100 Years of Arizona History

Celebrating
1912-2012

fiscal year

2012

Comprehensive Annual Financial Report
For the fiscal year ended June 30, 2012

Arizona Department of Transportation

Comprehensive Annual Financial Report
For the fiscal year ended June 30, 2012
Prepared by Financial Management Services
State of Arizona Department of Transportation

206 South 17th Avenue
Phoenix, Arizona 85007
azdot.gov

Arizona Department of Transportation
Comprehensive Annual Financial Report
for the fiscal year ended June 30, 2012
TABLE OF CONTENTS

Page
INTRODUCTORY SECTION
Letter of Transmittal.............................................................................................................................................. i-v
Certificate of Achievement for Excellence in Financial Reporting ......................................................................... vi
List of Principal Officials .......................................................................................................................................vii
Organization Chart ................................................................................................................................................viii

FINANCIAL SECTION
Independent Auditors’ Report ...............................................................................................................................1-2
Management’s Discussion and Analysis .............................................................................................................3-14
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Assets (Exhibit 1) ............................................................................................................. 15
Statement of Activities (Exhibit 2) ............................................................................................................... 16
Governmental Funds Financial Statements:
Balance Sheet - Governmental Funds (Exhibit 3) ...................................................................................17-18
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets (Exhibit 3.1) ............................................................................................ 19
Statement of Revenues, Expenditures, and Changes in Fund
Balances - Governmental Funds (Exhibit 4) .......................................................................................20-23
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances of Governmental Funds to the Statement of Activities (Exhibit 4.1) .......................... 24
Proprietary Funds Financial Statements:
Statement of Net Assets – Proprietary Funds (Exhibit 5) ............................................................................ 25
Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds (Exhibit 6) ....... 26
Statement of Cash Flows – Proprietary Funds (Exhibit 7) ........................................................................... 27
Fiduciary Funds Financial Statement
Statement of Net Assets – Agency Fund (Exhibit 8).................................................................................... 28
Index of Notes to the Financial Statements ...................................................................................................... 29
Notes to the Financial Statements ................................................................................................................30-52
Required Supplementary Information (Other than MD&A)
Budgetary Comparison Schedule – General Fund (State Highway Fund) ........................................................ 53
Note to Required Supplementary Information .................................................................................................. 54
Information About Infrastructure Assets Reported Using the Modified Approach .....................................55-59

2012 Comprehensive Annual Financial Report

Arizona Department of Transportation
Comprehensive Annual Financial Report
for the fiscal year ended June 30, 2012
TABLE OF CONTENTS (continued)

Page
Supplementary Information
Non-Major Governmental Funds Financial Statements:
Combining Balance Sheet (Exhibit 9) ....................................................................................................60-61
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Exhibit 10) ..........62-63
Fiduciary Funds Financial Statements:
Combining Statement of Net Assets – Agency Fund (Exhibit 11) ............................................................... 64
Statement of Changes in Assets and Liabilities – Agency Fund (Exhibit 12) .............................................. 65

STATISTICAL SECTION
Overview ................................................................................................................................................................ 66
Index of Statistical Section ..................................................................................................................................... 67
Financial Trends:
Change in Net Assets (Table A-1) ...............................................................................................................68-71
Statement of Revenues, Expenditures, and Changes in Fund Balances (Table A-2) ...................................72-75
Fund Balances of Governmental Funds (Table A-3) ........................................................................................ 76
Expenditures of Federal Awards (Table A-4) ................................................................................................... 77
Government-wide Expenses by Function (Table A-5)...................................................................................... 78
Government-wide Revenues (Table A-6) ......................................................................................................... 79
Net Assets by Component (Table A-7) ............................................................................................................. 80
Revenue Capacity:
Highway User Revenue Fund Collections (Table B-1) .................................................................................... 81
Highway User Revenue Fund Distributions (Table B-2) .................................................................................. 82
Fuel Tax Rates (Table B-3)............................................................................................................................... 83
Motor Vehicle Fuel Tax – Top Ten Suppliers (Table B-4)............................................................................... 84
Gasoline Volume Sold – Top Twenty-Five Suppliers (Table B-5)..............................................................85-86
Debt Capacity:
Highway User Revenue Fund – Legal Debt Margin (Table C-1) ..................................................................... 87
Highway Revenue Bonds – Bond Coverage (Table C-2) ................................................................................. 88
Transportation Excise Tax Revenue Bonds – Bond Coverage (Table C-3) ...................................................... 89
Transportation Excise Tax Revenue Bonds – Debt Service Revenue and Cost Per Capita (Table C-4) .......... 90
Ratios of Outstanding Debt by Type (Table C-5) ............................................................................................. 91

2012 Comprehensive Annual Financial Report

Arizona Department of Transportation
Comprehensive Annual Financial Report
for the fiscal year ended June 30, 2012
TABLE OF CONTENTS (continued)

Page
Demographic and Economic Information:
Number of Vehicle Registrations Per Year (Table D-1) ................................................................................... 92
Vehicle Registrations Per Year Compared to Fuel Sales (Table D-2) .............................................................. 93
Demographic and Economic Statistics (Table D-3).......................................................................................... 94
Principal Employers (Table D-4) ...................................................................................................................... 95
Operating Information:
Full-Time Equivalents (FTEs) (Table E-1) ....................................................................................................... 96
Capital Assets – Schedule by Function and Activity (Table E-2) ..................................................................... 97
Capital Assets – Schedule of Changes by Function and Activity (Table E-3) .................................................. 98
Total Public Road Mileage by Highway Class and Governmental Ownership (Table E-4) ............................. 99
Daily Vehicle Miles Traveled with Population Data (Table E-5) ................................................................... 100

Acknowledgments ..................................................................................................................................................... 101

2012 Comprehensive Annual Financial Report

100 Years of Arizona History

Celebrating
1912-2012

Comprehensive Annual
Financial Report

fiscal year

2012
Introductory Section

Office of the Director
206 South Seventeenth Avenue

Phoenix, Arizona 85007-3213

Janice K. Brewer
Governor
John S. Halikowski
Director

November 20, 2012

John A. Bogert
Deputy Director
for Operations
Floyd Roehrich, Jr.
Deputy Director
for Policy

The Honorable Janice K. Brewer
Governor of the State of Arizona,
Members of the Legislature, and
Citizens of the State of Arizona
The Arizona Department of Transportation (Department) is pleased to submit the Comprehensive Annual Financial Report
(CAFR) for the fiscal year ended June 30, 2012. The CAFR is presented in three sections: Introductory, Financial, and
Statistical. The Introductory Section includes this Letter of Transmittal, a List of Principal Officials, and the Department's
Organization Chart. The Financial Section includes the Independent Auditors' Report, Management’s Discussion and
Analysis, Basic Financial Statements, Notes to the Financial Statements, Required Supplementary Information, as well as
Other Supplementary Information. The Statistical Section includes additional financial information and transportation data
presented on a multi-year comparative basis.
Arizona Revised Statute, §41-1279.03, requires the State Auditor General to "conduct or cause to be conducted at least
biennial financial and compliance audits of financial transactions and accounts kept by or for all state agencies subject to the
single audit act of 1984 (P.L. 98-502)." In fulfillment of this requirement, the Department prepared this CAFR, for the fiscal
year ended June 30, 2012, and contracted with the independent auditing firm of Heinfeld, Meech & Co., P.C. to audit the
financial statements.
The objective of the independent audit is to provide a reasonable assurance that the financial statements are free from material
misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements; assessing the accounting principles used and significant estimates made by management; and
evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there
was a reasonable basis for rendering an unqualified opinion that the Department's financial statements for the fiscal year
ended June 30, 2012, are fairly presented in conformity with accounting principles generally accepted in the United States of
America (GAAP). The independent auditors’ report is presented as the first component of the Financial Section of this report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial
statements in the form of Management's Discussion and Analysis (MD&A). This Letter of Transmittal is designed to
complement MD&A and should be read in conjunction with it. The Department's MD&A can be found immediately following
the report of the independent auditors.
The CAFR includes all funds used to record the financial activity of the Department. Responsibility for both the accuracy of
the data and the completeness and fairness of the presentation, including all disclosures, rests with the Department.
To provide a reasonable basis for making these representations, the Department has established a comprehensive internal
control framework that is designed both to protect the Department's assets from loss, theft, or misuse and to compile
sufficiently reliable information for the preparation of the financial statements in conformity with GAAP. The Department's
internal control includes both automated controls, which are an integral component of the financial accounting system, and
comprehensive policies and procedures. In addition, the Department's Office of Audit and Analysis is an independent unit that
reviews accounting controls and performs operational audits of the various divisions and units of the Department. Because the
cost of internal controls should not outweigh their benefits, the Department's comprehensive framework of internal control has

2012 Comprehensive Annual Financial Report
i

been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material
misstatements.
To the best of our knowledge and belief, this financial report is complete and reliable in all material respects and is reported
in a manner designed to present fairly the financial position and results of operations of the various funds. All disclosures
necessary to enable the reader to gain an understanding of the Department's financial activities have been included.

Profile of the Department
The Department was established by the state legislature in July 1974 by combining the former Arizona Highway Department
(originally established in 1927) and the Department of Aeronautics (originally established in 1962). The Department is not
legally separate from the State of Arizona's primary government. The Department's mission is to provide a safe, efficient,
cost-effective transportation system. The vision is the standard of excellence for transportation systems and services. The
Department’s statutory authority for carrying out its programs is found in Arizona Revised Statutes, Titles 28, 35, and 41.
The Department receives guidance in capital planning and program development from a seven-member Transportation Board
appointed by the governor and confirmed by the state senate. The Transportation Board is responsible for the annual update
of the Five-Year Transportation Facilities Construction Program and awards contracts each month for highway projects. The
Transportation Board also has authority for the issuance of highway revenue and transportation excise tax bonds, grant
anticipation notes (GARVEE bonds), and board funding obligations.
As of June 30, 2012, the Department was organized into five operating divisions supported by the Transportation Services
Group. The five operating divisions include: Intermodal Transportation Division, Motor Vehicle Division, Enforcement and
Compliance Division, Administrative Services Division, and Multimodal Planning Division.
The Intermodal Transportation Division is responsible for the management and maintenance of the existing state
highway system and related facilities as well as the location, design, and construction of new highways and facilities
that are a part of the state highway system.
The Motor Vehicle Division regulates motor vehicles in the state and collects motor vehicle registration fees, motor
carrier fees, motor vehicle operators’ license fees, and miscellaneous fees and revenues. The Motor Vehicle Division
annually processes motor vehicle registrations and records, issues certificates of title for motor vehicles, and
processes drivers’ license applications.
The Enforcement and Compliance Division conducts criminal and administrative investigations related to all facets
of agency operations, e.g., titling, registration, and licensing; as well as providing services to the local and national
law enforcement communities while enforcing transportation related laws and regulations.
The Administrative Services Division provides a wide variety of services for ADOT business areas and employees.
The Administrative Services Division’s work units include Equipment Services, Facilities Maintenance & Support,
Office of Environmental Services, Procurement, Safety & Health, and Audit & Analysis. The Administrative
Services Division also oversees operations of the Grand Canyon National Park Airport.
The Multimodal Planning Division is responsible for the planning of the statewide transportation system, including
highways and airports, in coordination with local and regional planning agencies. The Division produces the FiveYear Transportation Facilities Construction Program through which the Transportation Board establishes the
priorities for highways and airports. The Division also supports statewide public transit planning, administers federal
grants for transit planning in rural and metropolitan areas, and performs state regulatory safety oversight for the light
rail system in Maricopa County.
The Transportation Services Group provides support to the Department's operating and other divisions, and contains
work units for Financial Management, Budget and Strategic Planning, Information Technology, Personnel and
Training, Civil Rights, Government Relations, Community Partnerships, and Arizona Highways Magazine.
Overall, the Department employs approximately 4,100 persons.

2012 Comprehensive Annual Financial Report
ii

Budgetary Controls Upon the effective date of the operating budget appropriations bill, allocations are made to
organizational levels within each division. The allocations result in a detailed operating budget that guides the divisions and
programs in their financial operation. State funding for the Five-Year Transportation Facilities Construction Program is
included in the capital outlay appropriations bill as a lump-sum budget without identifying individual projects. In the land,
building, and improvements portion of that bill, each separate capital project is identified for control purposes. This bill also
provides funding for building renewal purposes. The budgets are prepared on a cash basis except that liabilities
(encumbrances) incurred before the end of the fiscal year and paid within the next calendar month are charged against that
prior fiscal year's budget. With a few exceptions, such as the capital budgets, highway maintenance, and special line items,
state appropriations typically lapse at the end of the fiscal year.
The Department relies on the Arizona Financial Information System (AFIS) to control total expenditures by appropriation. In
addition, the Department utilizes several control features in its internal accounting system (Advantage®) to ensure budgetary
compliance and management control. These features include: encumbrance and pre-encumbrance capabilities, appropriation
allocation and control capabilities to the expense budget/organization unit level, and management control reports from the
expense budget/organizational unit level, with summary reporting capabilities by program, division, or appropriation.

Factors Affecting Financial Condition
Arizona Economy In fiscal year 2012, the Arizona economy continued to improve with modest gains in employment,
personal income and population. The housing market stabilized due to continued low interest rates and limited inventory of
homes for sale. According to the July 19, 2012 Arizona Department of Administration’s employment report, the Arizona
unemployment rate decreased from 9.6 percent in June 2011 to 8.2 percent in June 2012. During this period, the private
sector created 50,500 jobs while the government sector produced 6,800 new jobs. However, there remain economic
uncertainties in the U.S. due to the European debt crisis and the expected U.S. “fiscal cliff”.
For two years in a row, the Department’s two main funding sources, the Highway User Revenue Fund (HURF) and Maricopa
County Transportation Excise Tax posted positive year-over-year growth. In fiscal year 2012, the HURF revenue collections
were $1,210.6 million, an increase of 0.5 percent over fiscal year 2011, but 0.5 percent below the forecast. The Maricopa
County Transportation Excise Tax revenues totaled $324.2 million, an increase of 4.8 percent over fiscal year 2011 and 0.8
percent above the estimate. In spite of positive year-over-year growth, HURF and the Regional Area Road Fund (RARF)
revenue sources remain at fiscal year 2005 revenue levels.
Arizona’s economic activity is expected to continue to improve over the next two years. On May 4, 2012, the Arizona
Department of Administration estimated Arizona non-farm employment will grow by 2.0 and 2.3 percent in calendar years
2012 and 2013, respectively. According to the June 1, 2012 Western Blue Chip report, the Arizona personal income is
expected to increase by 5.0 percent in calendar year 2012 and 5.8 percent in calendar year 2013. Arizona’s population is
forecast to grow by 1.2 percent in calendar year 2012 and 1.4 percent in calendar year 2013.
The Department’s fiscal year 2013 HURF revenue estimate is $1,218.7 million, an increase of 0.7 percent over fiscal year
2012. The HURF average compound growth rate for fiscal years 2003 through 2012 was 1.0 percent. The distribution of
HURF revenues in fiscal year 2013 is estimated to be as follows: State Highway Fund $554.0 million; Arizona cities and
towns $334.6 million; Arizona counties $208.5 million; Department of Public Safety $120.0 million; Economic Strength
Project Fund $1.0 million; and the Motor Vehicle Division for the registration compliance/third party program $0.6 million.
An estimated $24.1 million will be re-allocated from the State Highway Fund share of HURF vehicle license tax revenues to
the State General Fund ($2.9 million), the Department of Public Safety ($2.5 million) and the motor vehicle division third
parties ($18.7 million).
The Maricopa County Transportation Excise Tax revenue forecast for fiscal year 2013 totals $340.5 million, an increase of
5.0 percent over fiscal year 2012. The Maricopa County Transportation Excise Tax average compound growth rate for fiscal
years 2003 through 2012 was 2.1 percent. The distribution of the Maricopa County Transportation Excise Tax revenue in
fiscal year 2013 is estimated to be as follows: Maricopa County Regional Area Road Fund $191.4 million for highways,
$35.7 million for arterial streets, and the Public Transportation Fund $113.4 million.

2012 Comprehensive Annual Financial Report
iii

Long-term Financial Planning The Department has developed a long-range forecasting model for revenues to be deposited
in the Highway User Revenue Fund and the Maricopa County Regional Area Road Fund. This econometric modeling
approach provides a framework that allows for the complex interaction of economic, demographic, and technological factors
which influence revenue collections over the long term. Using this process, the Department updates and publishes its official
forecast on an annual basis, after the close of the fiscal year, and uses this data in developing cash-flow projections for the
statewide Highway Construction Program and the Regional Transportation Plan (RTP) Freeway Program, two components of
the Five-Year Transportation Facilities Construction Program (the third component being the Airport Program). These cashflow projections incorporate estimates of all funding sources available to the capital program and estimates of project-related
and other expenditures.
Planned Construction Activity In June 2012, the Transportation Board approved a $4.6 billion statewide Highway
Construction Program as part of the Five-Year Transportation Facilities Construction Program for fiscal years 2013 through
2017. This program provides funding for highway facilities on the National Highway System and the statewide system, as
well as the Maricopa County Regional Transportation Plan. Altogether (including Maricopa County), the program includes
$2.8 billion for system improvements, $.5 billion for system management, and $1.3 billion for system preservation.
The Five-Year Transportation Facilities Construction Program includes approximately $2.1 billion for the RTP of freeway
and expressway construction in Maricopa County, funded in large part from the Maricopa County Regional Area Road Fund.
Obligations for the Regional Transportation Plan Freeway Program to date total $3.8 billion. The Department currently has 11
major RTP Freeway Program projects under design and eight major projects under construction. The Department has
acquired a total of 4,045 acres of land for the RTP Freeway Program.
As part of the Five-Year Transportation Facilities Construction Program, the Transportation Board also adopted a $149
million (state share) Five-Year Airport Development Program that includes 734 projects at general aviation and air carrier
airports located throughout the state.

Other Information
Single Audit The Department is required to undergo an annual Single Audit in accordance with the provisions of the Single
Audit Act Amendments of 1996 and the U.S. Office of Management and Budget Circular A-133, "Audits of States, Local
Governments, and Non-Profit Organizations." The Department's Single Audit information is included in the Single Audit of
the State of Arizona for the fiscal year ended June 30, 2012.
Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the Arizona Department of Transportation for its Comprehensive
Annual Financial Report for the fiscal year ended June 30, 2011. This accomplishment was the twenty-second consecutive
year that the Department has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a
government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This
report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current Comprehensive Annual Financial
Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to
determine its eligibility for another certificate.

2012 Comprehensive Annual Financial Report
iv

vi

Arizona Department of Transportation
List of Principal Officials
John S. Halikowski
Director
John A. Bogert
Deputy Director for Operations

Floyd P. Roehrich, Jr.
Deputy Director for Policy
Jennifer A. Toth
Assistant Director
Intermodal Transportation Division
Stacey K. Stanton
Assistant Director
Motor Vehicle Division
Terry W. Conner
Assistant Director
Enforcement and Compliance Division
Scott Omer
Assistant Director
Multimodal Planning Division
John H. Nichols
Assistant Director
Administrative Services
Kristine Ward
Assistant Director
for Finance and Accounting

Arizona State Transportation Board
Member
Barbara (Bobbie) Ann Lundstrom, Chairwoman
Victor Flores , Vice Chairman
William (Bill) J. Feldmeier
Stephen W. Christy
Kelly O. Anderson
Hank Rogers
Joseph E. La Rue

Counties
District 3 (Cochise, Greenlee, and Santa Cruz Counties)
District 1 (Maricopa County)
District 6 (Yavapai, Yuma, Mohave, and LaPaz Counties)
District 2 (Pima County)
District 4 (Gila, Graham, and Pinal Counties)
District 5 (Apache, Coconino, and Navajo Counties)
District 1 (Maricopa County)

2012 Comprehensive Annual Financial Report
vii

Term
Expires
2013
2014
2012
2015
2016
2017
2018

State
Stateof
of Arizona
Arizona
Department
Department of
of Transportation
Transportation
Organization
Chart
Organization Chart
Citizens

Governor
State
Transportation
Board
Director
Deputy Director
for Policy
Multimodal
Planning Division

Deputy Director
for Operations

Administrative
Services Division
Motor Vehicle
Division
Enforcement &
Compliance
Division
Intermodal
Transportation
Division
Transportation
Services Group

viii

100 Years of Arizona History

Celebrating
1912-2012

Comprehensive Annual
Financial Report

fiscal year

2012
Financial Section

Comprehensive Annual Financial Report
FISCAL YEAR

2012

Basic Financial Statements
Government-wide Financial Statements – include the Statement of Net Assets and the Statement of
Activities and use the accrual basis of accounting for financial reporting.
Governmental Funds Financial Statements – include the Balance Sheet and Statement of Revenues,
Expenditures, and Changes in Fund Balances for the major governmental funds and use the modified
accrual basis of accounting for financial reporting. Also include the reconciliations to the governmentwide financial statements.
Proprietary Funds Financial Statements – include the Statement of Net Assets, the Statement of Revenues,
Expenses, and Changes in Fund Net Assets and the Statement of Cash Flows for the business-type
activities and use the accrual basis of accounting for financial reporting.
Fiduciary Funds Financial Statement – includes the Statement of Net Assets for assets being held for
parties outside of the Department.
Notes to the Financial Statements

100 Years of Arizona History

Celebrating
1912-2012

10120 N. Oracle Road
Tucson, Arizona 85704
Tel (520) 742-2611
Fax (520) 742-2718

INDEPENDENT AUDITORS’ REPORT

The Honorable Janice K. Brewer
Governor of the State of Arizona
Members of the Arizona State Legislature

We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the Arizona
Department of Transportation (Department), as of and for the year ended June 30, 2012, which
collectively comprise the Department’s basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the management of the Arizona Department of
Transportation. Our responsibility is to express opinions on these financial statements based on our
audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
As discussed in Note 1.A, the financial statements of the Arizona Department of Transportation are
intended to present the financial position, and the changes in financial position and cash flows, where
applicable, of only that portion of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the State of Arizona that is attributable
to the Arizona Department of Transportation. They do not purport to, and do not, present fairly the
financial position of the State of Arizona, as of June 30, 2012, and the changes in its financial
position, and its cash flows, where applicable, for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the governmental activities, the business-type activities, each major fund, and
the aggregate remaining fund information of the Arizona Department of Transportation, as of
June 30, 2012, and the respective changes in its financial position, and cash flows, where applicable,
thereof for the year then ended in conformity with accounting principles generally accepted in the
United States of America.

