3.3% 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 3.3% 5.6% 5.9% 5.8% 4.6% 2.8% 2.7% 3.4% 3.7% 4.8% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 3.9% 2.6% 2.8% 2.7% 3.3% 3.8% 3.9% 3.9% 2.9% 2.5% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1.7% 2.8% 3.4% 3.8% 4.4% 4.4% 3.5% 3.3% 3.1% 2.9% 2000 2001 2002 2003 2004 2005 2006 2007 2008 * 2009 2.9% 2.6% 2.7% 2.5% 3.0% 3.6% 3.6% 2.8% 2.5% BEA FY 1962-2007. FY 2008 * and FY 2009 based on Arizona Blue Chip estimate, June 2008. FY 2010-2026 based on DES Arizona Population Projections 2006-2055 grow th rates dated March 31, 2006. HISTORICAL DATA - GRAPHED 7.0% 0.07 Percent PercentChange Change 6.0% 0.06 0.05 5.0% 0.05 0.04 4.0% 0.04 0.03 3.0% 0.03 0.02 2.0% 0.02 0.01 1.0% 0.01 0 0.0% 0 62 63 62 62 64 65 65 64 64 66 67 67 66 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 69 68 69 70 71 70 71 72 73 72 73 74 75 74 75 7677 76 777879 787980 81 8081 8283 8486 85 87 8688 87 89 8890 89 90 91929193 92949395 94 96 99 98 00 01 68 8283 84 85 96 9597 98 97 00 99 02 00 01 03 02 04 Fiscal Fiscal Year Year HISTORICAL DATA - ANALYSIS Period 5 Years 10 Years Full Period September 2008 Historical Min. Max. 2.5% 3.6% 2.5% 3.6% 1.7% 5.9% Mean 3.1% 2.9% 3.3% Std. Dev. 0.5% 0.4% 1.0% 80% Range Lower Upper 2.6% 3.6% 2.5% 3.6% 2.3% 4.6% 16 02 03 04 05 06 04 06 07 05 08 HISTORICAL DATA ARIZONA WAGE & SALARY EMPLOYMENT GROWTH (Annual Percent Change) HISTORICAL DATA BY FISCAL YEAR (July 1 through June 30) 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 6.0% 8.8% 10.8% 7.3% 1.0% 0.9% 5.4% 8.7% 10.0% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 6.3% 3.0% 0.8% 1.8% 7.2% 8.9% 6.3% 4.1% 3.0% 2.4% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2.2% 1.2% 1.1% 3.1% 5.6% 6.4% 5.7% 5.2% 4.7% 4.4% 2000 2001 2002 2003 2004 2005 2006 2007 2008 * 2009 4.0% 2.3% 0.5% 0.7% 2.5% 4.5% 5.2% 3.1% 0.8% * Estimate HISTORICAL DATA - GRAPHED Percent Percent Percent PercentChange Change Change Change 0.12 0.16 0.12 16.0% 0.14 14.0% 0.10.1 0.12 12.0% 0.1 0.08 0.08 10.0% 0.08 8.0% 0.06 0.06 0.06 0.06 6.0% 0.04 0.04 4.0% 0.04 0.04 0.04 0.02 0.02 2.0% 0 0.02 0 0.0% 0.02 0.02 -0.02 -2.0% -0.02 0 -0.04 0 -4.0% -0.04 0 7374 7475 7576767777 787979 80 818283 82 83 84 85 868887 88 89 90 91 92 93 94 959896 97 98 99 00 01 02 73 78 8080 8181 83 84 85 86 89 90 9192 92 93 94 95 97 98 99 00 03 73 74 75 80 81 82 84 86 87 89 91 92 93 94 95 96 97 9900 0001 01 02 03 04 71 7474 7676 77 78 83 84 85 86 8787 88 89 9090 9191 92 93 94 95 97 98 02 03 04 05 06 72 717274 72 737373 74 75 7677 7778 77 78 79 78 79 79 79 80 80 81 82 81 82 8383 83 84 84 8585 86 86 87 87 88 88 89 89 90 90 91 92 91 92 93 93 94 94 95 95 96 96 9796 97 98 98 9996 99 0099 00 01 02 01 02 03 03 04 04 0501 05 0602 06 07 05 07 08 73 75 767575 78 79 80 81 8282 84 85 86 87 8888 8990 93 94 95 96 97 98 99 00 01 02 03 04 Fiscal Fiscal Year FiscalYear Year HISTORICAL DATA - ANALYSIS Period 5 Years 10 Years Full Period September 2008 Historical Min. Max. Mean 0.8% 5.2% 3.2% 0.5% 5.2% 2.8% 0.5% 10.8% 4.4% Std. 80% Range Dev. Lower Upper 1.7% 1.5% 4.9% 1.7% 0.7% 4.6% 2.8% 0.9% 8.7% 17 HISTORICAL DATA ARIZONA REAL GROSS DOMESTIC PRODUCT GROWTH Using Phoenix CPI to Measure Inflation (Annual Percent Change) HISTORICAL DATA BY FISCAL YEAR (July 1 through June 30) 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 7.2% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 0.9% -2.2% -2.6% 1.9% 10.0% 8.4% 5.9% 5.6% 3.9% 1.5% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 -0.5% -0.3% 3.8% 5.2% 5.7% 6.2% 4.2% 5.6% 5.5% 4.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 * 2009 3.8% 3.0% 2.3% 3.1% 3.6% 5.5% 6.9% 3.5% 0.8% * Estimate HISTORICAL DATA - GRAPHED 0.16 16.0% 0.14 14.0% Percent PercentChange Change 0.12 12.0% 0.1 10.0% 8.0% 0.08 6.0% 0.06 0.04 4.0% 2.0% 0.02 0.0% 0 -2.0% -0.02 -4.0% -0.04 83 84 85 86 88 89 90 91 92 93 01 02 03 04 05 06 797980 808081 81 8181 82 82 8282 83 83 83 84 8484 85 8585 86 8686 87 87 87 88 88 89 89 90 9091 90 9192 91 9293 93 9294 94 939594 95 94 9695 96 95 9796 97 96 9897 98 99 9798 99 00 9899 00 01 9900 01 0200 02 0301 03 04 02 04 05 03 05 06 04 06 07 08 07 05 Fiscal Year HISTORICAL DATA - ANALYSIS Period 5 Years 10 Years Full Period September 2008 Historical Min. Max. Mean 0.8% 6.9% 4.1% 0.8% 6.9% 3.7% -2.6% 10.0% 3.8% Std. 80% Range Dev. Lower Upper 2.3% 1.9% 6.4% 1.7% 2.2% 5.7% 2.9% -0.3% 6.9% 18