TUCSON • PHOENIX • FLAGSTAFF • ALBUQUERQUE
www.heinfeldmeech.com

In accordance with Government Auditing Standards, we have also issued our report dated
November 20, 2012 on our consideration of the Arizona Department of Transportation’s internal
control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the internal control over financial reporting or
on compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards and should be considered in assessing the results of our audit.
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 3 through 14, budgetary comparison information on
pages 53 and 54, and information about infrastructure assets reported using the modified approach on
pages 55 through 59 be presented to supplement the basic financial statements. Such information,
although not a part of the basic financial statements, is required by Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide
us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Department’s financial statements as a whole. The accompanying
supplementary information such as the Introductory Section, Supplementary Information, and
Statistical Section, as listed in the table of contents, are presented for purposes of additional analysis
and are not a required part of the financial statements. The Supplementary Information is the
responsibility of management and were derived from and relate directly to the underlying accounting
and other records used to prepare the financial statements. The information has been subjected to the
auditing procedures applied in the audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and
other records used to prepare the financial statements or to the financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the information is fairly stated in all material respects in relation
to the financial statements as a whole. The Introductory Section and Statistical Section have not been
subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we do not express an opinion or provide any assurance on them.

HEINFELD, MEECH & CO., P.C.
CPAs and Business Consultants
November 20, 2012

2

Arizona Department of Transportation
Management’s Discussion and Analysis
June 30, 2012
As management of the Arizona Department of Transportation (Department), we offer readers of the Department’s
financial statements this narrative overview and analysis of the financial activities of the Department for the fiscal year
ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with the Letter of
Transmittal, which can be found on pages i-v, and the Department’s basic financial statements, which begin on page 15,
with the accompanying notes and Required Supplementary Information (RSI).

Financial Highlights
Government-wide:
The net assets of the Department at the close of the fiscal year are $16.7 billion, compared to $16.0 billion for
fiscal year 2011, an increase of 3.9 percent. Of this amount, $107.8 million represents unrestricted net assets
and may be used to meet the Department’s ongoing obligations to citizens and creditors as compared to $126.1
million at the end of 2011.
The Department’s capital assets are $18.6 billion, compared to $18.0 billion for fiscal year 2011, an increase of
3.5 percent. This increase is attributable to the results of increased highway construction activity. The
Department’s invested in capital assets, net of related debt, is $15.8 billion, compared to $15.2 billion for
fiscal year 2011, an increase of 4.2 percent.
The Department’s non-current liabilities are $3.3 billion, compared to $3.1 billion in 2011. The Department
had $65.8 million more in bonds outstanding in 2012 than in 2011. During fiscal year 2012, there were $759.2
million in bonds issued, $180.4 million in bonds repaid, and $512.9 million in bonds refunded.
Fund Level:
As of the close of the fiscal year, the governmental funds of the Department reported combined ending fund
balances of approximately $1.2 billion, as compared to approximately $1.1 billion in 2011.
The total restricted fund balance is $1.1 billion; the majority of this amount is restricted for capital projects.
Inventories of $8.2 million represent part of the nonspendable portion of fund balance while $118.6 million
represents the committed fund balance portion.
The proprietary funds reported net assets at year-end of $77.7 million, as compared to $76.4 million in 2011.

Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction of the Department’s basic financial statements. The
Department’s basic financial statements consist of three components: 1) government-wide financial statements, 2) fund
financial statements, and 3) notes to the financial statements. This report also contains other Required Supplementary
Information in addition to the basic financial statements.
Government-wide Financial Statements (Reporting the Department as a Whole)
The government-wide financial statements are designed to present an overall picture of the financial position of the
Department. These statements consist of the Statement of Net Assets and the Statement of Activities, and are prepared
using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of
the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.
The Statement of Net Assets combines and consolidates the Department’s current financial resources with capital assets
and long-term obligations. This statement includes all of the Department’s non-fiduciary assets and liabilities.

2012 Comprehensive Annual Financial Report
3

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012
Net assets are the difference between the Department’s assets and liabilities, and represent one measure of the
Department’s financial health.
An increase or decrease in the Department’s net assets from one year to the next is an indicator of whether its
financial health is improving or declining.
Other indicators of the Department’s financial health include the condition of its roads and bridges
(infrastructure) and economic trends affecting the Department’s future tax revenues.
The Statement of Activities focuses on both the gross and net cost of various activities (governmental and businesstype); these costs are paid by the Department’s general tax and other revenues. This statement summarizes the cost of
providing specific Department services and includes all current year revenues and expenses.
The Statement of Net Assets and the Statement of Activities divide the Department’s activities into two types:
Governmental Activities
The Department’s basic services are reported here, including administration, highway, highway maintenance, and
motor vehicle. Taxes, fees, and federal grants finance most of these activities.
Business-type Activities
Activities for which the Department charges a fee to customers to pay for most or all of the costs of the services it
provides are reported as business-type activities. The Department’s Arizona Highways Magazine and Highway
Expansion and Extension Loan Program (HELP) are reported here.
The government-wide financial statements can be found on pages 15-16 of this report.
This report includes two schedules (Exhibit 3.1 and Exhibit 4.1) that reconcile the amounts reported on the
governmental fund financial statements (prepared using the modified accrual basis of accounting and current financial
resources measurement focus) with governmental activities (prepared using the accrual basis of accounting and
economic resources measurement focus) on the appropriate government-wide statements. The following summarizes the
impact of utilizing Governmental Accounting Standards Board Statement 34 (GASB 34) reporting:
Capital assets used in governmental activities are not reported on governmental fund statements.
Long-term assets that are not available to pay for current period expenditures are not reported on governmental
fund statements.
Internal service fund activities are reported as governmental activities, but reported as proprietary funds in the
fund financial statements.
Bond issuance costs are capitalized and amortized to expense as governmental activities, but reported as
expenditures in the governmental fund statements.
Unless currently due and payable, long-term liabilities, such as capital lease obligations, compensated absences,
bonds, notes payable, and others only appear as liabilities on the government-wide statements.
Capital outlay spending results in capital assets on the government-wide statements, but is reported as
expenditures on the governmental fund statements.
Bond and note proceeds result in liabilities on the government-wide statements, but are recorded as other
financing sources on the governmental fund statements.

2012 Comprehensive Annual Financial Report
4

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

Certain other outflows represent either increases or decreases in liabilities on the government-wide statements,
but are reported as expenditures on the governmental fund statements.
Fund Financial Statements (Reporting the Department’s Major Funds)
The fund financial statements begin on page 17 and provide detailed information about the major individual funds. A
fund is an accounting entity with a self-balancing set of accounts that the Department uses to keep track of specific
sources of funding and spending for a particular purpose. The Department, like other state and local governments, uses
fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the
Department can be divided into three categories: governmental, proprietary, and fiduciary.
Governmental Funds A majority of the Department’s activities are reported in governmental funds. Reporting of
these funds focuses on how financial resources flow in and out of the funds, and amounts remaining at year-end for
future spending. Governmental funds are accounted for using the modified accrual basis of accounting, which
measures cash and other assets that can be readily converted to cash. The governmental fund statements provide a
detailed short-term view of the Department’s general governmental operations and the basic services it provides.
This information should help determine whether there are more or less current financial resources available for the
Department’s programs. The reconciliations following the fund financial statements explain the differences
between the government’s activities, reported in the government-wide statement of activities, and the governmental
funds.
The Department maintains fifteen individual governmental funds. Information is presented separately in the
governmental funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures, and Changes
in Fund Balances for the General Fund (State Highway Fund), Maricopa Regional Area Road Construction Fund,
Motor Vehicle Division Clearing Fund, Highway User Revenue Fund, Debt Service Fund, and Capital Projects
Fund, which are considered to be major funds. Data from the other nine governmental funds are combined into a
single, aggregated presentation. Individual fund data for each of these non-major governmental funds are provided
in the form of combining statements elsewhere in this report.
The legislature appropriates an annual budget for the Department’s General Fund (State Highway Fund). The
Budgetary Comparison Schedule – General Fund (State Highway Fund) has been provided to demonstrate
compliance with this budget and is presented as Required Supplementary Information.
The governmental funds financial statements can be found on pages 17-24 of this report.
Proprietary Funds When the Department charges customers for the services it provides, these services are
generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual
accounting, the same method used by private sector businesses. Enterprise funds report activities that provide goods
and services to outside customers, to other agencies, or to other divisions of the Department. The Department’s
enterprise funds are the Arizona Highways Magazine Fund and the Highway Expansion and Extension Loan
Program Fund. The internal service fund reports activities that provide supplies and services for the Department’s
other programs and activities and other state agencies. The Equipment Revolving Fund is the Department’s only
internal service fund. Internal service fund activities are reported as governmental activities on the governmentwide statements.
The proprietary funds financial statements can be found on pages 25-27 of this report.
Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of
those funds are not available to support the Department’s own programs.
The fiduciary fund financial statement can be found on page 28.

2012 Comprehensive Annual Financial Report
5

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of
the data provided in the government-wide and fund financial statements. The notes to the financial statements can be
found on pages 29-52 of this report.
Required Supplementary Information In addition to the basic financial statements, including accompanying notes,
this section presents certain Required Supplementary Information including the Department’s Budgetary Comparison
Schedule – General Fund (State Highway Fund) and the modified approach to reporting infrastructure assets. Required
Supplementary Information can be found on pages 53-59 of this report.
Supplementary Information Other Supplementary Information includes the combining statements for the non-major
governmental funds and agency funds, and is presented immediately following the Required Supplementary
Information on budget and infrastructure assets. Combining and individual fund statements and schedules can be found
on pages 60-65 of this report.

Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of the Department’s financial health. The following
tables, graphs, and analyses address the financial position and changes to financial position for the Department as a
whole as of and for the fiscal years ended June 30, 2012 and 2011.
The Department’s combined net assets increased by $618.6 million over the course of this fiscal year’s operations, an
increase of 3.9 percent. The net assets of the governmental activities increased by $617.2 million, or 4.0 percent, and
business-type activities increased by $1.3 million, an increase of 1.7 percent over the previous year. The overall increase
in the Department’s net assets was due to an increase in the Department’s infrastructure.

2012 Comprehensive Annual Financial Report
6

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

The following table reflects the condensed Statement of Net Assets as of June 30, 2012 and 2011:
Governmental Activities
2012
2011

Business-type Activities
2012
2011

Total
2012

2011

79,028,924
53,658
79,082,582

$ 1,594,850,038
18,607,613,723
20,202,463,761

$ 1,480,054,893
17,976,007,204
19,456,062,097

Assets
Current and other assets
Capital assets
Total assets
Liabilities
Other liabilities
Non-current liabilities
Total liabilities
Net assets
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets

$ 1,514,737,093
18,607,570,621
20,122,307,714

$ 1,401,025,969
17,975,953,546
19,376,979,515

$

283,094,516
3,267,217,325
3,550,311,841

291,218,260
3,131,004,477
3,422,222,737

2,258,198
147,402
2,405,600

2,508,827
136,069
2,644,896

285,352,714
3,267,364,727
3,552,717,441

293,727,087
3,131,140,546
3,424,867,633

15,796,384,864
668,679,292
106,931,717
$ 16,571,995,873

15,159,085,525
669,811,122
125,860,131
$ 15,954,756,778

43,102
76,882,306
825,039
77,750,447

53,658
76,192,180
191,848
76,437,686

15,796,427,966
745,561,598
107,756,756
$ 16,649,746,320

15,159,139,183
746,003,302
126,051,979
$ 16,031,194,464

$

80,112,945
43,102
80,156,047

$

$

In rounded figures, the total assets of the Department were $20.2 billion, while total liabilities were $3.6 billion,
resulting in a net assets balance of $16.6 billion. The majority of the Department’s net assets, $15.8 billion (95.0
percent), was invested in capital assets (e.g., land, infrastructure, buildings, machinery, and equipment), net of any
related debt used to acquire those assets. The Department uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the Department’s investment in its capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided
from other resources, since the capital assets themselves cannot be used to liquidate these liabilities.
The governmental activities reported an increase in capital assets with the largest increase being in the area of
construction in progress. The Department issued four new bonds in fiscal year 2012 which caused the non-current
liabilities to increase for the governmental activities.

2012 Comprehensive Annual Financial Report
7

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

The following condensed financial information was derived from the government-wide Statement of Activities and
reflects how the Department’s net assets changed during the year, compared to the prior year:
Governmental Activities
2012
2011

Business-type Activities
2012
2011

Total
2012

2011

Revenues
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Transportation excise taxes
Vehicle registration, title, license
and related taxes
Fuel and motor carrier taxes and fees
Flight property taxes
Income from investments
Gain <loss> on sale of capital assets
Other
Total revenues
Expenses
Administration
Highway
Highway maintenance
Motor vehicle
Non-capital, including asset preservation
Distributions to Arizona counties
and cities
Distributions to other state agencies
Local governmental assistance
Interest on long-term debt
Arizona Highways Magazine
Highway Expansion and Extension
Loan Program
Total expenses
Change in net assets before transfers
Transfers
Change in net assets
Net assets - July 1
Net assets - June 30

$

127,347,062
161,992,343
776,813,570

133,661,283
220,759,085
743,718,082

$ 5,582,832
-

$ 5,772,911
-

206,545,412

-

-

874,191,798
704,726,732
9,798,513
9,414,904
3,604,096
12,491,462
2,918,911,367

783,353
6,366,185

554,941
6,327,852

94,074,541
39,631,797
125,330,823
116,095,447
351,115,581

93,040,027
37,069,567
129,699,887
99,948,875
345,590,127

-

-

94,074,541
39,631,797
125,330,823
116,095,447
351,115,581

93,040,027
37,069,567
129,699,887
99,948,875
345,590,127

1,005,113,813
307,885,178
93,557,474
164,081,060
-

1,024,756,349
254,702,299
163,035,322
128,768,466
-

4,978,502

5,664,153

1,005,113,813
307,885,178
93,557,474
164,081,060
4,978,502

1,024,756,349
254,702,299
163,035,322
128,768,466
5,664,153

2,296,885,714

2,276,610,919

74,922
5,053,424

125,981
5,790,134

74,922
2,301,939,138

125,981
2,282,401,053

1,312,761
-

537,718
851,400

618,551,856
-

642,838,166
-

1,312,761
76,437,686
$77,750,447

1,389,118
75,048,568
$ 76,437,686

618,551,856
16,031,194,464
$ 16,649,746,320

642,838,166
15,388,356,298
$ 16,031,194,464

216,280,983
899,344,827
700,619,599
10,735,000
11,387,628
<895,030>
10,498,827
2,914,124,809

617,239,095
617,239,095
15,954,756,778
$ 16,571,995,873

$

642,300,448
<851,400>
641,449,048
15,313,307,730
$ 15,954,756,778

2012 Comprehensive Annual Financial Report
8

$

132,929,894
161,992,343
776,813,570
216,280,983
899,344,827
700,619,599
10,735,000
12,170,981
<895,030>
10,498,827
2,920,490,994

$

139,434,194
220,759,085
743,718,082
206,545,412
874,191,798
704,726,732
9,798,513
9,969,845
3,604,096
12,491,462
2,925,239,219

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

Governmental Activities
The following chart depicts revenues of the governmental activities for the fiscal year ended June 30, 2012:

Revenues - Governmental Activities
$2,914,124,809

Transportation excise
taxes
7.4%

Income from
investments
0.4%

Fuel and motor carrier
taxes and fees
24.0%

Vehicle registration,
title, license and
related taxes
30.9%

Other revenues
including flight
property taxes and
gain on sale of capital
assets
0.7%

Charges for services
4.4%

Operating grants and
contributions
5.5%

Capital grants and
contributions
26.7%

$2.4 billion (or 81.6 percent) of the Department’s revenues are from the following three revenue sources:
Vehicle registration, title, license, and related taxes comprise the Department’s largest revenue source of
$899.3 million (30.9 percent).
Capital grants and contributions represent the Department’s second largest revenue source of $776.8 million
(26.7 percent).
Fuel and motor carrier taxes and fees represent the Department’s third largest revenue source of $700.6 million
(24.0 percent).
The Department’s two main funding sources, the Highway User Revenue Fund (HURF) and the Maricopa County
Transportation Excise Tax, posted positive year-over-year growth in fiscal year 2012. HURF collections totaled
approximately $1.2 billion, an increase of 0.7 percent over fiscal year 2011. Maricopa County Transportation Excise
Tax collections totaled $324.2 million, an increase of 4.8 percent over fiscal year 2011, and 0.8 percent above the
Department’s estimate. The Transportation Excise Tax distribution to the Department was $216.3 million compared to
$206.5 million for fiscal year 2011.

2012 Comprehensive Annual Financial Report
9

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

The following chart depicts expenses of the governmental activities for the fiscal year ended June 30, 2012:

Expenses - Governmental Activities
$2,296,885,714
Distributions to other
state agencies
13.4%

Distributions to Arizona
counties and cities
43.8%

Local governmental
assistance
4.1%

Interest on long-term
debt
7.0%

Administration
4.1%
Highway
1.7%
Non-capital, including
asset preservation
15.3%

Highway Maintenance
5.5%
Motor Vehicle
5.1%

$1.7 billion (or 72.5 percent) of the Department’s expenses were for the following:
Distributions to Arizona counties and cities comprise the Department’s largest expense of $1.0 billion (43.8
percent).
Non-capital, including asset preservation, represents the Department’s second largest expense of $351.1
million (15.3 percent).
Distributions to other state agencies represent the Department’s third largest expense of $307.9 million (13.4
percent).
Distributions to Arizona counties and cities decreased in fiscal year 2012 as compared to fiscal year 2011. These
decreases were due to the lack of legislative mandates to sweep funds and transfer excess fund balances from state
agencies to the State General Fund.
The large decrease in operating grants and contributions expense was due primarily to less expenditures on American
Recovery and Reinvestment Act (ARRA) projects.

2012 Comprehensive Annual Financial Report
10

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

Business-type Activities
Net assets for business-type activities increased by $1.3 million in fiscal year 2012. Total revenues were $6.4 million,
with charges for services representing 87.7 percent and income from investments 12.3 percent. The total expenses for
business-type activities were $5.1 million.
The Highway Expansion and Extension Loan Program had a increase in total revenues (operating and non-operating) of
$66 thousand which was primarily due to the Department choosing not to loan money because the return on investment
was not sufficient to merit the risk. Interest revenue increased this fiscal year due to the fund not issuing any new loans
and receiving loan repayments, which increased average cash balances during the year.
The Arizona Highways Magazine had a decrease in operating revenues of $28 thousand primarily due to a reduction in
the number of subscribers for the monthly publication; and a reduction in the purchases of related products such as
calendars, books, and holiday gift catalog items. Typically magazine subscribers also purchase these related products.
This decline in demand is consistent with industry trends for many other consumer periodicals with revenues based
predominantly on annual subscriptions, as well as an overall weak economy, especially in Arizona where the majority
of subscribers are located.

Financial Analysis of the Department’s Funds
As previously mentioned, the Department uses fund accounting to ensure and demonstrate compliance with budgetary
and legal requirements. The following is a brief discussion of financial highlights from the fund financial statements.
Governmental Funds The focus of the Department’s governmental funds financial statements (pages 17-24) is to
provide information on near-term inflows, outflows, and balances of spendable resources. All major governmental funds
are discretely presented on these financial statements, while the non-major governmental funds are combined into a
single column. Combining statements for the non-major governmental funds may be found on pages 60-63.
As of the end of the fiscal year, the fund balances of the governmental funds totaled $1.2 billion, an increase of $120.9
million over the previous fiscal year. Of the $1.2 billion balance, $8.2 million for inventories represents that portion of
the fund balance that is nonspendable; $1.1 billion represents those funds that are restricted and used to pay for capital
projects while $15.3 million represents those funds that are restricted and used to pay for debt service; and $118.6
million represents that portion of the fund balance that is committed.
The General Fund (State Highway Fund) is the primary operating fund of the Department. At the end of the current
fiscal year, the nonspendable fund balance was $8.2 million; the restricted fund balance was $240.5 million; and the
committed fund balance was $81.3 million.
The Maricopa Regional Area Road Construction Fund is a major special revenue fund that receives a portion of
Maricopa County Transportation Excise Tax monies that are used to provide a funding source for the construction of
new freeways and other routes, improvements to existing freeways and other routes, and improvements to the arterial
street system within Maricopa County. Total revenues collected in the fund in fiscal year 2012 were $477.1 million;
Transportation Excise Tax revenue of $216.3 million (or 45.3 percent) was the bulk of the revenue. The remaining
revenue was mainly federal revenue and income from investments.
The Debt Service Fund is used for the accumulation of resources for, and the payment of, general long-term debt
principal and interest of the governmental funds. The other financing sources of $330.9 million were transferred in from
the General Fund (State Highway Fund) ($152.7 million), Maricopa Regional Area Road Construction Fund ($103.2
million), and Grant Anticipation Notes Fund ($75.0 million), and were used to pay the debt service.
The Capital Projects Fund is used to account for financial resources used for the acquisition or construction of major
capital facilities in the governmental funds. During the fiscal year, the Department’s expenditures were $163.9 million.
Capital outlay expenditures of $141.7 million (86.5 percent) accounted for the majority of the expenditures in the

2012 Comprehensive Annual Financial Report
11

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

Capital Projects Fund. This expenditure for the acquisition and construction of new highways was converted to capital
assets on the government-wide statements.

Budget Variances
As a consequence of lower revenue collections, the Department reduced its fiscal year 2012 operating spending levels in
order to ensure that there would be sufficient cash in the General Fund (State Highway Fund) to cover debt service,
contractor payments, fund transfers, and daily operational expenses. Accordingly, actual expenditures for fiscal year
2012 were less than the Department’s appropriated budget. Variances reflect personnel savings resulting from the
statewide hiring freeze, operational savings from the elimination of non-mission critical overtime and travel; and
deferred roadway equipment replacement, facility repair, and routine highway repair and maintenance. Reference the
budgetary comparison schedule on page 54.

Capital Assets and Debt Administration
Capital Assets (See Note 5A to the financial statements for additional information)
The Department’s investment in capital assets for its governmental and business-type activities as of June 30, 2012,
amounts to $18.6 billion (net of accumulated depreciation), a $631.6 million increase over the previous fiscal year.
Governmental Activities
2012
2011
Land
Buildings and improvements
Improvements other than buildings
Mobile fleet and aircraft
Machinery and equipment
Infrastructure
Construction in progress
Total

$ 2,747,307,749
108,712,313
24,475,649
47,257,632
13,332,478
12,207,437,415
3,459,047,385
$ 18,607,570,621

$ 2,619,089,147
110,771,178
25,532,416
41,920,580
12,089,608
11,604,565,886
3,561,984,731
$ 17,975,953,546

Business-type Activities
2012
2011
$

$

7,900
23,678
11,524
43,102

$

$

7,900
35,069
10,689
53,658

Total
2012

2011

$ 2,747,315,649
108,735,991
24,475,649
47,257,632
13,344,002
12,207,437,415
3,459,047,385
$ 18,607,613,723

$ 2,619,097,047
110,806,247
25,532,416
41,920,580
12,100,297
11,604,565,886
3,561,984,731
$ 17,976,007,204

As provided by accounting principles generally accepted in the United States (GAAP), the Department has elected to
record its infrastructure assets using the modified approach, as defined in GASB Statement 34. Assets accounted for
under the modified approach include 6,751 center lane miles (21,440 travel lane miles) and 4,754 bridges that the
Department is responsible for maintaining.
The Five-Year Transportation Facilities Construction Program (Program) is a dynamic program and adjustments are
made to the annual plans based on the needs of the Department to maintain the condition level of the roads and bridges
at a level equal to, or greater than, the goals established by the Department. The Program is updated annually and
adjustments are made monthly during the fiscal year, as circumstances may require.
The Department manages its roads using the Present Serviceability Rating (PSR), which measures the condition of the
pavement and its ability to serve the traveling public. The PSR uses a five-point scale (5 excellent, 0 impassable) to
characterize the condition of the roadway. The Department’s serviceability rating goal is 3.23 for the overall system.
The Department’s most recent assessment indicated that an overall rating of 3.69 was achieved for fiscal year 2012.
The Department manages its bridges using the Arizona Bridge Information and Storage System (ABISS). The
Department determines the condition rating based on standards developed by the Federal Highway Administration and
additional internal criteria. It is the policy of the Department to maintain a Condition Rating Index (CRI) of 92.5 percent
or better. In fiscal year 2012, a CRI of 93.1 percent was achieved.
The estimated expenditures for roads in fiscal year 2012 were $261.9 million while the actual expenditures were $373.6
million as a result of completion of a number of American Recovery and Reinvestment Act (ARRA) projects. The
estimated expenditures for bridges in fiscal year 2012 were $12.5 million while the actual expenditures were $20.6

2012 Comprehensive Annual Financial Report
12

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

million as a result of an ongoing effort to maintain the ability of an older inventory of bridges to serve a growing
population.
In addition to many smaller projects, the following major highway construction contracts in excess of $10 million were
started during fiscal year 2012:

Description
Capacity additions and major widening on State Route 303L at Interstate 10 interchange in
Maricopa County
Capacity additions and major widening on State Route 303L Peoria Avenue to Mountain
View Road in Maricopa County
Capacity additions and reconstruction on Interstate 10, Ruthrauff Road to Prince Road in
Pima County
New facilities - construction of new roads on State Route 24 from State Route 202L to
Ellsworth Road in Maricopa County (Phase I)
Capacity additions and major widening on State Route 303L Glendale Avenue to Peoria
Avenue in Maricopa County
Construct interim roadway on Northern Avenue from US Route 60 to State Route 303L in
Maricopa County
System preservation and relocations on Interstate 17 at the Cordes Junction traffic interchange
in Yavapai County
Capacity additions and major widening on State Route 303L Thomas Road to Camelback
Road in Maricopa County
Capacity additions and major widening on La Canada Drive, River Road to Ina Road in Pima
County
Capacity additions and major widening on State Route 89 Fain Road in Yavapai County
System preservation - bridge replacement on State Route 70, the Gila River Bridge at Bylas
#2945 in Graham County
System preservation-restoration/rehab/resurface in Interstate 15 Virgin River to Utah State
Line in Mohave County

Contract
Start Date

Fiscal Year 2012
Construction
Contract Amount
Expenditures

9/16/2011 $

133,909,898

$

43,199,841

7/15/2011

128,777,023

52,691,559

7/15/2011

76,438,548

21,655,651

2/17/2012

71,415,248

5,116,831

4/20/2012

65,104,896

1,532,077

7/20/2011

57,617,970

715,436

7/15/2011

50,927,648

28,537,000

4/13/2012

31,450,018

-

9/28/2011
12/6/2011

18,209,969
16,267,842

6,234,028

11/18/2011

12,685,324

7,222,390

4/20/2012

11,556,394

-

Furthermore, the following major highway construction projects had expenditures in excess of $15 million in fiscal year
2012. These project expenditures include payments made to construction contractors (as shown above) as well as utility,
design, right-of-way, and landscaping costs:

Location Description
State Route 303L from Peoria Avenue to Mountain View Boulevard in Maricopa County
State Route 303L Interstate10/State Route 303L Traffic Interchange in Maricopa County
State Route 101 Interstate 10 - Tatum Boulevard in Maricopa County
State Route 202L, Santan Freeway, Interstate 10 to Gilbert Road in Maricopa County
State Route 303L Camelback Road to Olive Avenue in Maricopa County
Interstate 17 Cordes Junction Traffic Interchange in Yavapai County
State Route 202L, Red Mountain Freeway, Higley Road to US Highway 60 in Maricopa County
Interstate 10 Ruthrauff Road to Prince Road in Pima County
Interstate 10 Val Vista Road to Early Road in Pinal County
Interstate 10 Salt River to Baseline Road in Maricopa County
Interstate 10 Interstate 8 to State Route 87 in Pinal County
Interstate 10 and State Route 90 Traffic Interchange in Cochise County

2012 Comprehensive Annual Financial Report
13

2012 Project
Expenditures
$

55,312,340
52,612,564
50,329,156
33,105,368
32,107,363
32,623,584
26,035,101
25,860,831
24,917,319
21,663,521
20,400,724
16,620,141

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

Non-Current Liabilities (See Note 5F to the financial statements for additional information)
The Department’s non-current liabilities for its governmental and business-type activities as of June 30, 2012, amount
to $3.2 billion, an increase of $114.7 million from the previous fiscal year. The increase in capital leases was due to
entering into new lease agreements in fiscal year 2012.
Governmental Activities
Highway revenue bonds
Transportation excise tax revenue bonds
Grant anticipation notes (GARVEE bonds)
Premium on bonds
Compensated absences
Capital leases
Advances and notes payable
Total governmental activities
Business-type Activities
Compensated absences
Total business-type activities
Total non-current liabilities

2012

2011

$ 1,619,965,000
981,845,000
335,230,000
227,329,835
14,890,371
10,728,825
55,666,442
3,245,655,473

$ 1,600,855,000
877,845,000
392,495,000
180,225,182
14,782,649
4,909,960
59,891,686
3,131,004,477

147,402
147,402

136,069
136,069

$ 3,245,802,875

$ 3,131,140,546

The Department has issued revenue bonds in 55 separate issues between 1980 and 2012. All bonds outstanding as of
June 30, 2012, are scheduled to mature on various dates, but none later than July 1, 2036. The bonds are obligations of
the Transportation Board of the State of Arizona Department of Transportation (Transportation Board) and are not
obligations of the State of Arizona. This data was gathered from the various bond records on file from the 1980s to the
present.
The senior lien Highway Revenue Bonds have been rated AAA/Aa1 by Standard & Poor’s Ratings Services and
Moody’s Investors Service, respectively. The Department’s subordinate lien Highway Revenue Bonds are rated
AA+/Aa2 The Department’s Transportation Excise Tax Revenue Bonds are rated AA+/Aa1. The Department’s Grant
Anticipation Notes (“GARVEE bonds”) are rated AA/Aa2/AA with the additional rating provided by Fitch Ratings.

Requests for Information
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with an overview
of the Department’s finances. Questions concerning any of the information provided in this report or requests for
additional financial information should be addressed to the Controller, Arizona Department of Transportation, 206 S.
17th
Avenue,
Phoenix,
Arizona,
85007,
or
by
visiting
our
website
at
http://www.azdot.gov/Inside_ADOT/fms/PDF/CAFR12.pdf.

2012 Comprehensive Annual Financial Report
14

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

Capital Projects Fund. This expenditure for the acquisition and construction of new highways was converted to capital
assets on the government-wide statements.

Budget Variances
As a consequence of lower revenue collections, the Department reduced its fiscal year 2012 operating spending levels in
order to ensure that there would be sufficient cash in the General Fund (State Highway Fund) to cover debt service,
contractor payments, fund transfers, and daily operational expenses. Accordingly, actual expenditures for fiscal year
2012 were less than the Department’s appropriated budget. Variances reflect personnel savings resulting from the
statewide hiring freeze, operational savings from the elimination of non-mission critical overtime and travel; and
deferred roadway equipment replacement, facility repair, and routine highway repair and maintenance. Reference the
budgetary comparison schedule on page 54.

Capital Assets and Debt Administration
Capital Assets (See Note 5A to the financial statements for additional information)
The Department’s investment in capital assets for its governmental and business-type activities as of June 30, 2012,
amounts to $18.6 billion (net of accumulated depreciation), a $631.6 million increase over the previous fiscal year.
Governmental Activities
2012
2011
Land
Buildings and improvements
Improvements other than buildings
Mobile fleet and aircraft
Machinery and equipment
Infrastructure
Construction in progress
Total

$ 2,747,307,749
108,712,313
24,475,649
47,257,632
13,332,478
12,207,437,415
3,459,047,385
$ 18,607,570,621

$ 2,619,089,147
110,771,178
25,532,416
41,920,580
12,089,608
11,604,565,886
3,561,984,731
$ 17,975,953,546

Business-type Activities
2012
2011
$

$

7,900
23,678
11,524
43,102

$

$

7,900
35,069
10,689
53,658

Total
2012

2011

$ 2,747,315,649
108,735,991
24,475,649
47,257,632
13,344,002
12,207,437,415
3,459,047,385
$ 18,607,613,723

$ 2,619,097,047
110,806,247
25,532,416
41,920,580
12,100,297
11,604,565,886
3,561,984,731
$ 17,976,007,204

As provided by accounting principles generally accepted in the United States (GAAP), the Department has elected to
record its infrastructure assets using the modified approach, as defined in GASB Statement 34. Assets accounted for
under the modified approach include 6,751 center lane miles (21,440 travel lane miles) and 4,754 bridges that the
Department is responsible for maintaining.
The Five-Year Transportation Facilities Construction Program (Program) is a dynamic program and adjustments are
made to the annual plans based on the needs of the Department to maintain the condition level of the roads and bridges
at a level equal to, or greater than, the goals established by the Department. The Program is updated annually and
adjustments are made monthly during the fiscal year, as circumstances may require.
The Department manages its roads using the Present Serviceability Rating (PSR), which measures the condition of the
pavement and its ability to serve the traveling public. The PSR uses a five-point scale (5 excellent, 0 impassable) to
characterize the condition of the roadway. The Department’s serviceability rating goal is 3.23 for the overall system.
The Department’s most recent assessment indicated that an overall rating of 3.69 was achieved for fiscal year 2012.
The Department manages its bridges using the Arizona Bridge Information and Storage System (ABISS). The
Department determines the condition rating based on standards developed by the Federal Highway Administration and
additional internal criteria. It is the policy of the Department to maintain a Condition Rating Index (CRI) of 92.5 percent
or better. In fiscal year 2012, a CRI of 93.1 percent was achieved.

2012 Comprehensive Annual Financial Report
12

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

In addition to many smaller projects, the following major highway construction contracts in excess of $10 million were
started during fiscal year 2012:

Description
Capacity additions and major widening on State Route 303L at Interstate 10 interchange in
Maricopa County
Capacity additions and major widening on State Route 303L Peoria Avenue to Mountain
View Road in Maricopa County
Capacity additions and reconstruction on Interstate 10, Ruthrauff Road to Prince Road in
Pima County
New facilities - construction of new roads on State Route 24 from State Route 202L to
Ellsworth Road in Maricopa County (Phase I)
Capacity additions and major widening on State Route 303L Glendale Avenue to Peoria
Avenue in Maricopa County
Construct interim roadway on Northern Avenue from US Route 60 to State Route 303L in
Maricopa County
System preservation and relocations on Interstate 17 at the Cordes Junction traffic interchange
in Yavapai County
Capacity additions and major widening on State Route 303L Thomas Road to Camelback
Road in Maricopa County
Capacity additions and major widening on La Canada Drive, River Road to Ina Road in Pima
County
Capacity additions and major widening on State Route 89 Fain Road in Yavapai County
System preservation - bridge replacement on State Route 70, the Gila River Bridge at Bylas
#2945 in Graham County
System preservation-restoration/rehab/resurface in Interstate 15 Virgin River to Utah State
Line in Mohave County

Contract
Start Date

Fiscal Year 2012
Construction
Contract Amount
Expenditures

9/16/2011 $

133,909,898

$

43,199,841

7/15/2011

128,777,023

52,691,559

7/15/2011

76,438,548

21,655,651

2/17/2012

71,415,248

5,116,831

4/20/2012

65,104,896

1,532,077

7/20/2011

57,617,970

715,436

7/15/2011

50,927,648

28,537,000

4/13/2012

31,450,018

-

9/28/2011
12/6/2011

18,209,969
16,267,842

6,234,028

11/18/2011

12,685,324

7,222,390

4/20/2012

11,556,394

-

Furthermore, the following major highway construction projects had expenditures in excess of $15 million in fiscal year
2012. These project expenditures include payments made to construction contractors (as shown above) as well as utility,
design, right-of-way, and landscaping costs:

Location Description
State Route 303L from Peoria Avenue to Mountain View Boulevard in Maricopa County
State Route 303L Interstate10/State Route 303L Traffic Interchange in Maricopa County
State Route 101 Interstate 10 - Tatum Boulevard in Maricopa County
State Route 202L, Santan Freeway, Interstate 10 to Gilbert Road in Maricopa County
State Route 303L Camelback Road to Olive Avenue in Maricopa County
Interstate 17 Cordes Junction Traffic Interchange in Yavapai County
State Route 202L, Red Mountain Freeway, Higley Road to US Highway 60 in Maricopa County
Interstate 10 Ruthrauff Road to Prince Road in Pima County
Interstate 10 Val Vista Road to Early Road in Pinal County
Interstate 10 Salt River to Baseline Road in Maricopa County
Interstate 10 Interstate 8 to State Route 87 in Pinal County
Interstate 10 and State Route 90 Traffic Interchange in Cochise County

2012 Comprehensive Annual Financial Report
13

2012 Project
Expenditures
$

55,312,340
52,612,564
50,329,156
33,105,368
32,107,363
32,623,584
26,035,101
25,860,831
24,917,319
21,663,521
20,400,724
16,620,141

Arizona Department of Transportation
Management’s Discussion and Analysis (continued)
June 30, 2012

Non-Current Liabilities (See Note 5F to the financial statements for additional information)
The Department’s non-current liabilities for its governmental and business-type activities as of June 30, 2012, amount
to $3.2 billion, an increase of $114.7 million from the previous fiscal year. The increase in capital leases was due to
entering into new lease agreements in fiscal year 2012.
Governmental Activities
Highway revenue bonds
Transportation excise tax revenue bonds
Grant anticipation notes (GARVEE bonds)
Premium on bonds
Compensated absences
Capital leases
Advances and notes payable
Total governmental activities
Business-type Activities
Compensated absences
Total business-type activities
Total non-current liabilities

2012

2011

$ 1,619,965,000
981,845,000
335,230,000
227,329,835
14,890,371
10,728,825
55,666,442
3,245,655,473

$ 1,600,855,000
877,845,000
392,495,000
180,225,182
14,782,649
4,909,960
59,891,686
3,131,004,477

147,402
147,402

136,069
136,069

$ 3,245,802,875

$ 3,131,140,546

The Department has issued revenue bonds in 55 separate issues between 1980 and 2012. All bonds outstanding as of
June 30, 2012, are scheduled to mature on various dates, but none later than July 1, 2036. The bonds are obligations of
the Transportation Board of the State of Arizona Department of Transportation (Transportation Board) and are not
obligations of the State of Arizona. This data was gathered from the various bond records on file from the 1980s to the
present.
The senior lien Highway Revenue Bonds have been rated AAA/Aa1 by Standard & Poor’s Ratings Services and
Moody’s Investors Service, respectively. The Department’s subordinate lien Highway Revenue Bonds are rated
AA+/Aa2 The Department’s Transportation Excise Tax Revenue Bonds are rated AA+/Aa1. The Department’s Grant
Anticipation Notes (“GARVEE bonds”) are rated AA/Aa2/AA with the additional rating provided by Fitch Ratings.

Requests for Information
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with an overview
of the Department’s finances. Questions concerning any of the information provided in this report or requests for
additional financial information should be addressed to the Controller, Arizona Department of Transportation, 206 S.
17th
Avenue,
Phoenix,
Arizona,
85007,
or
by
visiting
our
website
at
http://www.azdot.gov/Inside_ADOT/fms/PDF/CAFR12.pdf.

2012 Comprehensive Annual Financial Report
14

Exhibit 1
Arizona Department of Transportation
Statement of Net Assets
June 30, 2012
Governmental
Activities
Assets
Unrestricted cash on deposit with the State Treasurer

$

$ 2,263,107

-

59,562

59,562

2,308
530,450
151,605
28,783
379,503
348,079
-

2,308
64,439,338
6,402,051
16,584,483
143,308,526
12,112,940
18,516,819
14,850,684

1,208,900,683
18,413,792,549

76,349,548
7,900

1,285,250,231
18,413,800,449

193,778,072
20,122,307,714

35,202
80,156,047

193,813,274
20,202,463,761

6,939,613
5,159,106
153,052,510

21,683
31,644
-

6,961,296
5,190,750
153,052,510

11,330,261
106,613,026
-

2,204,871

11,330,261
106,613,026
2,204,871

193,444,934
3,073,772,391
3,550,311,841

145,686
1,716
2,405,600

193,590,620
3,073,774,107
3,552,717,441

15,796,384,864

43,102

15,796,427,966

2,517,544
666,161,748
106,931,717
$ 16,571,995,873

76,882,306
825,039
$ 77,750,447

76,882,306
2,517,544
666,161,748
107,756,756
$ 16,649,746,320

64,439,338
5,871,601
16,432,878
143,308,526
<28,783>
11,733,437
18,168,740
14,850,684

Restricted cash on deposit with the State Treasurer
Capital assets not subject to depreciation (Note 5A)
Capital assets subject to depreciation, net of
accumulated depreciation (Note 5A)
Total assets
Liabilities
Accounts payable and other current liabilities
Accrued payroll and other accrued expenses
Contracts and retainage payable
Due to other state agencies
Due to Arizona counties and cities
Unearned revenues (Note 5C)
Non-current liabilities (Note 5F):
Due within one year
Due in more than one year
Total liabilities
Net assets
Invested in capital assets, net of related debt
Restricted:
Loans and other financial assistance
Debt service
Capital projects
Unrestricted
Total net assets

The notes to the financial statements are an integral part of this statement.
2012 Comprehensive Annual Financial Report
15

Total

31,059,989

Receivables:
Subscriptions, net of allowance for doubtful accounts
Accrued interest
Taxes and fees
Notes and loans
Other, net of allowance for doubtful accounts
Due from U.S. Government for reimbursable costs
Internal balances
Inventories
Other assets/prepaid items
Deferred charges

Business-type
Activities
$

33,323,096

Exhibit 2
Arizona Department of Transportation
Statement of Activities
for the fiscal year ended June 30, 2012
Program Revenues

Expenses
94,074,541
39,631,797
125,330,823
116,095,447
351,115,581
307,885,178
1,005,113,813
93,557,474
164,081,060
2,296,885,714

$ 11,947,241
1,681,192
2,289,515
111,429,114
127,347,062

4,978,502

5,581,304

-

-

74,922
5,053,424
$ 2,301,939,138

1,528
5,582,832
$132,929,894

161,992,343

$776,813,570

<73,394>
529,408
$ <1,230,203,331>

Business-type
Activities

Total

Functions/Programs
Governmental Activities
Administration
Highway
Highway maintenance
Motor vehicle
Non-capital, including asset preservation
Distributions to other state agencies
Distributions to Arizona counties and cities
Local governmental assistance
Interest on long-term debt
Total governmental activities
Business-type Activities
Arizona Highways Magazine
Highway Expansion and
Extension Loan Program
Total business-type activities
Total

$

Operating Grants and
Contributions

Capital Grants
and
Contributions

Charges for
Services

$

$

71,510,313
90,482,030
161,992,343

Governmental
Activities

$

1,003,896
775,809,674
776,813,570

Net <Expenses>
Revenues
$

<81,123,404>
809,369,382
<123,041,308>
<4,666,333>
<351,115,581>
<307,885,178>
<1,005,113,813>
<3,075,444>
<164,081,060>
<1,230,732,739>

602,802

Net <expenses> revenues
General revenues:
Transportation excise taxes
Vehicle registration, title, license, and related taxes and fees
Fuel and motor carrier taxes and fees
Flight property taxes
Income from investments
Loss on sale of capital assets
Other
Total general revenues

$ <1,230,732,739> $

529,408

$ <1,230,203,331>

216,280,983
899,344,827
700,619,599
10,735,000
11,387,628
<895,030>
10,498,827
1,847,971,834

783,353
783,353

216,280,983
899,344,827
700,619,599
10,735,000
12,170,981
<895,030>
10,498,827
1,848,755,187

Change in net assets
Net assets - July 1
Net assets - June 30

617,239,095
15,954,756,778
$ 16,571,995,873

The notes to the financial statements are an integral part of this statement.

2012 Comprehensive Annual Financial Report

16

1,312,761
76,437,686
$ 77,750,447

618,551,856
16,031,194,464
$ 16,649,746,320

Comprehensive Annual Financial Report
FISCAL YEAR

2012

Governmental Funds Financial Statements
Major Funds
General Fund (State Highway Fund)
This fund is used to account for all financial transactions applicable to the general operations of the
Department. The fund receives money from the Highway User Revenue Fund including vehicle registration,
title, license, and related fees, and fuel and motor carrier taxes. Reimbursements for certain construction
expenditures are received from the federal government, Arizona cities and counties, and other state
agencies. The fund also receives interest and other revenues. The fund disburses money primarily for the
design, construction, improvement, and maintenance of state highways, parts of highways forming state
routes, and highways under cooperative agreements with the United States and day-to-day operating
expenses.
Maricopa Regional Area Road Construction Fund
This fund receives certain Maricopa County transportation excise tax monies collected by the Department
of Revenue. These monies are used for the construction of new freeways and other routes, improvements
to existing freeways and other routes, and improvements to the arterial street system within Maricopa
County.
Motor Vehicle Division Clearing Fund
This fund accounts for the collection and disbursement of Motor Vehicle Division revenues.
Highway User Revenue Fund
This fund receives all revenues collected by the Department and its agents that are not designated for other
purposes. The revenues include: motor fuel taxes, a portion of vehicle license tax, vehicle registration fees,
driver license fees, dealer fees, permits, and other miscellaneous fees. These monies are distributed to
the General Fund (State Highway Fund), the Department of Public Safety, the Economic Strength Project
Fund, incorporated cities, counties, and other legislatively appropriated entities.
Debt Service Fund
This fund is used to administer all payments of principal and interest on bonds and notes issued by the
Arizona Transportation Board for Highway Revenue Bonds, Transportation Excise Tax Revenue Bonds, and
Grant Anticipation Notes (GARVEE bonds).
Capital Projects Fund
This fund is used to administer bond proceeds for Arizona Transportation Board Highway Revenue
Bonds, Arizona Transportation Board Transportation Excise Tax Revenue Bonds, and Grant Anticipation
Notes (GARVEE bonds). These monies are expended for the construction of projects in the Five-Year
Transportation Facilities Construction Program.

Non-Major Funds
Other Governmental Funds are the non-major funds and are all special revenue funds. These funds can
be found on Exhibit 9 and Exhibit 10.

100 Years of Arizona History

Celebrating
1912-2012

Arizona Department of Transportation
Balance Sheet
Governmental Funds
June 30, 2012
Special Revenue Funds
Maricopa
Regional
Area Road
Construction
Fund

General
Fund
(State Highway
Fund)
Assets
Unrestricted cash on deposit with the
State Treasurer
Receivables:
Interfund (Note 5D)
Taxes and fees
Notes and loans
Other (net)
Amounts due from U.S. Government
Inventories
Land held for resale
Restricted cash on deposit with the
State Treasurer
Total assets

$

-

$

82,468,517
1,910,694
4,572,135
68,941,477
8,235,030
18,168,740

Liabilities and fund balances
Liabilities:
Accounts payable
Accrued payroll and other accrued expenditures
Contracts and retainage payable
Interfund payables (Note 5D)
Amounts due to:
Other state agencies
Arizona counties and cities
Surety and rental deposits
Deferred revenue (Note 5C)
Total liabilities
Fund balances: (Note 5G)
Unassigned
Nonspendable
Restricted
Committed
Total fund balances
Total liabilities and fund balances

-

$

$

$

392,042,197
452,629,267

57,708
53,601,380
268,190

2,532,510
274,916
1,910,694
94,767,689

53,927,278

8,235,030
240,480,792
81,293,874
330,009,696
$ 424,777,385

392,001,989
6,700,000
398,701,989
452,629,267

$

The notes to the financial statements are an integral part of this statement.
2012 Comprehensive Annual Financial Report
17

$

4,496,394
56,090,676
-

240,480,792
$ 424,777,385

5,135,993
4,769,006
78,629,517
1,515,053

Motor
Vehicle
Division
Clearing
Fund

Highway
User
Revenue
Fund

-

$

8,832,922
-

$

$

$

36,230,945
45,063,867

825,919
28,105,833

26,504,603
55,606,416
-

$

$

82,197,312
164,308,331

2,617
78,334,505

5,020,569
18,958,469
281,500
53,192,290

85,971,209
164,308,331

<8,128,423>
<8,128,423>
45,063,867
$

164,308,331

Exhibit 3

Debt
Service
Fund

$

Total
Non-Major
Governmental
Funds
(See Exhibit 9)

Capital
Projects
Fund

-

$ 30,425,235

-

267,916
-

2,849,461
3,960,907
7,359,722
18,276,373
-

15,385,296
$ 15,385,296

429,407,905
$ 429,675,821

13,156,236
$ 76,027,934

$

$

$

$

-

$

Total
Governmental
Funds

77,500
3,153
-

10,130
3,829,137

328,880
92,757
20,821,613
64,828

80,653

3,839,267

3,777,182
1,683,348
3,960,907
30,729,515

15,304,643
15,304,643
$ 15,385,296

425,836,554
425,836,554
$ 429,675,821

14,645,827
30,652,592
45,298,419
$ 76,027,934

$

30,425,235
112,090,497
64,439,338
5,871,601
16,428,251
143,308,526
8,235,030
18,168,740
1,208,900,683
1,607,867,901

6,368,292
4,935,371
153,052,510
112,117,546
11,330,261
106,613,026
556,416
5,871,601
400,845,023

$

<8,128,423>
8,235,030
1,088,269,805
118,646,466
1,207,022,878
1,607,867,901

2012 Comprehensive Annual Financial Report
18

Exhibit 3.1
Arizona Department of Transportation
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
June 30, 2012
Total fund balances - governmental funds (Exhibit 3)

$ 1,207,022,878

Amounts reported for governmental activities in the Statement of Net
Assets (Exhibit 1) are different because:
Capital assets used in governmental activities are not financial resources
and, therefore, are not reported in the funds (Note 4 B1).
Internal service funds are used by management to charge the costs
of equipment rentals to individual funds. The assets and liabilities of
the internal service funds are included in governmental activities in
the Statement of Net Assets (Exhibit 5).
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are deferred in the funds (Note 4 B2).
Long-term liabilities, including bonds payable, are not due and
payable in the current period and, therefore, are not reported in
the funds (Note 4 B3).
Net assets of governmental activities (Exhibit 1)

18,559,776,659

51,059,771
5,871,601

<3,251,735,036>
$ 16,571,995,873

The notes to the financial statements are an integral part of this statement.

2012 Comprehensive Annual Financial Report
19

Arizona Department of Transportation
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
for the fiscal year ended June 30, 2012
Special Revenue Funds
Maricopa
Regional
Area Road
Construction
Fund

General
Fund
(State Highway
Fund)
Revenues
Transportation excise taxes
Vehicle registration, title, license,
and related taxes and fees
Fuel and motor carrier taxes and fees
Flight property taxes
Reimbursement of construction
expenditures - federal aid
Other federal grants and reimbursements
Reimbursements from Arizona counties and cities
Distributions from other state agencies
Interest on loans receivable
Income from investments
Grand Canyon National Park Airport
Rental income
Other
Total revenues
Expenditures
Current:
Administration
Highway
Highway maintenance
Motor vehicle
Total current expenditures

$

Motor
Vehicle
Division
Clearing
Fund

-

$ 216,280,983

139,158,674
361,456,432
-

-

511,321,159
21,602,754
-

347,008,081
285,498,976
-

441,653,560
71,510,313
4,465,092
1,842,194
102,476
3,011,762
1,853,533
3,751,810
1,028,805,846

256,008,366
108,917
2,939,107
1,241,972
514,069
477,093,414

532,923,913

376,364
1,739,867
634,623,288

67,902,634
40,479,111
118,230,113
104,039,377
330,651,235

335,844
1,871,272
2,207,116

8,128,423
1,381,383
9,509,806

4,434,310
4,434,310

The notes to the financial statements are an integral part of this statement.

2012 Comprehensive Annual Financial Report
20

$

Highway
User
Revenue
Fund
-

$

-

Exhibit 4

Debt
Service
Fund
$

Total
Non-Major
Governmental
Funds
(See Exhibit 10)

Capital
Projects
Fund
-

$

-

$

Total
Governmental
Funds

-

$ 216,280,983

-

-

13,059,618
32,061,437
10,735,000

1,010,547,532
700,619,599
10,735,000

778,417
778,417

3,780,091
3,780,091

73,238,527
85,926,299
5,071,191
248,372
244,626
821,236
2,171,717
223,578,023

770,900,453
157,436,612
9,645,200
1,842,194
350,848
11,130,367
821,236
3,095,505
8,177,463
2,901,582,992

66,160
66,160

257,943
257,943

3,935,891
93,557,474
4,472,314
101,965,679

80,626,895
135,907,857
118,230,113
114,327,384
449,092,249
(continued)

2012 Comprehensive Annual Financial Report
21

Arizona Department of Transportation
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
for the fiscal year ended June 30, 2012
Special Revenue Funds
Maricopa
Regional
Area Road
Construction
Fund

Motor
Vehicle
Division
Clearing
Fund

Highway
User
Revenue
Fund

65,506,549

$ 142,354,604
389,187,926

$ 132,956,096
497,232,882

3,536,603
214,058
213,277,218
299,841,232
891,415,340

12,366,560
52,147,365
259,885,684
392,113,274

541,052,336

634,623,288

137,390,506

84,980,140

<152,687,225>
1,814,772
1,817,979
<149,054,474>

<103,223,010>
9,541,317
<93,681,693>

General
Fund
(State Highway
Fund)
Expenditures (continued)
Intergovernmental:
Distributions to other state agencies
Distributions to Arizona counties and cities
Debt service:
Principal
Interest
Bond issuance costs
Non-capital, including asset preservation
Capital outlay
Total expenditures
Excess <deficiency> of revenues over
<under> expenditures
Other financing sources <uses>
Transfers in
Transfers out for debt service
Sale of capital assets
Insurance recovery
Debt issuance
Refunding debt issuance
Premium from debt issuance
Payment to refunded bond escrow agent
Total other financing sources <uses>
Net change in fund balances
Fund balances - July 1
Fund balances - June 30

$

137,596
43,757,398

$

<11,663,968>
<8,701,553>
341,673,664
407,403,542
$ 330,009,696
$ 398,701,989
$

The notes to the financial statements are an integral part of this statement.

2012 Comprehensive Annual Financial Report

22

<8,128,423>

<8,128,423>
<8,128,423> $

-

-

Exhibit 4

Debt
Service
Fund

$

Total
Non-Major
Governmental
Funds
(See Exhibit 10)

Capital
Projects
Fund

-

29,769,482
9,083,730

$ 305,217,778
1,004,768,485

319,417,509

1,124,624
20,792,338
141,744,920
163,919,825

185,530
141,004,421

196,338,163
137,212,841
3,042,190
286,216,921
701,657,366
3,083,545,993

<318,639,092>

<160,139,734>

82,573,602

<181,963,001>

330,856,456
499,725,000
62,314,314
<560,228,345>
332,667,425

259,460,000
28,438,791
287,898,791

<74,946,221>
<74,946,221>

330,856,456
<330,856,456>
1,814,772
1,817,979
269,001,317
499,725,000
90,753,105
<560,228,345>
302,883,828

180,435,000
136,998,783
1,917,566

14,028,333
1,276,310
$ 15,304,643

$

-

127,759,057
298,077,497
$ 425,836,554

$

Total
Governmental
Funds

$

7,627,381
37,671,038
45,298,419

120,920,827
1,086,102,051
$ 1,207,022,878

2012 Comprehensive Annual Financial Report

23

Exhibit 4.1
Arizona Department of Transportation
Reconciliation of the Statement of Revenues,
Expenditures, and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
for the fiscal year ended June 30, 2012
Net change in fund balances - total governmental funds (Exhibit 4)
Amounts reported for governmental activities in the Statement of Activities (Exhibit 2)
are different because:
Capital outlays are reported as expenditures in governmental funds (Note 4 C1).
Bond proceeds provide current financial resources to governmental funds.
However, issuing debt increases long-term liabilities in the statement
of net assets. Governmental funds report the effect of issuance costs,
premiums, discounts, and similar items when the debt is first issued,
whereas these amounts are deferred and amortized in the statement
of activities (Note 4 C2).
Repayment of long-term debt is reported as an expenditure in governmental
funds, but the repayment reduces long-term liabilities in the statement of
net assets (Note 4 C2).
Internal service funds are used by management to charge the cost of equipment
rentals to individual funds. The net loss of the internal service funds
is reported with governmental activities (Note 4 C3).
Some items reported in the statement of activities do not require the use of
current financial resources and, therefore, are not reported as expenditures
in governmental funds (Note 4 C4).
Change in net assets of governmental activities (Exhibit 2)

$ 120,920,827

626,256,345

<856,543,829>

729,804,921

5,206,470

<8,405,639>
$ 617,239,095

The notes to the financial statements are an integral part of this statement.

2012 Comprehensive Annual Financial Report
24

Comprehensive Annual Financial Report
FISCAL YEAR

2012

Proprietary Funds Financial Statements
Major Funds
Arizona Highways Magazine Fund
The fund consists of receipts generated from the sale of the Arizona Highways Magazine and other
branded products. The fund provides for the production and sale of the Magazine and related products
that promote the State of Arizona.
Highway Expansion and Extension Loan Program Fund
This fund is an innovative financing mechanism to administer monies designated to provide loans and
credit enhancement assistance to the Department and to sponsors of local transportation projects.

Non-Major Fund
Internal Service Fund
The Equipment Revolving Fund is primarily funded by the charges it collects from the Department of
Transportation, other state agencies, and local organizations to support the repair and maintenance of
vehicles and equipment.

100 Years of Arizona History

Celebrating
1912-2012

Exhibit 5
Arizona Department of Transportation
Statement of Net Assets
Proprietary Funds
June 30, 2012
Business-type Activities - Enterprise Funds
Highway
Expansion and
Extension Loan
Program Fund
Assets
Current assets:
Unrestricted cash on deposit with the State Treasurer
Receivables:
Interfund
Subscriptions, net of allowance for doubtful accounts
Accrued interest
Loans
Other, net allowance for doubtful accounts
Inventories
Prepaid items
Restricted cash on deposit with the State Treasurer
Total current assets

$

-

Arizona
Highways
Magazine
Fund

$

2,263,107

$

Total

Governmental
Activities Internal
Service Fund

2,263,107

$

634,754

2,308
530,450
76,349,548
76,882,306

26,571
59,562
151,605
379,503
348,079
3,228,427

26,571
59,562
2,308
530,450
151,605
379,503
348,079
76,349,548
80,110,733

478
4,627
3,498,407
4,138,266

Non-current assets:
Capital assets not subject to depreciation
Capital assets subject to depreciation, net of
accumulated depreciation
Total non-current assets
Total assets

-

7,900

7,900

76,882,306

35,202
43,102
3,271,529

35,202
43,102
80,153,835

47,793,962
47,793,962
51,932,228

Liabilities
Current liabilities:
Accounts payable
Accrued payroll and other accrued expenses
Unearned revenues (Note 5C)
Compensated absences
Total current liabilities

-

21,683
31,644
2,204,871
145,686
2,403,884

21,683
31,644
2,204,871
145,686
2,403,884

14,905
223,735
570,588
809,228

Non-current liabilities:
Compensated absences
Total non-current liabilities
Total liabilities

-

1,716
1,716
2,405,600

1,716
1,716
2,405,600

63,229
63,229
872,457

76,882,306
$ 76,882,306

43,102
822,827
865,929

43,102
76,882,306
822,827
77,748,235

47,793,962
3,265,809
$ 51,059,771

Net assets
Invested in capital assets, net of related debt
Restricted for loans and other financial assistance
Unassigned
Total net assets

$

Adjustment to reflect the consolidation of internal service fund activities related to
enterprise funds
Net assets of business-type activities
The notes to the financial statements are an integral part of this statement.

2012 Comprehensive Annual Financial Report
25

2,212
$ 77,750,447

Exhibit 6
Arizona Department of Transportation
Statement of Revenues, Expenses, and
Changes in Fund Net Assets
Proprietary Funds
for the fiscal year ended June 30, 2012
Business-type Activities - Enterprise Funds
Highway
Expansion and
Extension Loan
Program Fund
Operating revenues
Sales and charges for services (net of write off $28,162)
Interest on loans receivables
Other
Total operating revenues

$

Operating expenses
Publication and promotional cost
Repair and maintenance
Fuel and lubricants
Salaries and related benefits
Shipping and postage
Supplies
Equipment purchase and rental
Professional and outside services
Travel
Depreciation
Other
Total operating expenses
Operating income <loss>
Non-operating revenues <expenses>
Income from investments
Investment expense
Gain <loss> on sale/disposal of capital assets
Insurance recoveries
Interest on capital leases
Distributions to other state agencies
Total non-operating revenues <expenses>

Arizona
Highways
Magazine
Fund

Total

Governmental
Activities Internal
Service Fund

1,528
1,528

$ 4,889,261
692,043
5,581,304

$ 4,889,261
1,528
692,043
5,582,832

$ 28,028,438
72,072
28,100,510

16,645
12,875
29,520

1,831,927
10,802
1,571,889
633,517
18,175
26,274
606,551
14,113
14,254
234,783
4,962,285

1,831,927
10,802
1,588,534
633,517
18,175
26,274
619,426
14,113
14,254
234,783
4,991,805

1,694,730
12,416,564
11,489,199
111,802
148,771
36,728
49,046
7,489,883
745,667
34,182,390

<27,992>

619,019

591,027

<6,081,880>

763,520
<44,902>
<500>

19,833
<1,205>
<1,912>
<13,100>

783,353
<46,107>
<1,912>
<13,600>

22,550
<1,224>
83,117
471,536
<34>
<2,667,400>

718,118

3,616

721,734

<2,091,455>

Capital contributions
Changes in net assets
Total net assets - July 1
Total net assets - June 30

-

-

-

13,379,805

690,126
76,192,180
$ 76,882,306

622,635
243,294
865,929

1,312,761

5,206,470
45,853,301
$ 51,059,771

$

Adjustment to reflect the consolidation of internal service fund activities related to
enterprise funds
Change in net assets of business-type activities

The notes to the financial statements are an integral part of this statement.
2012 Comprehensive Annual Financial Report
26

$ 1,312,761

Exhibit 7
Arizona Department of Transportation
Statement of Cash Flows
Proprietary Funds
for the fiscal year ended June 30, 2012
Business-type Activities - Enterprise Funds
Highway
Expansion and
Extension Loan
Program Fund
Cash flows from operating activities
Receipts from customers
Receipts from other agencies, Arizona counties, and cities
Payments to suppliers
Payments to employees
Other receipts <payments>
Net cash provided <used> by operating activities
Cash flows from non-capital financing activities

$

Distributions to other state agencies
Transfers from <to> other funds
Net cash provided <used> by non-capital financing activities

Cash flows from investing activities
Income from investments
Investment expense
Net cash provided <used> by investing activities

Reconciliation of operating <loss> income to net cash
provided <used> by operating activities
Operating <loss> income
Adjustment to reconcile operating <loss> income to net
cash provided by operating activities:
Depreciation
Net changes in assets and liabilities:
Receivables
Inventories
Prepaid items
Accounts payable
Accrued payroll and other accrued expenses
Unearned revenues
Compensated absences
Due to Arizona counties and cities
Advance/interfund payable
Net cash provided <used> by operating activities

$

<2,667,400>
<2,667,400>

-

<5,610>

<5,610>

-

<5,610>

<5,610>

684,847
<72,539>
471,536
<34>
1,083,810

19,833
<1,205>
18,628

783,353
<46,107>
737,246

22,550
<1,224>
21,326

4,655,667
71,693,881
76,349,548

616,411
1,646,696
$ 2,263,107

<27,992> $

4,002,269
<2,499>
<3,639>
<30,590>
3,937,549
$

619,019

The notes to the financial statements are an integral part of this statement.
2012 Comprehensive Annual Financial Report

$

5,272,078
73,340,577
78,612,655

$

591,027

14,254
48,091
93,731
43,966
<10,544>
<58,302>
<148,694>
14,972
616,493
$

Non-cash capital and financing activities
Certain vehicles were contributed to the Equipment Revolving Fund by the General Fund totaling $13,379,805.

27

4,898,871
$ 16,765,742
3,893,583
11,126,005
<3,261,863>
<15,478,254>
<1,638,002>
<11,914,787>
661,453
72,072
4,554,042
570,778
<13,600>
<13,600>

-

$

Governmental
Activities Internal
Service Fund

<13,100>
<13,100>

763,520
<44,902>
718,618

$

Total

110,214
$ 4,788,657
$
3,893,583
<12,875>
<3,248,988>
<22,783>
<1,615,219>
<30,590>
692,043
3,937,549
616,493
<500>
<500>

Cash flows from capital and related financing activities
Proceeds from sale of capital assets
Acquisition of capital assets
Insurance recoveries
Interest on capital leases
Net cash provided <used> by capital and related financing activities

Net increase <decrease> in cash
Cash - July 1
Cash - June 30

Arizona
Highways
Magazine
Fund

$

<991,486>
1,626,240
634,754

$ <6,081,880>

14,254
4,050,360
93,731
43,966
<10,544>
<60,801>
<148,694>
11,333
<30,590>
4,554,042
$

7,489,883
<5,105>
<219,916>
<104,076>
<379,421>
2,879
<131,586>
570,778

Comprehensive Annual Financial Report
FISCAL YEAR

2012

Fiduciary Funds Financial Statements
Agency Funds
Highway Properties – Privilege Tax Fund
This fund collects monies from renters of properties previously acquired by the Department for use in
future highway development. Monies collected are distributed to the Department of Revenue.
Highway Properties – 24 Percent Fund
This fund collects 24 percent of the Department’s rental income from properties for use in future highway
development. Monies collected are distributed to the local counties.

100 Years of Arizona History

Celebrating
1912-2012

Exhibit 8
Arizona Department of Transportation
Statement of Net Assets
Agency Funds
June 30, 2012

ASSETS
Restricted cash on deposit with the State Treasurer
Total assets
LIABILITIES
Due to Department of Revenue
Due to Arizona counties
Total liabilities

$
$

413,045
413,045

$

721
412,324
413,045

$

The notes to the financial statements are an integral part of this statement.

2012 Comprehsive Annual Financial Report

28

100 Years of Arizona History

Celebrating
1912-2012

Comprehensive Annual
Financial Report

fiscal year

2012

Notes to the Financial Statements

Arizona Department of Transportation
Index – Notes to the Financial Statements
June 30, 2012

Page
Note 1 – Summary of Significant Accounting Policies ............................................................................................... 30
A – Reporting Entity........................................................................................................................................... 30
B – Government-wide and Fund Financial Statements ...................................................................................... 30
C – Measurement Focus, Basis of Accounting, and Financial Statement Presentation ...................................... 31
D – Assets, Liabilities, and Net Assets/Fund Balance ........................................................................................ 33
E – Revenues and Expenditures/Expenses ......................................................................................................... 36
F – Interfund Activity and Balances ................................................................................................................... 37
Note 2 – Funds by Classification ................................................................................................................................. 38
Note 3 – Budgeting, Budgetary Control, and Legal Compliance ................................................................................ 38
Note 4 – Accounting Pronouncements and Reconciliation of Government-wide and Fund Financial Statements ..... 39
A – New Accounting Pronouncements. .............................................................................................................. 39
B – Explanations of Reconciling Items of the Balance Sheet of Governmental Funds to the
Statement of Net Assets ........................................................................................................................... 39
C – Explanations of Reconciling Items of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................. 40
Note 5 – Detailed Notes on all Funds .......................................................................................................................... 42
A – Capital Assets .............................................................................................................................................. 42
B – Construction Commitments ......................................................................................................................... 43
C – Deferred/Unearned Revenues ...................................................................................................................... 44
D – Interfund Receivables, Payables, Advances, and Transfers ......................................................................... 44
E – Leases ........................................................................................................................................................... 45
F – Non-Current Liabilities ................................................................................................................................ 46
G – Fund Balances .............................................................................................................................................. 51
Note 6 – Other Information ......................................................................................................................................... 51
A – Contingent Liabilities .................................................................................................................................. 51
B – Pension and Other Postemployment Benefits .............................................................................................. 52

2012 Comprehensive Annual Financial Report
29

Arizona Department of Transportation
Notes to the Financial Statements
June 30, 2012

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of the Arizona Department of Transportation (Department) conform in all
material respects to accounting principles generally accepted in the United States of America (GAAP) as applicable
to governments. The Governmental Accounting Standards Board (GASB) is the primary standard-setting body for
establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB’s
Codification of Governmental and Financial Reporting Standards (GASB Codification). Following is a summary of
the Department’s significant accounting policies.
A.

Reporting Entity

The Department is a department of the State of Arizona (State) and is not a legally separate entity. The Department
has no component units. The Director of the Department serves as the Chief Executive Officer and is directly
responsible to the governor. The governor appoints a seven-member Transportation Board of the State of Arizona
Department of Transportation (Transportation Board) which has responsibility for establishing a complete system of
state highway routes, approving all highway construction contracts, and distributing monies for local airport
facilities’ projects through a grant program.
The Department is responsible for the construction and maintenance of all state highways. The Department
cooperates with the various cities and counties within the state in the construction and maintenance of state roads
and with the Federal Highway Administration in the construction and maintenance of interstate and other highways.
Assistance in the development of local airports, registering motor vehicles and aircraft, licensing drivers, and the
publishing of the Arizona Highways Magazine are also responsibilities of the Department.
B.

Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) report
information on all of the non-fiduciary activities of the government. For the most part, the effect of interfund activity
has been removed from these statements. Governmental activities, which normally are supported by federal
reimbursement, taxes, and intergovernmental revenues, are reported separately from business-type activities, which
rely to a significant extent on fees and charges for services.
The Statement of Net Assets presents the reporting entity’s non-fiduciary assets and liabilities, with the difference
reported as net assets. Net assets are reported in three categories:
Invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation and is
reduced by outstanding balances for bonds, notes, and other debt that are attributed to the acquisition,
construction, or improvement of those assets.
Restricted net assets result when constraints placed on asset use are either externally imposed by creditors,
grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation.
Unrestricted net assets consist of net assets which do not meet the definition of the two preceding categories.
Unrestricted net assets often are designated to indicate that management does not consider them to be available
for general operations. Unrestricted net assets often have constraints on resources which are imposed by
management, but can be removed or modified by management or the Transportation Board.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by
program revenues. Direct expenses are those that are clearly identified with a specific function. Program revenues
include: charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function; and grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function. Taxes and other items not properly included among program revenues are
reported instead as general revenues.

2012 Comprehensive Annual Financial Report
30

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Fund Financial Statements
Separate statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the
latter are excluded from the government-wide financial statements. Major individual governmental funds and major
proprietary funds are reported as separate columns in the fund financial statements, with non-major funds being
reported in a single column.
C.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the
full accrual basis of accounting, as are the proprietary funds. Revenues are recorded when earned and expenses are
recorded when the liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as
revenues in the year they are levied for transportation excise, aircraft licensing, aviation and motor fuel, flight
property, and underground storage tanks. Motor carrier and vehicle license taxes are recognized when received.
Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider
have been met.
As allowed by GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other
Governmental Entities that Use Proprietary Fund Accounting, the Department’s enterprise funds follow GASB
pronouncements and those Financial Accounting Standard Board (FASB) Statements and Interpretations,
Accounting Principle Board Opinions, and Accounting Research Bulletins that were issued on or before November
30, 1989, except those that conflict with a GASB pronouncement. The enterprise funds do not follow any FASB
Statements and Interpretations issued after November 30, 1989.
Governmental fund financial statements are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the Department considers revenues to be
available if they are collected within 60 days of the end of the fiscal year, e.g., federal revenue reimbursements,
vehicle license taxes, and highway user revenue taxes. Expenditures generally are recorded when a liability is
incurred as under accrual accounting. However, debt service expenditures, as well as expenditures related to
compensated absences and claims and judgments, are recorded only when payment is due and payable.
Financial Statement Presentation
The Department reports the following major governmental funds:
The General Fund, known as the State Highway Fund, is the primary operating fund. It accounts for all
financial resources except for those required to be accounted for in another fund. Expenditures are reported for
general operations of the Department, including road and bridge repairs, maintenance and construction,
planning and development, engineering, and administration. Revenues are received from the following primary
sources: fuel and motor carrier taxes and fees; vehicle registrations, titles, licenses and related fees; and federal
grants.
The Maricopa Regional Area Road Construction Fund is a special revenue fund that receives a portion of
Maricopa County Transportation Excise Tax monies collected by the Department of Revenue. These monies
are expended for the construction of new freeways and other routes, improvements to existing freeways and
other routes, and improvements to the arterial street system, which are included in the Maricopa County
Regional Transportation Plan.
The Motor Vehicle Division Clearing Fund is a special revenue fund which accounts for the collection and
disbursement of certain Motor Vehicle Division revenues (e.g., vehicle registration, title, license, and related
taxes and fees, and fuel and motor carrier taxes and fees).

2012 Comprehensive Annual Financial Report
31

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

The Highway User Revenue Fund is a special revenue fund which collects motor vehicle and liquid use fuel
taxes and receives certain Motor Vehicle Division revenues from the Motor Vehicle Division Clearing Fund.
These monies are distributed to the General Fund (State Highway Fund), the Department of Public Safety, the
Economic Strength Project Fund, incorporated cities, towns, counties, and other legislatively appropriated
entities.
The Debt Service Fund is used to account for the accumulation of resources for, and the payments of, general
long-term debt principal and interest of the governmental funds.
The Capital Projects Fund is used to account for financial resources to be used for the acquisition or
construction of major capital facilities in the governmental funds.
The Department reports the following major proprietary funds:
The Highway Expansion and Extension Loan Program Fund is an innovative financing mechanism to
administer funds designated to provide loan and credit enhancement assistance to sponsors of local
transportation projects.
The Arizona Highways Magazine Fund publishes and markets the Arizona Highways Magazine and various
other products that promote the State of Arizona.
Additionally, the Department reports the following funds:
The Internal Service Fund, which accounts for purchases and maintenance of equipment and materials to be
used by other divisions in the Department and other government agencies. The Equipment Revolving Fund is
the Department’s only internal service fund.
The Agency Fund is custodial in nature (assets equal liabilities) and does not involve measurement of results of
operations. The Department has two agency funds: the Highway Properties – Privilege Tax Fund and the
Highway Properties – 24 Percent Fund (neither are included in the government-wide statements).
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are charges for services by the Equipment Revolving Fund to the other
governmental functions. Elimination of these charges would distort the direct costs and program revenues reported
for the various functions concerned.
Amounts reported as program revenues include: charges for services, operating grants and contributions, and
capital grants and contributions. Internally dedicated resources are reported as general revenues rather than program
revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a
proprietary fund’s principal ongoing operations. The principal operating revenues are charges for services and
magazine subscriptions. The Department also recognizes as operating revenues interest on loan receivables and
other revenues intended to recover the cost of services. Operating expenses for the enterprise funds and the internal
service fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All
revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.
When both restricted and unrestricted resources are available for use, the Department generally expends the
restricted resources first, and then unrestricted resources, as they are needed to maintain appropriate cash balances
and finance the construction program.

2012 Comprehensive Annual Financial Report
32

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

D.

Assets, Liabilities, and Net Assets/Fund Balance

Deposits and Investments
The Department’s cash includes petty cash, bank accounts, and deposits with the State Treasurer for pooled
investments. All investments are carried in the name of the State of Arizona. State statutes require the State
Treasurer to invest these pooled funds in collateralized time certificates of deposit, repurchase agreements,
obligations of the U.S. Government, or other permitted investments. All investments are carried at fair value. These
balances are not subject to GASB Statement No. 3, Deposits with Financial Institutions, Investments (including
Repurchase Agreements), and Reverse Repurchase Agreements, and GASB Statement No. 40, Deposit and
Investment Risk Disclosures – an amendment of GASB Statement No. 3, classification because they are included in
the state’s investment pool.
The investment pool is not required to register (and is not registered) with the Securities and Exchange Commission
under the 1940 Investment Advisors Act. The activity and performance of the pool is reviewed monthly by the State
Board of Investment in accordance with Arizona Revised Statutes, §35-311. The fair value of investments is
measured on a monthly basis. Participant shares are purchased and sold based on the Net Asset Value (NAV) of the
shares. The NAV is determined by dividing the fair value of the portfolio by the total shares outstanding. The State
Treasurer does not contract with an outside insurer in order to guarantee the value of the portfolio or the price of
shares redeemed. As of June 30, 2012, the State’s investment pool 2, pool 3, and pool 4 were not rated. The
weighted average maturity at year end for investment pool 2 was 8.57 years while for investment pool 3 it was 4.84
years, and for investment pool 4 it was 5.22 years.
State statutes require the State Treasurer to maintain separate investment accounts for the portions of the Highway
Revenue Bond Proceeds Fund relating to the Highway Revenue Bond issues and the Maricopa Regional Area Road
Bond Proceeds Fund relating to the Transportation Excise Tax Revenue Bond issues. These funds may be invested
by the Treasurer in the state’s investment pool.
The Department’s investments are included in the state investment pool and these investments are not shown in the
Department’s name. From the perspective of the Department, the pool functions as both a cash management pool
and a demand deposit account. Therefore, the Department presents its equity in the internal pool as required in
GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment
Pools, and carries the investments at amortized cost, which approximates fair value.
The Department has restricted cash for payment of capital projects for Maricopa and Pima Counties, for future debt
service payments, and for the Statewide Transportation Acceleration Needs account.
Receivables, Payables and Advances
Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the
fiscal year are referred to as interfund receivables/payables. All other outstanding balances between the U.S.
Government, Arizona counties and cities, and other state agencies are reported as due to/from. Any residual balances
outstanding between the governmental activities and business-type activities are reported in the government-wide
financial statements as internal balances.
Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account
in applicable governmental funds to indicate that they are not available for appropriation and are not expendable
available financial resources. The other receivables and subscriptions receivable are shown net of allowance for
doubtful accounts. For other receivables comprising recoverable insurance claims, the amount reserved for doubtful
accounts is comprised of 100% of balances greater than six years old, 95% of balances from four to six years old,
and a percentage of balances less than four years old. The subscriptions receivable allowance for doubtful accounts
is equivalent to an estimated number of issues delivered on outstanding subscription payments past due more than
90 days.

2012 Comprehensive Annual Financial Report
33

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Notes receivable represents loans made to parties purchasing assets previously owned by the Department for
highway construction purposes.
Inventories and Prepaid Items
The governmental activities inventory is valued at cost, which approximates market, using the moving average
method. This inventory is accounted for using the consumption method. Under this method, inventories are recorded
as expenditures as they are used. The fund financial statement reports inventory as nonspendable for the like amount
indicating it does not constitute available expendable resources. No reservation of net assets is shown in the
government-wide statements for inventories.
The business-type activities’ inventories are stated at the lower of cost or market. Costs of enterprise fund
inventories consisting of resale products and supplies are generally determined by moving average cost and specific
identification methods, respectively. Costs of the internal service fund’s inventories (consisting of vehicle parts and
supplies, fuels and lubricants, and other supplies) are determined by moving average cost methods.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items
in both the government-wide and fund financial statements.
Restricted Assets
Certain proceeds of the Department’s governmental revenue bonds, as well as certain resources of the General Fund
(State Highway Fund) and the Highway Expansion and Extension Loan Program Fund (enterprise fund) are
classified as restricted assets on the balance sheet because they are maintained in separate accounts and their use is
limited by applicable bond covenants or state statutes. State law requires 12.6 percent of the revenues allocated each
year to the General Fund (State Highway Fund) from the Highway User Revenue Fund be allocated for design,
purchase of right-of-way, or construction of controlled-access highways, arterial streets, and local highways that are
included in the regional transportation plan of counties with populations in excess of 400,000 (Maricopa and Pima
counties). State Transportation Board policy further allocates 2.6 percent of the revenues allocated each year to the
General Fund (State Highway Fund) from the Highway User Revenue Fund for the design, purchase of right-ofway, or construction of controlled-access highways, that are included in the regional transportation plan of counties
with populations in excess of 400,000 (Maricopa and Pima counties). The debt service fund is used to report the
resources set aside for payment of future debt service. Bond proceeds are deposited in the capital projects fund and
are restricted for acquisitions of right-of-way and construction of federal, state, and local highways.
Capital Assets
Capital assets, which include land, buildings and improvements, improvements other than buildings, machinery and
equipment, infrastructure, and construction in progress, are reported in the applicable governmental or business-type
columns in the government-wide financial statements. Capital assets are defined by the Department as assets with an
initial, individual cost of $5,000 or more and an estimated useful life in excess of one year. Purchased capital assets
are recorded at historical cost or estimated historical cost if historical cost is not available. Donated capital assets are
recorded at estimated fair value at the date of donation.
Costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset’s life
are not capitalized. Outlays for capital assets are capitalized at the time of the purchase or, in the case of
infrastructure, at the time of final acceptance by the Department from the contractor. Asset preservation costs are
expensed as incurred.

2012 Comprehensive Annual Financial Report
34

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

The Department depreciates non-infrastructure capital assets on a straight-line basis using the following estimated
useful lives:
Assets
Buildings and improvements
Improvements other than buildings
Machinery and equipment
Mobile fleet and aircraft

Years
20-40
20-40
5-15
5-15

Infrastructure was capitalized for the first time in fiscal year 2002. The infrastructure assets are reported in the
governmental activities column of the Statement of Net Assets. The Department’s infrastructure assets consist of
roads and bridges and are presented using the modified approach and, therefore, are not depreciated.
In order to utilize the modified approach, the Department is required to maintain an asset management system that
includes an up-to-date inventory of eligible infrastructure assets, perform condition assessments of eligible assets
and summarize the results using a measurement scale, estimate each year the annual amount to maintain and
preserve the assets at the condition level established and disclosed by the Department, and document that the assets
are being preserved approximately at or above the established condition level.
Deferred/Unearned Revenues
In the government-wide statements and proprietary fund financial statements, deferred/unearned revenues are
recorded when cash, receivables, or other assets are received prior to revenue being recognized. In the governmental
funds, amounts are reported as deferred revenues until they are available to liquidate liabilities of the current period.
Deferred/unearned revenues are reported in the government-wide statements for the business-type activities and in
the fund statements for both the governmental and proprietary funds. In the government-wide statements, the
unearned revenues relate to unearned subscription revenue for the Arizona Highways Magazine. Unearned
subscription revenue is recorded when subscription orders are received and is amortized as revenue over the terms of
the related subscriptions. Costs associated with the selling of subscriptions are expensed in the year incurred. In the
fund statements for the General Fund (State Highway Fund), the deferred revenue represents the amount for the
notes receivable for loans made to parties who purchased assets previously owned by the Department for highway
construction purposes. For the Non-Major Governmental Funds, the deferred revenue represents loans to various
local governments for airport capital improvements designed to generate airport revenues and/or related airport
economic development efforts. Loans are typically for construction of aircraft storage hangars, fuel dispensing and
storage facilities, and terminal buildings. Loan rates vary and are based on the Bond Buyer Index (BBI) for 25 year
national revenue bonds. Loan periods are typically 10 to 25 years in length.
Compensated Absences
It is the Department’s policy to permit employees to accumulate earned but unused sick leave and vacation benefits
as well as compensatory time. There is no liability for unpaid accumulated sick leave for the Department. All
vacation pay and compensatory time is accrued when incurred in the government-wide and proprietary fund
financial statements.
Effective July 1, 1998, state employees are eligible to receive payment for an accumulated sick leave balance of 500
hours or more with a maximum of 1,500 hours, upon retirement directly from state service. The benefit value is
calculated by taking the employee’s hourly rate of pay at the retirement date, multiplied by the number of sick hours
at the retirement date, times the eligibility percentage. The eligibility percentage varies based upon the number of
accumulated sick hours from 25 percent for 500 hours to a maximum of 50 percent for 1,500 hours. The maximum
benefit value is $30,000. Per Arizona Revised Statute 38-615D, the benefit shall be paid either in a lump sum or in
installments over three years. The Retiree Accumulated Sick Leave Fund is accounted for on the state’s financial
statements as an Internal Service Fund.

2012 Comprehensive Annual Financial Report
35

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Most employees accrue vacation time which is paid when taken or upon termination of employment at the
individual’s then current rate of pay. Additionally, some employees may earn compensatory time in lieu of overtime
pay, which is paid in the same manner as vacation time. To limit the Department’s liability, employees are allowed
to carry forward a maximum of 240 hours of vacation time if covered and 320 hours if uncovered at the end of each
calendar year, while compensatory time accrual is capped at 240 hours at any time. The liabilities for vacation and
compensatory time outstanding as of June 30 for both the governmental and proprietary funds are reported on the
Statement of Net Assets.
Long-term Obligations
In the government-wide financial statements, long-term debt and other long-term obligations are reported as
liabilities. Bond premiums and discounts are deferred and amortized using the straight-line method. Bonds payable
are reported net of the applicable premium or discount. Debt issuance costs are reported as deferred charges and
amortized over the term of the related debt. Other long-term obligations also include amounts that other
governmental entities advance the Department for highway road construction projects.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
issuance costs, during the current period. The face amount of the debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures. Advances from other governmental entities are recorded as debt issuance in
other financing sources.
Net Assets/Fund Balance
The difference between assets and liabilities is “Net Assets” on the government-wide and proprietary statements and
“Fund Balance” on the governmental fund statements.
Fund balances for governmental funds may be classified as nonspendable, restricted, committed, assigned, or
unassigned in the fund financial statements. Nonspendable fund balance describes that portion of fund balance that
cannot be spent because of its form; restricted fund balance describes that portion of fund balance that reflects
resources that are subject to externally enforceable legal restrictions; committed fund balance describes that portion
which has self-imposed limitations; assigned fund balance describes that portion of fund balance that reflects a
governments’ intended use of resources; and unassigned fund balance represents net resources in excess of what can
properly be classified in one of the other categories.
The Department’s highest level of Authority is the State legislature where the legislative appropriations are
determined, identifying the uses of funds for specific purposes. The Arizona State Legislature also grants authority
to other Boards and Commissions to authorize fund uses.
E.

Revenues and Expenditures/Expenses

In the government-wide Statement of Activities, revenues and expenses are segregated by activity (governmental or
business-type), then further by function (e.g., Administration, Highway). Additionally, revenues are classified
between program and general revenues. Program revenues include charges for services, operating grants and
contributions, and capital grants and contributions. Internally dedicated resources are reported as general revenue
rather than as program revenue. General revenue includes all taxes and income on investments.
In the governmental fund financial statements, revenues are reported by source. Expenditures are reported by
function (e.g., Administration, Distributions to Arizona counties and cities, Distributions to other state agencies,
Debt service, Capital outlay).
The Distributions to Arizona counties and cities and Distributions to other state agencies are shared tax revenues that
are distributed based on statutory requirements. Debt service includes both interest and principal outlays related to

2012 Comprehensive Annual Financial Report
36

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

bonds, loans, advances, board funding obligations, and capitalized leases. Capital outlay includes expenditures for
real property or infrastructure (i.e., bridges and roads).
Revenues and expenses of proprietary funds are classified as operating and non-operating and are sub-classified by
object (e.g., salaries, equipment rental, depreciation). Operating revenues and expenses generally result from
providing services and producing and delivering goods. All other revenues and expenses are reported as nonoperating.
Other Financing Sources <Uses>
Other financing sources are additions to the governmental fund balances in the fund financial statements and include
resources and financing provided by bond issuance, sale of capital assets, capital leases, insurance recovery, and
transfers from other funds. Other financing uses are reductions of governmental fund resources in fund financial
statements normally resulting from transfers to other funds.
F.

Interfund Activity and Balances

Interfund Activity
As a general rule, the effect of interfund activity has been eliminated from the government-wide statements.
Exceptions to this rule are activities between the funds reported as governmental activities and the funds reported as
business-type activities (e.g., the transfer of the gain or loss from the Equipment Revolving Fund).
Interfund Balances
Interfund receivables and payables have been eliminated from the Statement of Net Assets, except for the residual
amounts due between governmental and business-type activities.

2012 Comprehensive Annual Financial Report
37

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

2.

FUNDS BY CLASSIFICATION

The following table lists all of the funds whose balances are reflected in this financial report.
FUND TYPES
MAJOR FUNDS
Governmental Funds:
General Fund (State Highway Fund)
Special Revenue Funds:
Maricopa Regional Area Road
Construction Fund
Motor Vehicle Division Clearing Fund
Highway User Revenue Fund
Debt Service Fund
Capital Projects Fund

NON-MAJOR FUNDS
Other Governmental Funds:
Special Revenue Funds:
State Aviation Fund
Safety Enforcement and
Transportation Infrastructure Fund
Motor Vehicle Liability Insurance
Enforcement Fund
Motor Vehicle Inspection and Title
Enforcement Fund
Motor Carrier Safety Revolving Fund
Underground Storage Tank Fund
Economic Strength Project Fund
Grant Anticipation Notes Fund
Local Agency Deposits Fund

Proprietary Funds:
Enterprise Funds:
Arizona Highways Magazine Fund
Highway Expansion and Extension
Loan Program Fund
Internal Service Fund
Equipment Revolving Fund
FIDUCIARY FUNDS
Agency Funds:
Highway Properties–Privilege Tax Fund
Highway Properties–24 Percent Fund

3.

BUDGETING, BUDGETARY CONTROL, AND LEGAL COMPLIANCE

An annual budget for the operating expenditures of the General Fund (State Highway Fund) is submitted to the
governor in accordance with state law. The budget is legally enacted as appropriations after approval by the state
legislature and signature of the governor. The legal level of control for operating expenditures is set at the agency
level and expenditure budgets are appropriated using a lump-sum by agency format with a special line-item
appropriation for highway maintenance. Expenditure details for personal services, employee-related expenditures,
and all other operating expenditures are specifically allocated within all divisions. In certain divisions, other specific
programs are allocated in addition to these categories. Revenue budgets are developed internally by the Department
and are not part of the appropriation process.
Amendments to the approved appropriations require legislative approval. However, since the Department’s
appropriation is a lump sum appropriation, the allocation of funds between personal services, employee-related
expenditures, and other operating expenditures is an internal decision. Accordingly, transfers between line items
such as personal services and other operating expenditures within a particular program may be made by the program
manager. Expenditures may not exceed appropriations. All transfers of funds are reported to the Department’s
Office of Strategic Planning and Budgeting for monitoring purposes.
Budgets are prepared on the cash basis except that liabilities incurred before the end of the fiscal year and paid
within the first month of the subsequent fiscal year are charged against the prior fiscal year’s budget. The
Department’s appropriations lapse at fiscal year-end unless exempted by the legislature.
2012 Comprehensive Annual Financial Report
38

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

In addition, budgets for capital outlay, including land, building, and improvements for the State Highway Fund and
State Aviation Fund, are also submitted to the governor in accordance with state law. The capital outlay
appropriation includes state highway construction and land, building, and improvements for the State Highway
Fund. A legal limitation is adopted for land, building, and improvements; however, legislation allows the
Department to spend in excess of its appropriation for state highway construction up to the current fund balance. The
Department monitors expenditures through an internal budgetary process and the Five-Year Transportation Facilities
Construction Program approved by the Transportation Board.
For fiscal year 2012, the General Appropriation Act (Laws 2011Chapter 24), appropriated operating funds from the
Highway User Revenue Fund. It appears that this was a one-time shift in funding as the appropriation was returned
to the Department’s General Fund (State Highway Fund) in fiscal year 2013. For consistency in reporting, the
Department has shown the operating revenues and expenditures associated with this appropriation as part of the
Department’s General Fund (State Highway Fund).

4. ACCOUNTING PRONOUNCEMENTS AND RECONCILIATION OF GOVERNMENT-WIDE AND
FUND FINANCIAL STATEMENTS
A.

New Accounting Pronouncements

Statement No. 57 OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans
The objectives of this Statement are to address issues related to the use of the alternative measurement method and
the frequency and timing of measurements by employers that participate in agent multiple-employer other postemployment benefit (OPEB) plans (i.e., agent employers). In addition, this Statement clarifies that when actuarially
determined OPEB measures are reported by an agent multiple-employer OPEB plan and its participating employers,
those measures should be determined as of a common date and at a minimum frequency to satisfy the agent
multiple-employer OPEB plan’s financial reporting requirements. The requirements of this Statement are effective
for financial statements for periods beginning after June 15, 2011. The Department has implemented this Statement
as appropriate. There was no impact to the Department.
Statement No. 59 Financial Instruments Omnibus
The objective of this Statement is to update and improve existing standards regarding financial reporting and
disclosure requirements of certain financial instruments and external investment pools for which significant issues
have been identified in practice. The requirements of this Statement are effective for financial statements for periods
beginning after June 15, 2010. The Department has implemented this Statement as appropriate. There was no impact
to the Department.

B. Explanations of Reconciling Items of the Balance Sheet of Governmental Funds to the Statement of Net
Assets
The governmental funds Balance Sheet includes a reconciliation between total fund balances – governmental funds
and net assets of governmental activities as reported on the government-wide Statement of Net Assets. The
following explanations are necessary to clarify these differences between the governmental fund Balance Sheet and
the government-wide Statement of Net Assets:

2012 Comprehensive Annual Financial Report
39

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

1. Capital assets are not included on the fund statements, but are included on the government-wide statement as
follows:

2.

Capital assets not subject to depreciation
Capital assets subject to depreciation

$ 18,413,792,549
193,778,072

Less Internal Service Fund (Equipment Revolving Fund) assets

18,607,570,621
<47,793,962>
$ 18,559,776,659

Deferred revenues for assets shown in the fund statements for the following funds:
Governmental funds:
General Fund (State Highway Fund)
State Aviation Fund

$ 1,910,694
3,960,907
$ 5,871,601

3. Long-term liabilities, including bonds payable, are not due and payable in the current period and are not
reported in the current period on the fund statements. The detail for the difference is as follows:

Bonds payable
Deferred charges - bond issuance costs
Capital leases
Compensated absences
Advances and notes payable
Business activity share of Equipment Revolving Fund gain <loss>

$ <3,185,931,687>
14,850,684
<10,728,825>
<14,256,554>
<55,666,442>
<2,212>
$ <3,251,735,036>

C. Explanations of Reconciling Items of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Governmental Funds to the Statement of Activities
The governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances includes a
reconciliation between net change in fund balances – total governmental funds and changes in net assets of
governmental activities as reported on the government-wide Statement of Activities. The following explanations are
necessary to clarify these differences between the governmental fund Statement of Revenues, Expenditures, and
Changes in Fund Balances and the government-wide Statement of Activities:
1. Governmental funds report capital outlay as expenditures. However, in the Statement of Activities, these costs
are removed; some costs are capitalized as assets while other costs are expensed as follows:
Capital outlay
Reduction in construction in progress resulting from certain infrastructure
projects being reclassified from capital outlay to non-capital
Change in net capital assets – Internal Service Fund (Equipment Revolving Fund)
Assets removed from service, net of accumulated depreciation
Other
Less depreciation expense – governmental funds
Less depreciation expense – Internal Service Fund (Equipment Revolving Fund)

2012 Comprehensive Annual Financial Report
40

$

701,657,365

<35,074,585>
<5,360,730>
<19,847,667>
81,287
<7,709,442>
<7,489,883>
$ 626,256,345

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

2. The issuance of long-term debt (e.g., bonds) provides current financial resources to governmental funds, while
the repayment of principal of long-term debt consumes current financial resources of the governmental funds.
Neither transaction, however, has any effect on net assets. Also, the government reports the effect of debt issuance
costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are amortized in the
Statement of Activities. The details of this difference are as follows:

Debt issued or incurred:
Issuance of Highway Revenue Bonds
Issuance of Transportation Excise Tax Revenue Bonds
Issuance of Grant Anticipation Notes (GARVEE bonds)
Premium on bonds
Bond issuance costs
Advances and notes payable

$ <555,900,000>
<159,460,000>
<43,825,000>
<90,753,104>
2,935,593
<9,541,317>
$ <856,543,828>

Principal repayments:
Highway Revenue Bonds
Transportation Excise Tax Revenue Bonds
Grant Anticipation Notes (GARVEE bonds)
Amortization of premium and discount
Amortization of debt issuance costs
Repayment of advances and notes payable
Repayment of capital leases

$ 536,790,000
55,460,000
101,090,000
22,086,600
<1,524,843>
13,766,561
2,136,603
$ 729,804,921

3. The Internal Service Fund (Equipment Revolving Fund) is used by the Department to charge the cost for
purchases and maintenance of equipment and material to be used by other funds and state agencies. The gain <loss>
in the Internal Service Fund (Equipment Revolving Fund) represents over <under> billing and must be eliminated
from the government-wide Statement of Activities for the business activity.
Internal Service Fund (Equipment Revolving Fund):
Changes in net assets
Business activity share of Equipment Revolving Fund <gain> loss

$
$

5,206,470
5,206,470

4. Some items reported in the Statement of Activities do not provide or require the use of current financial
resources and, therefore, are not reported in the governmental funds. The details are as follows:

Notes and loans receivables
Compensated absences
Assumption of lease by General Fund (State Highway Fund)

$

$

2012 Comprehensive Annual Financial Report
41

<345,328>
<104,843>
<7,955,468>
<8,405,639>

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

5.

DETAILED NOTES ON ALL FUNDS

A.

Capital Assets

Capital assets activity for the year ended June 30, 2012, was as follows:
July 1, 2011
Beginning
Balance

Governmental Activities
Capital assets, not being depreciated:
Land
Infrastructure
Construction in progress
Total capital assets, not being depreciated

$

Capital assets, being depreciated:
Buildings and improvements
Improvements other than buildings
Machinery and equipment
Mobile fleet and aircraft
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings and improvements
Improvements other than buildings
Machinery and equipment
Mobile fleet and aircraft
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets, net

$

$

Capital assets, being depreciated:
Buildings and improvements
Machinery and equipment
Total capital assets, being depreciated
Less accumulated depreciation for:
Buildings and improvements
Machinery and equipment
Total accumulated depreciation
Total capital assets, being depreciated, net
Business-type activities capital assets, net

Increases

$

$

<15,126,409> $ 2,747,307,749
<3,790,727>
12,207,437,415
<649,716,708>
3,459,047,385
<668,633,844>
18,413,792,549

2,012,724
56,548
4,154,515
13,287,238
19,511,025

<2,998,219>
<6,178,640>
<9,176,859>

192,509,769
33,844,604
49,844,993
147,163,073
423,362,439

<79,725,867>
<8,255,640>
<36,599,089>
<98,133,895>
<222,714,491>

<4,071,589>
<1,113,315>
<2,644,592>
<7,369,829>
<15,199,325>

2,731,166
5,598,283
8,329,449

<83,797,456>
<9,368,955>
<36,512,515>
<99,905,441>
<229,584,367>

190,313,782

4,311,700

17,975,953,546

$

7,900

1,301,098,329

<847,410>
$

Increases

$

193,778,072

<669,481,254> $ 18,607,570,621
June 30, 2012
Ending
Balance

Decreases

-

$

-

$

7,900

981,157
2,182,794
3,163,951

5,610
5,610

<19,116>
<19,116>

981,157
2,169,288
3,150,445

<946,088>
<2,172,105>
<3,118,193>

<11,391>
<2,863>
<14,254>

17,204
17,204

<957,479>
<2,157,764>
<3,115,243>

<8,644>

<1,912>

35,202

<8,644> $

<1,912> $

43,102

45,758
$

143,345,011
606,662,256
546,779,362
1,296,786,629

June 30, 2012
Ending
Balance

190,497,045
33,788,056
48,688,697
140,054,475
413,028,273

July 1, 2011
Beginning
Balance

Business-type Activities
Capital assets, not being depreciated:
Land

2,619,089,147
11,604,565,886
3,561,984,731
17,785,639,764

Decreases
Including
Transfers

53,658

$

2012 Comprehensive Annual Financial Report
42

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Depreciation expense was charged to functions/programs as follows:
Governmental Activities:
Administration
Highway
Highway Maintenance
Motor Vehicle

$

2,336,233
2,022,235
1,858,172
1,492,802
7,709,442

B.

Capital assets held by the Department's internal
service fund are charged to the various
functions based on their usage of the assets
Total depreciation expense - governmental activities

$

7,489,883
15,199,325

Business-type Activities
Arizona Highways Magazine Fund

$

14,254

Construction Commitments

The Department’s outstanding commitments for contracts at June 30, 2012, were $746,407,282.

Construction contracts:
Rural roadways
Small urban roadways
Urban roadways
Large urban roadways
General roadways
Sub-total
Design contracts
Other commitments
Total

Expenditures To
Date

Remaining
Commitments

$1,399,277,575
420,495,868
295,282,099
937,645,698
216,738,959
3,269,440,199
852,772,536
63,623,625
$4,185,836,360

$136,565,122
29,429,253
152,454,228
141,249,161
236,354,052
696,051,816
5,789,314
44,566,152
$746,407,282

Area type designations for highways and roads are primarily determined by geographic location and population, as
noted below:
Rural – outside of urbanized areas and urban clusters, generally long roads carrying little traffic.
Urban – interstate highways, freeways, expressways, principal arteries serving major centers of activity in
metropolitan areas.
Small Urban – in areas of 5,000 to 49,999 in population.
Urban – in areas of less than 200,000 in population.
Large Urban – in areas of equal to or greater than 200,000 in population.

2012 Comprehensive Annual Financial Report
43

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

C.

Deferred/Unearned Revenues

In the fund financial statements, the deferred/unearned revenues represent the amount for notes receivable for loans
made to parties who purchased assets previously owned by the fund for highway construction purposes. The State
Aviation Fund amount represents loans to various local governments for construction of hangars, taxiway
extensions, runways, etc. These loans were made at fixed interest rates and with various maturity dates. The
proprietary fund includes the amount for unearned subscriptions. The following schedule is a summary of the
amounts outstanding as of June 30, 2012:

Governmental funds:
General Fund (State Highway Fund)
State Aviation Fund
Proprietary funds:
Arizona Highways Magazine Fund

D.

$ 1,910,694
3,960,907
$ 5,871,601
$ 2,204,871

Interfund Receivables, Payables, Advances, and Transfers

The balances of current interfund receivables and payables as of June 30, 2012, were:
Receivables
Governmental activities:
General Fund (State Highway Fund)

Capital Projects Fund
Equipment Service Fund
Highway User Revenue Fund
Non-Major Governmental Funds
Business-type acivities:
Arizona Highways Magazine

Payables

Amount

Highway User Revenue Fund
Motor Vehicle Division Clearing Fund
Capital Projects Fund
Non-Major Governmental Funds
Maricopa Area Road Fund
Maricopa Area Road Fund
General Fund (State Highway Fund)
Motor Vehicle Division Clearing Fund
General Fund (State Highway Fund)
Motor Vehicle Division Clearing Fund

$ 78,334,505
239,773
3,829,137
64,828
274
267,916
478
24,990,028
1,514,575
2,849,461
112,090,975

Motor Vehicle Division Clearing Fund

26,571
$ 112,117,546

The General Fund (State Highway Fund) receivable of $78,334,505 is an accrual for fuel taxes imposed in fiscal
year 2012 from the Highway User Revenue Fund that will be collected in fiscal year 2013.
The Highway User Revenue Fund receivable of $24,990,028 is an accrual for vehicle license taxes due in fiscal year
2012 from the Motor Vehicle Division Clearing Fund that will be collected in fiscal year 2013.

2012 Comprehensive Annual Financial Report
44

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Interfund transfers for the year ended June 30, 2012, consisted of the following:
Interfund Transfers In:

Interfund Transfers Out:
General Fund (State Highway Fund)
Maricopa Regional Area Road
Construction Fund
Non-Major Governmental Funds
Total

Debt Service
Fund
$ 152,687,225
103,223,010
74,946,221
$ 330,856,456

Internal
Service
Fund
(Equipment Fund)
$
-

$

Arizona
Highways
Magazine
Fund

-

$

-

Total
$ 152,687,225

$

-

103,223,010
74,946,221
$ 330,856,456

The General Fund (State Highway Fund) ($152,687,225), the Maricopa Regional Area Road Construction Fund
($103,223,010), and Non-Major Governmental Funds - Grant Anticipation Notes Fund ($74,946,221) made transfers
to the Debt Service Fund to pay bond debt service.

E.

Leases

Operating Leases
The Department leases data processing equipment, other equipment, and certain facilities from various lessors. The
majority of these leases are for a one-year term, renewable annually. Total rental expenditures (excluding interfund
transactions) for the fiscal year ended June 30, 2012, approximated $2.8 million.
In fiscal year 2002, the Department entered into a lease agreement with the city of Phoenix for a facility located on
East Washington Street in Phoenix. During fiscal year 2010, the Department renegotiated the lease with the city.
This renegotiated lease, effective July 1, 2010, will result in fewer square feet being leased by the Department than
had been the case under the original lease. The future operating lease commitments are as follows:
Year ending June 30
2013
Future operating lease commitments

$
$

Amount
535,510
535,510

In fiscal year 2003, the Department entered into a long-term lease to build a structure to house lab facilities in
Gilbert, Arizona. The future operating lease commitments are as follows:
Year ending June 30
2013
Future operating lease commitments

$

2012 Comprehensive Annual Financial Report
45

Amount
97,758
97,758

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Capital Leases
The Department has entered into lease agreements as lessee for financing the acquisition of various vehicles,
equipment, and modular office buildings. These lease agreements qualify as capital leases for accounting purposes
and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception
date. The assets acquired through capital leases are as follows:

Governmental
Activities
Assets:
Machinery and equipment
Less accumulated depreciation
Total

$
$

12,478,493
<1,222,464>
11,256,029

The future minimum lease obligations and the net present value of these minimum lease payments as of June 30,
2012, were as follows:

Year Ending June 30

Governmental
Activities

2013
2014
2015
2016
2017

2,654,766
2,654,769
2,654,767
2,604,125
743,698

Total minimum lease payments
Less amount representing interest
Present value of minimum lease payments

F.

$

11,312,125
<583,300>
10,728,825

Non-Current Liabilities

Arizona Transportation Board Highway Revenue Bonds
The Transportation Board has issued Senior and Subordinate Lien Highway Revenue Bonds to provide funds for
acquisition of right-of-way, design, and construction of federal and state highways. The original amount of Highway
Revenue Bonds issued in prior years and outstanding at the start of the fiscal year was $1,600,855,000. During the
year, Highway Revenue Bonds totaling $555,900,000 were issued to (i) finance portions of the Transportation
Board’s Five-Year Transportation Facilities Construction Program, (ii) pay interest on any bonds issued for highway
purposes, (iii) pay costs of issuing the bonds, and (iv) refund of the Board’s outstanding Senior Series 2001 Bonds
($19,290,000), Senior Series 2002 Bonds ($38,195,000), Senior Refunding Series 2002A Bonds ($65,625,000),
Senior Series 2002B Bonds ($88,170,000), Senior Series 2003 Bonds ($89,895,000), and refund portions of the
Board’s outstanding Subordinated Series 2003A Bonds ($75,465,000) and Subordinated Refunding Series 2004B
($92,265,000).
The Highway Revenue Bonds are secured by a prior lien on and a pledge of motor vehicle and related fuel fees and
taxes of the General Fund (State Highway Fund). On September 21, 2006, House Bill 2206 became effective and
eliminated the restriction that limited the principal amount of Highway Revenue Bonds that could be outstanding at
any time to $1.3 billion. Also, during fiscal year 2007, the Transportation Board received legislative authority to
begin issuing Highway Revenue Bonds with maturities up to 30 years in length, replacing the 20 year maturity
requirement that had been in place since 1980.

2012 Comprehensive Annual Financial Report
46

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Highway Revenue Bonds currently outstanding are as follows:

Purpose
Governmental activities
Governmental activities - refunding

Interest Rates
2.0% - 5.5%
5.0% - 5.25%

Amount
$ 1,486,690,000
133,275,000
$ 1,619,965,000

Annual debt service requirements to maturity for Highway Revenue Bonds are as follows:
Fiscal year
ending June 30
2013
2014
2015
2016
2017
2018-2022
2023-2027
2028-2032
2033-2036

Highway Revenue Bonds
Principal
Interest
Total
60,540,000
78,455,334
138,995,334
73,890,000
76,108,094
149,998,094
77,190,000
72,806,964
149,996,964
80,680,000
69,317,408
149,997,408
84,390,000
65,607,448
149,997,448
486,145,000
263,838,672
749,983,672
442,415,000
135,673,890
578,088,890
228,990,000
56,932,188
285,922,188
85,725,000
7,620,500
93,345,500
$ 1,619,965,000 $ 826,360,498 $ 2,446,325,498

The Department has pledged future motor vehicle and related fuel fees and taxes to repay $1,619,965,000 in
outstanding Highway Revenue Bonds issued since 2001. Proceeds from the bonds finance portions of the
Transportation Board’s Five-Year Transportation Facilities Construction Program. The bonds are payable solely
from motor vehicle and related fuel fees and taxes and are payable through 2036. The total principal and interest
remaining to be paid on the bonds is $2,446.3 million. Principal and interest paid for the current year and total
pledged revenues were $139.0 million and $369.8 million, respectively. The annual principal and interest payments
on the bonds required 40.6 percent of the pledged revenues.
Arizona Transportation Board Transportation Excise Tax Revenue Bonds
The Maricopa Regional Area Road Construction Fund is used to record all payments of principal and interest for
Transportation Excise Tax Revenue Bonds issued by the Transportation Board. These bonds are secured by a
portion of transportation excise taxes collected by the Arizona Department of Revenue on behalf of Maricopa
County. The original amounts of Transportation Excise Tax Revenue Bonds issued in prior years and outstanding at
the start of the fiscal year was $877,845,000. During the year, Transportation Excise Tax Revenue Bonds totaling
$159,460,000 were issued to pay (1) costs of design, right-of-way purchase, or construction of certain freeways and
other routes within Maricopa County, Arizona and (2) costs of issuing the bonds.
All Transportation Excise Tax Revenue Bonds mature no later than July 1, 2026. Transportation Excise Tax
Revenue Bonds currently outstanding are as follows:

Purpose
Governmental activities

Interest Rates
2.0% - 5.25%

$

Amount
981,845,000

2012 Comprehensive Annual Financial Report
47

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Annual debt service requirements to maturity for Transportation Excise Tax Revenue Bonds are as follows:
Fiscal year
ending June 30
2013
2014
2015
2016
2017
2018-2022
2023-2025

Transportation Excise Tax Revenue Bonds
Principal
Interest
Total
55,870,000
47,721,307
103,591,307
58,600,000
44,988,107
103,588,107
61,395,000
42,198,107
103,593,107
64,355,000
39,233,431
103,588,431
67,495,000
36,096,681
103,591,681
390,775,000
127,181,331
517,956,331
283,355,000
27,417,357
310,772,357
$ 981,845,000
$ 364,836,321
$ 1,346,681,321

The Department has pledged future transportation excise taxes to repay $981,845,000 in outstanding Transportation
Excise Tax Revenue Bonds issued since 2007. Proceeds from the bonds pay the costs of design, right-of-way
purchase, or construction of certain freeways and other routes within Maricopa County. The bonds are payable
solely from transportation excise taxes and are payable through 2026. The total principal and interest remaining to
be paid on the bonds is $1,346.7 million. Principal and interest paid for the current year and total pledged revenues
were $103.6 million and $216.2 million, respectively. The annual principal and interest payments on the bonds
required 50.2 percent of the pledged revenues.
Arizona Transportation Board Grant Anticipation Notes (GARVEE)
The Grant Anticipation Notes Fund administers all payments of principal and interest for notes issued by the
Transportation Board and is secured by revenues received from the Federal Highway Administration under grant
agreements and certain other federal-aid revenues. The original amount of Grant Anticipation Notes (GARVEE –
Grant Anticipation Revenue Vehicles) issued in prior years and outstanding at the start of the fiscal year was
$392,495,000. During the year, Grant Anticipation Notes (GARVEE bonds – Grant Anticipation Revenue Vehicles)
totaling $43,825,000 were issued to pay (1) cost of the projects (as specified) and (2) costs of issuing the bonds.
Grant Anticipation Notes (GARVEE) currently outstanding are as follows:

Purpose
Governmental activities
Governmental activities - refunding

Interest Rates
2.5% - 5.25%
3.625% - 5.0%

$
$

Amount
301,085,000
34,145,000
335,230,000

Annual debt service requirements to maturity for Grant Anticipation Notes (GARVEE) are as follows:
Fiscal year
ending
June 30
2013
2014
2015
2016
2017
2018-2022
2023-2026

Grant Anticipation Notes
(GARVEE)
Principal
Interest
Total
38,990,000
18,445,555
57,435,555
48,530,000
16,436,331
64,966,331
53,040,000
11,854,731
64,894,731
47,350,000
9,552,631
56,902,631
11,770,000
7,392,881
19,162,881
67,935,000
27,886,255
95,821,255
67,615,000
9,042,932
76,657,932
$ 335,230,000
$ 100,611,316
$ 435,841,316

2012 Comprehensive Annual Financial Report
48

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

The Department has pledged federal revenues to repay $335,230,000 in outstanding Grant Anticipation Notes
(GARVEE – Grant Anticipation Revenue Vehicles) issued since 2003. Proceeds from the bonds pay the costs of
design, right-of-way purchase, or construction of certain freeways and other routes within Arizona. The bonds are
payable solely from federal revenues and are payable through 2026. The total principal and interest remaining to be
paid on the bonds is $435.8 million. Principal and interest paid for the current year and total pledged revenues were
$75.0 million and $815.8 million, respectively. The annual principal and interest payments on the bonds required 6.8
percent of the pledged revenues.
Refunded Bonds Deposited with Escrow Agents
In prior fiscal years, the Transportation Board had refinanced various bond issues through refunding arrangements.
Under the terms of the refunding bond issues, sufficient assets to pay all principal, redemption premium, if any, and
interest on the refunded bond issues have been placed in irrevocable trust accounts at commercial banks and
invested in U.S. Government securities which, together with interest earned thereon, will provide amounts sufficient
for future payment of principal and interest of the issues refunded. The assets, liabilities, and financial transactions
of these trust accounts and the liability for the defeased bonds are not reflected in the financial statements of the
Department.
The Department refunded the Highway Revenue Bonds Senior Series 2001 Bonds ($19,290,000), Senior Series
2002 Bonds ($38,195,000), Senior Refunding Series 2002A Bonds ($65,625,000), Senior Series 2002B Bonds
($88,170,000), Senior Series 2003 Bonds ($89,895,000), a portion of the Highway Revenue Bonds Subordinated
Series 2003A Bonds ($75,465,000), and Subordinated Refunding Series 2004B ($92,265,000) to reduce the total
debt service payments by $2,433,907 and to obtain an economic gain (difference between the present values of the
debt service payments on the old and new debt) of $24,116,137. The payment to the refunded bond escrow agent
totaled $511,869,785, representing principal of $468,905,000, interest of $20,620,609, and premium of $22,344,176.
The Department advance refunded a portion of the Grant Anticipation Notes 2003A Series ($18,335,000) and the
2004B Series ($25,665,000) to reduce the total debt service payments by $2,523,451 and to obtain an economic gain
(difference between the present values of the debt service payments on the old and new debt) of $2,500,776. The
payment to the refunded bond escrow agent totaled $48,358,560 representing principal of $44,000,000 and interest
of $4,358,560.
Refunded bonds of the Department deposited with escrow agents at June 30, 2012, are as follows:

Original Issue
2011 Series A
2011 Series B
2012

Escrow
Type
Maturity Date
Highway Revenue Bonds
July 1, 2036
Highway Revenue Bonds
July 1, 2019
Grant Anticipation Notes
July 1, 2016
Total refunded bonds deposited with escrow agent

Balance
$ 441,503,102
70,366,683
48,358,560
$ 560,228,345

Advances and Notes Payable
The Department’s outstanding advances and notes payable as of June 30, 2012, were $55,666,442 in governmental
activities. The advances and notes payable represent amounts for other intergovernmental advances.

2012 Comprehensive Annual Financial Report
49

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

Annual debt service requirements to maturity for advances and notes payable are as follows:
Fiscal year
ending June 30
2013
2014
2015
2021
2022

Governmental Activities
Principal
Interest
$ 3,115,251
$
30,209,502
1,877,593
151,430
20,312,666
$ 55,666,442
$

-

Business-type Activities
Principal
Interest
$
- $
$
- $

Total
-

Principal
3,115,251
30,209,502
1,877,593
151,430
20,312,666
$ 55,666,442
$

Interest
$

-

$

Changes in non-current liabilities
The activity for the fiscal year ended June 30, 2012, was as follows:
Beginning
Balance
July 1, 2011

Additions

$ 1,600,855,000

$ 555,900,000

877,845,000

159,460,000

<55,460,000>

981,845,000

55,870,000

392,495,000
180,225,182

43,825,000
90,753,105

<101,090,000>
<22,086,600>

335,230,000
248,891,687

38,990,000
20,373,653

Total bonds and notes
Capital leases
Compensated absences
Advances and notes payable
Total governmental activities

3,051,420,182
4,909,960
14,782,649
59,891,686
3,131,004,477

849,938,105
7,955,468
13,159,543
9,541,317
880,594,433

<715,426,600>
<2,136,603>
<13,051,821>
<13,766,561>
<744,381,585>

3,185,931,687
10,728,825
14,890,371
55,666,442
3,267,217,325

175,773,653
2,418,377
12,137,653
3,115,251
193,444,934

Business-type Activities
Compensated absences
Total business-type activities

136,069
136,069

106,251
106,251

<94,918>
<94,918>

147,402
147,402

145,686
145,686

$ 3,131,140,546

$ 880,700,684

<744,476,503> $ 3,267,364,727

$ 193,590,620

Governmental Activities
Bonds and notes:
Highway Revenue Bonds
Transportation Excise Tax
Revenue Bonds
Grant Anticipation Notes
(GARVEE)
Premium on bonds

Total non-current liabilities

Reductions

$

$

Ending
Balance
June 30, 2012

<536,790,000> $ 1,619,965,000

Due Within
One Year

$ 60,540,000

The Internal Service Fund predominantly serves the governmental funds. Accordingly, long-term liabilities for that
fund are included as part of the above totals for governmental activities. At year-end, $633,817 of the Internal
Service Fund’s compensated absences is included in the above amounts.
The capital leases will be liquidated by the General Fund (State Highway Fund). The General Fund (State Highway
Fund) has paid compensated absences in the past while the advances and notes payable will be repaid with funds
from the General Fund (State Highway Fund) and the Maricopa Regional Area Road Construction Fund.
Bonds and notes issued by the Department require compliance with a number of covenants. The Department
believes that it is in compliance with all such covenants. In addition, certain of the Department’s obligations are
subject to Internal Revenue Service regulations pertaining to issuance of tax-exempt debt by governmental entities.
The Department does not have and has not accrued a liability under these regulations.

2012 Comprehensive Annual Financial Report
50

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

G.

Fund Balances

The Department’s fund balance, as of June 30, 2012, is composed of the following:
Unassigned
Administration
Highway Operations
Highway Maintenance
Motor Vehicle
Inventories
Land Held for Resale
Other

$

$

Nonspendable
- $
<8,128,423>
8,235,030
<8,128,423> $
8,235,030

Restricted
15,325,091
1,072,323,186
621,528
$ 1,088,269,805
$

Committed
89,686,579
148,182
7,067,355
3,575,610
18,168,740
$ 118,646,466
$

Total
105,011,670
1,072,471,368
7,067,355
<4,552,813>
8,235,030
18,168,740
621,528
$ 1,207,022,878
$

The <$8.1> million in the unassigned portion of the fund balance is due to Arizona Revised Statutes, §28-6542 (B),
which prohibits adjustments more than 24 months after the original distribution.

6.

OTHER INFORMATION

A.

Contingent Liabilities

Risk Management Insurance Losses
The Department is exposed to various risks of loss related to torts; thefts of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The Department is a participant in the state’s selfinsurance program and, in the opinion of the Department’s management, any unfavorable outcomes from these
claims and actions would be covered by the self-insurance program. Accordingly, the Department has no risk of loss
beyond adjustments to future years’ premium payments to the state’s self-insurance program. All estimated losses
for unsettled claims and actions of the state are determined on an actuarial basis and are included in the State of
Arizona’s Comprehensive Annual Financial Report.
Claims
The Department has a variety of claims pending against it that arose during the normal course of its activities.
Management of the Department believes, based on the advice of legal counsel, that losses, if any, resulting from
settlement of these claims will not have a material effect on the financial position of the Department.
Grants
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies,
principally the federal government. Any disallowed claims, including amounts already collected, may constitute a
liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot
be determined at this time although the Department expects such amounts, if any, to be immaterial.
Light Rail Transit System
Arizona Revised Statutes, §28-9201, requires the Department to establish, implement, and enforce minimum safety
standards for light rail transit systems. If a violation of the safety standards is discovered, the Department shall
report the violation in writing to the Federal Transit Administration. Furthermore, the organization that operates a
light rail transit system shall include a safety oversight function and pay the Department’s costs resulting from
administration.

2012 Comprehensive Annual Financial Report
51

Arizona Department of Transportation
Notes to the Financial Statements (continued)
June 30, 2012

B.

Pension and Other Postemployment Benefits

Plan descriptions – The Department contributes to a cost-sharing, multiple-employer defined benefit pension plan; a
cost-sharing, multiple-employer defined benefit health care plan; and a cost-sharing, multiple-employer defined
benefit long-term disability plan, all of which are administered by the Arizona State Retirement System. The System
(through its Retirement Fund) provides retirement (i.e., pension), death, and survivor benefits; the Health Benefit
Supplement Fund provides health insurance premium benefits (i.e., a monthly subsidy); and the Long-Term
Disability Fund provides long-term disability benefits. Benefits are established by state statute. The System is
governed by the Arizona State Retirement System Board according to the provisions of Arizona Revised Statutes,
Title 38, Chapter 5, Article 2.
The System issues a Comprehensive Annual Financial Report that includes financial statements and required
supplementary information. The most recent report may be obtained by writing the Arizona State Retirement
System, 3300 North Central Avenue, P.O. Box 33910, Phoenix, AZ 85067-3910, or by calling (602) 240-2000 or
(800) 621-3778.
Funding policy – The Arizona state legislature establishes and may amend active plan members’ and the
Department’s contribution rates. For the year ended June 30, 2012, active plan members were required by statute to
contribute at the actuarially determined rate of 10.74 percent (10.5 percent for retirement and 0.24 percent for longterm disability) of the members’ annual covered payroll and the Department was required by statute to contribute at
the actuarially determined rate of 10.75 percent (9.87 percent for retirement, 0.63 percent for health insurance
premium, and 0.24 percent for long-term disability) of the members’ annual covered payroll.
The Department’s contributions for the current and two preceding years, all of which were equal to the required
contributions, were as follows:
Fiscal year
Health Benefit
Long-Term
ended June 30 Retirement Fund Supplement Fund Disability Fund
2012
2011
2010

$

17,230,639 $
14,551,983
13,068,245

1,441,900
1,175,632
2,585,137

$

Total

451,367 $ 19,123,906
423,310
16,150,925
702,369
16,355,751

The Department's total payroll for fiscal year 2012 was $188.1 million. The System is funded through payroll
deductions from employees' gross earnings and amounts contributed by the Department. Retirement benefits, health
care benefits, and long term disability benefits are obligations of the System and not of the Department. The Arizona
Revised Statutes provide statutory authority for employee and employer contributions. The contribution requirement
for fiscal year 2012 was $19.1 million each by both the employees and the Department.

2012 Comprehensive Annual Financial Report
52

Comprehensive Annual Financial Report
FISCAL YEAR

2012

Required Supplementary Information (Other than MD&A)
Budgetary Comparison Schedule – General Fund (State Highway Fund)
Note to Required Supplementary Information
Information About Infrastructure Assets Reported Using the Modified Approach

100 Years of Arizona History

Celebrating
1912-2012

Arizona Department of Transportation
Required Supplementary Information
June 30, 2012

Budgetary Comparison Schedule
General Fund (State Highway Fund)
for the fiscal year ended June 30, 2012

Budgeted Amounts
Original
Final
Expenditures appropriated by State legislature in 2012 budget
Department of Transportation
$ 326,374,600

$ 326,374,600

Timing differences:
Prior year appropriation expenditures expended in current budgetary year
Basis differences:
Net increase <decrease> from cash basis for budgeting purposes and
modified accrual basis for financial reporting purposes
Entity differences:
Funds not appropriated, but included for financial reporting purposes
Perspective differences:
Expenditures on modified accrual basis and not recognized on budgetary basis:
Capital outlay and asset preservation
Distributions to Arizona counties and cities
Distributions to other state agencies
Interest expense
Principal repayment of debt
Total expenditures as reported on the Statement of Revenues, Expenditures, and
Changes in Fund Balances - Governmental Funds (General Fund) - Exhibit 4
The note to required supplementary information is an integral part of this schedule.

2012 Comprehensive Annual Financial Report
53

Actual
Amounts

$ 323,368,206

5,661,900

117,521
1,503,608

513,118,450
43,757,398
137,596
214,058
3,536,603

$ 891,415,340

Variance with
Final Budget Positive
<Negative>

$

3,006,394

Arizona Department of Transportation
Required Supplementary Information (continued)
June 30, 2012

Note to Required Supplementary Information
1. Budgets and budgetary accounting
An annual budget for the operating expenditures of the General Fund (State Highway Fund) is submitted to the governor
in accordance with state law. The budget is legally enacted as appropriations after approval by the state legislature and
signature of the governor. The legal level of control for operating expenditures is set at the agency level and expenditure
budgets are appropriated using a lump-sum by agency format with a special line-item appropriation for highway
maintenance. Revenue budgets are developed internally by the Department and are not part of the appropriation process.
Amendments to the approved appropriations require legislative approval. However, since the Department’s
appropriation is a lump sum appropriation by agency, the allocation of funds between personal services, employeerelated expenditures, and other operating expenditures is an internal decision. Accordingly, transfers between line items
such as personal services and other operating expenditures within a particular program may be made by the program
manager. Expenditures may not exceed appropriations. All transfers of funds are reported to the Department’s Office of
Strategic Planning and Budgeting for monitoring purposes.
Budgets are prepared on the cash basis except that liabilities incurred before the end of the fiscal year and paid within
the first month of the subsequent fiscal year are charged against the prior fiscal year’s budget. The Department’s
appropriations lapse at fiscal year-end unless exempted by the legislature.
For financial reporting purposes, the accompanying financial statements present the legally adopted budget for the
operations of the General Fund (State Highway Fund) that is subject to legislative appropriation.
In addition, budgets for capital outlay, including land, building, and improvements for the General Fund (State Highway
Fund) and State Aviation Fund, are also submitted to the governor in accordance with state law. The capital outlay
appropriation includes state highway construction and land, building, and improvements for the General Fund (State
Highway Fund). A legal limitation is adopted for land, building, and improvements; however, legislation allows the
Department to spend in excess of its appropriation for state highway construction up to the current fund balance. The
Department monitors expenditures through an internal budgetary process and the Five-Year Transportation Facilities
Construction Program approved by the Transportation Board.

2012 Comprehensive Annual Financial Report
54

Arizona Department of Transportation
Required Supplementary Information (continued)
June 30, 2012

Information About Infrastructure Assets Reported Using the Modified Approach
As allowed by Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements – and
Management’s Discussion and Analysis – for State and Local Governments (GASB 34), the Arizona Department of
Transportation (Department) reports its roads and bridges using the modified approach. Assets accounted for under the
modified approach include 6,751 center lane miles (21,440 travel line miles) of roads and 4,754 bridges that the
Department is responsible to maintain.
In order to utilize the modified approach, the Department is required to:
Maintain an asset management system that includes an up to date inventory of eligible infrastructure assets.
Perform condition assessments of eligible assets and summarize the results using a measurement scale.
Estimate each year the annual amount to maintain and preserve the assets at the condition level established and
disclosed by the Department.
Document that the assets are being preserved approximately at or above the established condition level.
As adopted by the Transportation Board of the State of Arizona Department of Transportation (Transportation Board)
on an annual basis, the Five-Year Transportation Facilities Construction Program (Program) contains estimated
expenditures for highway system improvements and the preservation of existing roadway and bridges. Both of these
factors impact the condition assessment of the roads and bridges as described in the following sections. The Program in
effect for fiscal year 2012 and beyond was adopted by the Transportation Board on June 17, 2011.
This Program is a dynamic instrument and adjustments are made to the annual plans based on the needs of the
Department to maintain the condition level of the roads and bridges at a level equal to, or greater than, the goals
established by the Department. In addition, not only are adjustments made during the life of the Program, circumstances
may require that refinements to the individual components of the Program be made during the fiscal year.
In comparing Estimated to Actual Expenditures in the tables that follow, significant variances can occur. These
variances are primarily due to the methodology used in the preparation of the Program. In this Program, the Estimated
Expenditures for the current year are based on “programmed” projects which may or may not be spent in the current
year of the Program. Programmed expenditures consist of those items that are planned for the future, with contracts that
have not yet been awarded. Furthermore, the Actual Expenditures will include projects that were programmed for a prior
year’s Estimated Expenditures, but which did not occur, or were not completed, in the prior year.
The following information pertains to the condition assessment and maintenance of infrastructure assets and reflects the
Department’s success in achieving condition levels that exceed the established levels.
Roads
The mission of the Department’s Pavement Management Section (PMS) is to develop and provide a cost effective
pavement rehabilitation construction program that preserves the state’s investment in its highway system and enhances
public transportation and safety. The requirements of GASB 34 and the PMS both work toward the same basic goal, the
efficient, effective management of the Department’s assets to produce long-term benefits while minimizing expenditures.
The PMS has developed performance goals for the condition level of the pavement in the state highway system. These
goals require periodic assessment of pavement conditions and the budget level needed to meet that goal. The goal is
expressed as a measure called “Serviceability” which can be defined as the ability of a pavement to serve the traveling
public (as documented in 1961 after American Association of State Highway and Transportation Officials (AASHTO)
Road Test, 1956-1961). Serviceability is based on detailed measurements of objective features of the pavement. Many
surveys since the original road test have shown that these measurements closely track the subjective opinion of the
traveling public. Most commonly, this number is called Present Serviceability Rating and abbreviated as PSR. PSR is a
five-point scale (5 excellent, 0 impassable), similar to the Weaver/AASHTO Scale shown as follows:

2012 Comprehensive Annual Financial Report
55

Arizona Department of Transportation
Required Supplementary Information (continued)
June 30, 2012

Information About Infrastructure Assets Reported Using the Modified Approach (continued)
Numerical
Rating
5
4
3
2
1
0

PSR
Excellent
Good
Fair
Poor
Very Poor
Impassable

Weaver/AASHTO
Scale
Perfect
Very Good
Good
Fair
Poor
Very Poor

The goal of the Department is to maintain a condition level (PSR) rating of 3.23 or better for all roads in the state
highway system. Annually, Transportation Material Technicians drive over the system with inertial profiling equipment
and measure the roughness of the pavement. This process is continuous throughout the year in order to assess the
condition level of all pavement on an annual basis. As of the end of fiscal year 2012, an overall rating of 3.69 was
achieved, as shown in the following graph:

Figure 1
Preservation of the roads is accomplished through programs managed primarily by the Department’s PMS, as well as
other units within the Department. The estimated (as specified in the Program as programmed amounts) and actual
expenditures for fiscal years 2008 through 2012 were as follows:

Fiscal Year
2008
2009
2010
2011
2012

Estimated Expenditures
(in millions)
$260.7
264.4
227.4
265.7
261.9

Actual Expenditures
(in millions)
247.9
236.0
220.9
373.4
373.6

2012 Comprehensive Annual Financial Report
56

Arizona Department of Transportation
Required Supplementary Information (continued)
June 30, 2012

Information About Infrastructure Assets Reported Using the Modified Approach (continued)
Bridges
The Department’s bridge assets constitute a significant portion of all infrastructure assets in Arizona. As of June 30,
2012, the Department owned and maintained 4,754 bridges with an approximate total deck area of 47,959,739 square
feet. Bridges, for purposes of this report, include all structures erected over an opening or depression with a centerline of
20 feet or more. Information related to these bridges is stored and updated in the Arizona Bridge Information and
Storage System (ABISS). This system is used to efficiently manage the bridge inventory through storing all bridge
related data and assisting bridge engineers in arriving at appropriate bridge preservation decisions. Also, ABISS is used
for reporting bridge inventory and condition, on a biennial basis, to the Federal Highway Administration (FHWA).
A Condition Rating Index (CRI) is used to track the condition of the bridge network. The CRI is based on four selected
bridge inspection condition ratings, which in turn are based on standards established in the FHWA’s “Recording and
Coding Guide for the Structural Inventory of the Nation’s Bridges.” The four selected condition ratings that are
included in the CRI computation are: the bridge joints condition, the deck condition, the super-structure condition, and
the sub-structure condition. The bridge joints condition rating is an Arizona-specific rating item not included in the
FHWA condition rating guidelines, whereas the other three condition ratings are federally mandated condition ratings.
The CRI is computed by subtracting from one the ratio of the sum of the deck areas of all bridges with a condition rating
of four or less (see table below), which indicates that the rated element is at best in a poor condition, to the total sum of
the deck areas. The rating system in this guide is as follows:
Numerical
Rating
9
8
7
6
5
4
3
2
1

Condition
Rating
Excellent
Very Good
Good
Satisfactory
Fair
Poor
Serious
Critical
Imminent Failure

Management of the bridge inventory is a major function of the Department’s Bridge Group and regularly scheduled
biennial inspections are made of all bridges. A civil or structural engineer, licensed to practice in Arizona, performs
these inspections. It is the policy of the Department to maintain state highway bridges so that the CRI exceeds 92.5%. In
fiscal year 2012, the CRI was computed at 93.1%.

2012 Comprehensive Annual Financial Report
57

Arizona Department of Transportation
Required Supplementary Information (continued)
June 30, 2012

Information About Infrastructure Assets Reported Using the Modified Approach (continued)

Figure 2
Bridges represent a major public investment, and their inspection and maintenance is an essential function of the
Department in its mission of providing products and services for a safe, efficient, and cost effective transportation
system. Figure 3 indicates that approximately 57% of the bridges in the state were constructed prior to the 1970s while
only 13% have been constructed since 2000.

Figure 3

2012 Comprehensive Annual Financial Report
58

Arizona Department of Transportation
Required Supplementary Information (continued)
June 30, 2012

Information About Infrastructure Assets Reported Using the Modified Approach (continued)
Preservation of the bridges is accomplished through programs managed by the Bridge Group. The estimated (as
specified in the Program as programmed amounts) and actual expenditures for fiscal years 2008 through 2012 were as
follows:

Fiscal Year
2008
2009
2010
2011
2012

Estimated Expenditures
(in millions)
$13.4
14.3
16.1
11.8
12.5

Actual Expenditures
(in millions)
$18.1
17.3
22.4
26.0
20.6

Actual expenditures on bridge preservation have exceeded estimated expenditures in each of the past five fiscal years.
These higher-than-estimated expenditures have been the result of an ongoing effort to maintain the ability of an older
inventory of bridges to serve a growing population. This trend explains why the higher expenditures have occurred
simultaneously with a decline, during the same period, of the bridge network’s Condition Rating Index (CRI), as
described above.

2012 Comprehensive Annual Financial Report
59

Comprehensive Annual Financial Report
FISCAL YEAR

2012

Non-Major Governmental Funds Financial Statements
Special Revenue Funds
Special revenue funds are used to account for specific revenues that are legally restricted to expenditures
for particular purposes.
The State Aviation Fund is appropriated by the legislature and receives monies from aviation gasoline
taxes, sale of abandoned and seized aircraft, flight property taxes, and the operation of the Grand Canyon
National Park Airport. The Aviation Fund monies are used to build and maintain airport facilities throughout
Arizona.
The Safety Enforcement and Transportation Infrastructure Fund is appropriated by the legislature and
receives monies from registration fees for non-resident vehicles and single trip and limited use fuel
tax permits. Monies are used for enforcement of vehicle safety requirements, and construction and
maintenance of transportation facilities within twenty-five miles of the border between Arizona and
Mexico.
The Motor Vehicle Liability Insurance Enforcement Fund is appropriated by the legislature and receives
reinstatement fees for insurance-related driver license and vehicle registration suspensions. Monies are
used to administer the State’s Mandatory Liability Insurance Program.
The Motor Vehicle Inspection and Title Enforcement Fund is appropriated by the legislature and
receives monies from the fees charged for certain vehicle inspections. Monies are used to defray the
cost of investigations involving certificates of title, licensing fraud, registration enforcement, and other
enforcement related issues.
The Motor Carrier Safety Revolving Fund receives fees to administer and enforce the rules governing the
safety operations of motor carriers, shippers, and vehicles transporting hazardous materials, substances,
or waste.
The Underground Storage Tank Fund receives certain Department revenues for distribution to the
Department of Environmental Quality.
The Economic Strength Project Fund receives monies from the Highway User Revenue Fund for use on
approved economic strength projects recommended by the Department of Commerce and Economic
Development Commission.
The Grant Anticipation Notes Fund receives revenues from the Federal Highway Administration under
various grant agreements for the repayment of Grant Anticipation Notes (GARVEE bonds).
The Local Agency Deposits Fund receives monies from the U.S. Government and local agencies for the
payment of local agency sponsored city streets and county secondary road construction projects.

100 Years of Arizona History

Celebrating
1912-2012

Arizona Department of Transportation
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2012

State
Aviation
Fund
Assets
Unrestricted cash on deposit with the
State Treasurer
Receivables:
Interfund
Notes and loans
Other (net)
Amounts due from U.S. Government
Restricted cash on deposit with the
State Treasurer
Total assets
Liabilities and fund balances
Liabilities:
Accounts payable
Accrued payroll and other
accrued expenditures
Contracts and retainage payable
Interfund payables
Amounts due to:
Other state agencies
Arizona counties and cities
Deferred revenue
Total liabilities
Fund balances:
Restricted
Committed
Total fund balances
Total liabilities and fund balances

Safety
Enforcement Motor Vehicle Motor Vehicle
and
Liability
Inspection
Transportation
Insurance
and Title
Infrastructure
Enforcement
Enforcement
Fund
Fund
Fund

$ 25,389,352

$ 1,376,389

$ 1,135,925

35,143
3,960,907
2,649,826
-

59,705
-

60,461
-

53,318
-

$ 32,035,228

$ 1,436,094

$ 1,196,386

$

861,770

$

$

$

$

-

328,880

-

-

$

808,452

22,646
526,111
-

20,280
-

23,357
-

26,474
-

3,960,907
4,838,544

20,280

23,357

26,474

27,196,684
27,196,684
$ 32,035,228

1,415,814
1,415,814
$ 1,436,094

1,173,029
1,173,029
$ 1,196,386

835,296
835,296
861,770

2012 Comprehensive Annual Financial Report

60

$

Exhibit 9

Motor
Carrier
Safety
Revolving
Fund

$

Underground
Storage
Tank
Fund

31,769

$

-

Economic
Strength
Project
Fund

$

Grant
Anticipation
Notes
Fund

1,683,348

$

-

Local
Agency
Deposits
Fund

$

Total
Non-Major
Governmental
Funds

-

$ 30,425,235

-

2,640,834
-

-

-

4,709,896
18,276,373

2,849,461
3,960,907
7,359,722
18,276,373

$

31,769

1,199,996
$ 3,840,830

$

1,683,348

$

2,558
2,558

11,953,682
$ 34,939,951

13,156,236
$ 76,027,934

$

-

$

$

-

$

-

$

$

$

-

-

328,880

-

63,648

-

-

20,295,502
1,180

92,757
20,821,613
64,828

-

3,777,182
3,840,830

1,683,348
1,683,348

-

20,296,682

3,777,182
1,683,348
3,960,907
30,729,515

31,769
31,769
31,769

$ 3,840,830

1,683,348

2,558
2,558
2,558

14,643,269
14,643,269
$ 34,939,951

14,645,827
30,652,592
45,298,419
$ 76,027,934

$

$

2012 Comprehensive Annual Financial Report

61

Arizona Department of Transportation
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Non-Major Governmental Funds
for the fiscal year ended June 30, 2012

State
Aviation
Fund
Revenues
Vehicle registration, title, license,
and related taxes and fees
Fuel and motor carrier taxes and fees
Flight property taxes
Reimbursement of construction
expenditures - federal aid
Other federal grants and reimbursements
Reimbursements from Arizona counties and cities
Interest on loans receivable
Income from investments
Grand Canyon National Park Airport
Other
Total revenues

$

9,975,520
308,752
10,735,000

Safety
Enforcement
and
Transportation
Infrastructure
Fund

Motor Vehicle
Liability
Insurance
Enforcement
Fund

Motor Vehicle
Inspection
and Title
Enforcement
Fund

$

$

$

3,084,098
-

2,152,197
-

1,492,819
-

488,436
515,460
248,372
197,405
821,236
2,170,359
25,460,540

13,605
1,764
3,099,467

2,152,197

13,094
1,505,913

3,935,286
3,935,286

1,843,590
1,843,590

1,090,320
1,090,320

1,473,250
1,473,250

Distributions to other state agencies
Distributions to Arizona counties and cities
Capital outlay
Total expenditures

727,100
8,172,293
185,530
13,020,209

1,553,300
3,396,890

325,500
1,415,820

7,900
1,481,150

Excess <deficiency> of revenues over
<under> expenditures

12,440,331

<297,423>

736,377

24,763

-

-

736,377
436,652
1,173,029

24,763
810,533
835,296

Expenditures
Current:
Administration
Highway
Motor vehicle
Total current expenditures
Intergovernmental:

Other financing sources <uses>
Transfers out for debt service
Total other financing sources <uses>
Net change in fund balances
Fund balances - July 1
Fund balances - June 30

12,440,331
14,756,353
$ 27,196,684

-

$

<297,423>
1,713,237
1,415,814
$

2012 Comprehensive Annual Financial Report
62

$

Exhibit 10

Motor
Carrier
Safety
Revolving
Fund

$

Underground
Storage
Tank
Fund

-

$

<13,500>
<13,500>

$

Grant
Anticipation
Notes
Fund

1,000,000
-

$

-

Local
Agency
Deposits
Fund

$

Total
Non-Major
Governmental
Funds

-

$ 13,059,618
32,061,437
10,735,000

12,437
27,120,106

12,167
1,012,167

72,750,091
9,012
72,759,103

85,926,299
4,555,731
90,482,030

73,238,527
85,926,299
5,071,191
248,372
244,626
821,236
2,171,717
223,578,023

-

64,424
64,424

730
730

605
605

93,557,474
93,557,474

3,935,891
93,557,474
4,472,314
101,965,679

-

27,055,682
27,120,106

100,000
911,437
1,012,167

605

93,557,474

29,769,482
9,083,730
185,530
141,004,421

-

-

72,758,498

<3,075,444>

82,573,602

-

-

<74,946,221>
<74,946,221>

-

-

<13,500>

-

$

27,107,669
-

Economic
Strength
Project
Fund

<13,500>
45,269
31,769
$

$

-

<74,946,221>
<74,946,221>

<2,187,723>
<3,075,444>
7,627,381
2,190,281
17,718,713
37,671,038
$
2,558
$ 14,643,269
$ 45,298,419

2012 Comprehensive Annual Financial Report
63

Comprehensive Annual Financial Report
FISCAL YEAR

2012

Fiduciary Funds Financial Statements
Combining Statement of Net Assets
Statement of Changes in Assets and Liabilities

Agency Funds
Highway Properties – Privilege Tax Fund collects monies from renters of properties previously acquired
by the Department for use in future highway development. Monies collected are distributed to the
Department of Revenue.
Highway Properties – 24 Percent Fund collects 24 percent of the Department’s rental income from
properties for use in future highway development. Monies collected are distributed to the local counties.

100 Years of Arizona History

Celebrating
1912-2012

Exhibit 11
Arizona Department of Transportation
Combining Statement of Net Assets
Agency Funds
June 30, 2012

Highway
Properties Privilege Tax
Fund
ASSETS
Restricted cash on deposit with the State Treasurer
Total assets
LIABILITIES
Due to Department of Revenue
Due to Arizona counties
Total liabilities

Total

$
$

721
721

$
$

412,324
412,324

$
$

413,045
413,045

$

721
721

$

412,324
412,324

$

721
412,324
413,045

$

2012 Comprehsive Annual Financial Report
64

Highway
Properties - 24 %
Lieu Tax Fund

$

$

Exhibit 12
Arizona Department of Transportation
Statement of Changes in Assets and Liabilities
Agency Funds
for the fiscal year ended June 30, 2012
Balance
July 1, 2011

Additions

Deductions

Balance
June 30, 2012

Highway Properties - Privilege Tax Fund
Assets
Restricted cash on deposit with the State Treasurer
Total assets

$
$

-

$
$

7,354
7,354

$
$

<6,633> $
<6,633> $

721
721

$

$
$

721
6,633
7,354

$

$

-

- $
<6,633>
<6,633> $

721
721

Assets
Restricted cash on deposit with the State Treasurer
Total assets

$
$

415,227
415,227

$
$

423,986
423,986

$ <426,889> $
$ <426,889> $

412,324
412,324

Liabilities
Due to Arizona counties
Total liabilities

$
$

415,227
415,227

$
$

423,986
423,986

$ <426,889> $
$ <426,889> $

412,324
412,324

Total
Assets
Restricted cash on deposit with the State Treasurer
Total assets

$
$

415,227
415,227

$
$

431,340
431,340

$ <433,522> $
$ <433,522> $

413,045
413,045

$

415,227
415,227

$

721
430,619
431,340

$

721
412,324
413,045

Liabilities
Due to Department of Revenue
Due to Arizona counties
Total liabilities

$

Highway Properties - 24 Percent Fund

Liabilities
Due to Department of Revenue
Due to Arizona counties
Total liabilities

$

$

2012 Comprehensive Annual Financial Report
65

- $
<433,522>
$ <433,522> $

100 Years of Arizona History

Celebrating
1912-2012

Comprehensive Annual
Financial Report

fiscal year

2012
Statistical Section

Arizona Department of Transportation
Overview – Statistical Section
for the fiscal year ended June 30, 2012

This part of the Arizona Department of Transportation’s (Department) Comprehensive Annual Financial Report
provides detail in the form of graphs and tables intended to assist the reader of the report with understanding the
information presented in the financial statements, note disclosures, and required supplementary information
regarding the overall financial health of the Department.

Financial Trends
These schedules show trend information that gives an insight into the Department’s financial well-being
and performance over time.
Revenue Capacity
Information about the Motor Vehicle Fuel Tax and the Highway User Revenue Fund, the Department’s
most significant own-source revenues, is presented in these tables.
Debt Capacity
These tables present information to help the reader assess the affordability of the Department’s current
levels of outstanding debt as well as the Department’s ability to issue additional debt in the future.
Demographic and Economic Information
The demographic and economic indicators presented in this section offer an understanding of the
environment in which the Department’s financial activities take place.
Operating Information
The Department’s relationship of the financial report to the services provided as well as its activities is
illustrated in these tables depicting service and infrastructure information.

Sources: Unless otherwise stated, all information in the following tables is derived from the Comprehensive Annual
Financial Reports for the years shown.

2012 Comprehensive Annual Financial Report
67

Arizona Department of Transportation
Index – Statistical Section
for the fiscal year ended June 30, 2012

Page
Financial Trends
Table A-1 – Change in Net Assets.........................................................................................................................68-71
Table A-2 – Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................72-75
Table A-3 – Fund Balances of Governmental Funds .................................................................................................. 76
Table A-4 – Expenditures of Federal Awards ............................................................................................................ 77
Table A-5 – Government-wide Expenses by Function ............................................................................................... 78
Table A-6 – Government-wide Revenues .................................................................................................................. 79
Table A-7 – Net Assets by Component ...................................................................................................................... 80
Revenue Capacity
Table B-1 – Highway User Revenue Fund Collections .............................................................................................. 81
Table B-2 – Highway User Revenue Fund Distributions ........................................................................................... 82
Table B-3 – Fuel Tax Rates ........................................................................................................................................ 83
Table B-4 – Motor Vehicle Fuel Tax – Top Ten Suppliers ........................................................................................ 84
Table B-5 – Gasoline Volume Sold – Top Twenty-Five Suppliers .......................................................................85-86
Debt Capacity
Table C-1 – Highway User Revenue Fund – Legal Debt Margin............................................................................... 87
Table C-2 – Highway Revenue Bonds – Bond Coverage ........................................................................................... 88
Table C-3 – Transportation Excise Tax Revenue Bonds – Bond Coverage ............................................................... 89
Table C-4 – Transportation Excise Tax Revenue Bonds – Debt Service Revenue and Cost Per Capita .................... 90
Table C-5 – Ratios of Outstanding Debt by Type ...................................................................................................... 91
Demographic and Economic Information
Table D-1 – Number of Vehicle Registrations Per Year ............................................................................................ 92
Table D-2 – Vehicle Registrations Per Year Compared to Fuel Sales ....................................................................... 93
Table D-3 – Demographic and Economic Statistics ................................................................................................... 94
Table D-4 – Principal Employers ............................................................................................................................... 95
Operating Information
Table E-1 – Full Time Equivalents (FTEs)................................................................................................................. 96
Table E-2 – Capital Assets – Schedule by Function and Activity .............................................................................. 97
Table E-3 – Capital Assets – Schedule of Changes by Function and Activity ........................................................... 98
Table E-4 – Total Public Road Mileage by Highway Class and Governmental Ownership ...................................... 99
Table E-5 – Daily Vehicle Miles Traveled with Population Data ............................................................................ 100

2012 Comprehensive Annual Financial Report
68

Arizona Department of Transportation
Change in Net Assets
for fiscal year ended June 30
(Thousands of Dollars)
Expenses
Governmental Activities:
Administration
Aeronautics

2003
$

Highway1
Highway maintenance
Motor vehicle
Other
Non-capital, including asset preservation1
Distributions to other state agencies
Distributions to Arizona counties and cities
Local governmental assistance
Interest on long-term debt
Total governmental activities expenses
Business-type Activities:
Arizona Highways Magazine
Highway Expansion and Extension Loan Program
Total business-type activities expenses
Total primary government expenses

$

Program Revenues
Governmental Activities:
Charges for services:
Administration
Aeronautics
Highway
Highway maintenance
Motor vehicle
Other
Local governmental assistance
Operating grants and contributions
Capital grants and contributions
Total governmental activities program revenues
Business-type Activities:
Charges for services:
Arizona Highways Magazine
Highway Expansion and Extension Loan Program
Total business-type activities program revenues
Total primary governmental program revenues
Net <expenses>/revenues:
Governmental Activities
Business-type Activities
Total primary government net expense

$

$

52,533
3,848

2004
$

57,703
7,512

2005
$

42,298
9,804

45,644
96,353
83,090
8,460
277,975
192,536
957,057
30,235
84,084
1,831,815

93,656
95,642
86,845
9,815
333,930
161,029
1,022,768
39,205
89,431
1,997,536

125,889
105,037
91,676
6,871
156,678
306,853
1,086,955
42,440
86,870
2,061,371

11,118
26,349
37,467
1,869,282

10,007
4,414
14,421
$ 2,011,957

$

10,270
4,360
14,630
2,076,001

$

$

717
107,395
4,220
5,080
34,160
453,758
605,330

9,596
3,881
13,477
618,807

$

902
108,346
4,848
4,129
44,008
418,174
580,407

9,271
3,529
12,800
593,207

$

919
1,518
113,506
5,564
4,760
58,948
484,276
669,491

8,443
3,009
11,452
680,943

$ <1,226,485> $ <1,417,129> $ <1,391,880>
<23,989>
<1,621>
<3,178>
$ <1,250,474> $ <1,418,750> $ <1,395,058>

NOTES: 1 Adjustments were made to Highway and Non-capital, including asset preservation, for the years 2004 - 2007 to
conform to the current year's presentation.

2012 Comprehensive Annual Financial Report
68

Table A-1

2006
$

45,002
10,705

2007
$

118,147
114,119
96,937
9,394
<53,981>
206,903
1,095,671
36,771
88,279
1,767,947

51,667
5,418

2008
$

54,918
4,373

2009
$

56,066
10,993

2010
$

65,781
-

2011
$

93,040
-

2012
$

94,075
-

138,788
120,163
105,961
113,569
114,795
1,219,208
48,760
82,450
2,000,779

132,874
137,100
112,880
187,004
176,692
1,238,383
37,285
92,295
2,173,804

116,742
110,963
133,415
216,198
413,940
1,091,893
48,571
114,683
2,313,464

34,721
102,932
102,926
122,747
251,392
1,057,720
83,230
129,626
1,951,075

37,070
129,700
99,949
345,590
254,702
1,024,756
163,035
128,768
2,276,610

39,632
125,331
116,095
351,116
307,885
1,005,114
93,557
164,081
2,296,886

8,175
4,273
12,448
$ 1,780,395

8,072
4,355
12,427
$ 2,013,206

7,712
4,053
11,765
$ 2,185,569

7,410
2,112
9,522
$ 2,322,986

6,288
147
6,435
$ 1,957,510

5,664
126
5,790
$ 2,282,400

$

4,979
75
5,054
2,301,940

$

$

$

$

$

9,766
1,266
1,858
111,412
5
146,936
575,448
846,691

$

$

5,975
566
6,541
853,232

5,619
154
5,773
$ 1,103,912

$

1,214
537
121,179
7,099
4,040
67,241
387,614
588,924

8,012
3,281
11,293
600,217

$

8,843
1,133
2,953
577
132,274
12,239
72,679
354,024
584,722

8,060
2,909
10,969
595,691

$

9,706
940
1,451
1,765
127,900
8,263
79,747
523,728
753,500

7,624
1,755
9,379
762,879

$

8,752
936
1,765
887
117,267
9,789
90,619
552,488
782,503

6,291
1,128
7,419
789,922

$

10,770
2,798
2,667
117,427
220,759
743,718
1,098,139

$

11,947
1,681
2,290
111,429
161,992
776,814
1,066,153

5,581
2
5,583
1,071,736

$ <1,179,023> $ <1,416,057> $ <1,420,304> $ <1,530,961> $ <1,104,384> $ <1,178,471> $ <1,230,733>
<1,155>
<1,458>
<2,386>
<2,103>
106
<17>
529
$ <1,180,178> $ <1,417,515> $ <1,422,690> $ <1,533,064> $ <1,104,278> $ <1,178,488> $ <1,230,204>

2012 Comprehensive Annual Financial Report
69

Arizona Department of Transportation
Change in Net Assets
for fiscal year ended June 30 (continued)
(Thousands of Dollars)
General Revenues and Other Changes in Net Assets
Governmental Activities:
Transportation excise taxes
Vehicle registration, title, license, and related taxes and fees
Fuel and motor carrier taxes and fees
Flight property taxes
Income from investments
Other
Transfers
Governmental activities before accounting change
Cumulative effect of accounting change
Special Item - State appropriation for Statewide Transportation
Acceleration Needs (STAN)
Total governmental activities
Business-type Activities:
Income from investments
Other
Transfers
Total business-type activities
Total primary government
Change in Net Assets
Governmental Activities
Business-type Activities
Total primary government

2003
$

$

$
$

268,721
832,492
691,003
6,026
19,803
21,304
1,839,349
40,399

$

288,600
914,657
698,406
6,321
8,352
24,775
1,941,111
-

2005
$

316,806
966,885
759,633
13,180
19,245
27,120
2,102,869
-

1,879,748

1,941,111

2,102,869

2,440
426
2,866
1,882,614

1,588
505
2,093
$ 1,943,204

2,764
380
3,144
2,106,013

653,263
$
<21,123>
632,140
$

2012 Comprehensive Annual Financial Report

70

2004

523,982
472
524,454

$

$
$

710,989
<34>
710,955

2006
$

316,491
994,052
770,596
13,686
28,538
11,026
2,134,389
-

2007
$

1,848,811

3,518
3,518
$ 2,137,907

5,563
4,788
1,612
514
<3>
<17>
<1>
500
5,560
4,771
2,111
514
$ 2,413,795
$ 2,170,534
$ 1,932,445
$ 1,818,816

554
851
1,405
$ 1,821,325

$

783
783
1,849,594

$

$

$

$

$

$

2,165,763

$
$

745,459
2,385
747,844

219,165
$
199,672
976,075
893,287
667,200
690,503
11,975
9,527
33,588
16,347
22,831
8,966
<500>
1,930,334
1,818,302
1,930,334

$
$

399,373
8
399,381

$
$

713,918
620
714,538

2012 Comprehensive Annual Financial Report

71

$

2012

1,819,920

992,178
4,102
996,280

$

2011

1,818,302

245,000
2,408,235

253,742
1,033,505
766,394
13,822
59,528
38,772
2,165,763
-

2010

216,281
899,345
700,620
10,735
11,388
10,442
1,848,811
-

955,366
2,363
957,729

$

2009

206,545
$
874,191
704,727
9,798
9,415
16,095
<851>
1,819,920
-

2,134,389

262,264
1,029,001
790,909
15,303
55,760
9,998
2,163,235
-

2008

$

641,449
1,389
642,838

$

617,239
1,313
618,552

Arizona Department of Transportation
Statement of Revenues, Expenditures, and Changes in Fund Balances
for fiscal year ended June 30
(Thousands of Dollars)
2003
Revenues
Transportation excise taxes
Vehicle registration, title, license, and related taxes and fees
Fuel and motor carrier taxes and fees
Flight property taxes
Reimbursement of construction expenditures - federal aid
Other federal grants and reimbursements
Reimbursements from Arizona counties and cities
Distributions from other state agencies
Interest on loans receivable
Income from investments
Grand Canyon National Park Airport
Rental income
Other
Total revenues
Expenditures
Current:
Transportation:
Administration
Aeronautics
Highway
Highway maintenance
Motor vehicle
Other
Total Transportation

$

2004

268,721
940,022
690,869
6,026
459,458
6,896
24,818
1,284
2,486
19,702
717
1,632
6,021
2,428,652

$

51,485
74,244
94,978
81,517
3,579
2,304
308,107

Transportation not appropriated by State legislature:

9,594

2005

288,600
1,023,004
698,406
6,321
421,220
6,146
38,012
933
1,880
8,333
902
1,635
5,161
2,500,553

$

56,484
7,228
130,117
95,144
84,921
2,940
376,834
-

316,806
1,080,391
759,633
13,180
503,646
9,078
32,186
2,349
945
19,162
919
1,596
6,216
2,746,107

40,599
9,517
159,408
105,887
90,208
1,802
407,421
-

Intergovernmental:
Distributions to other state agencies
Distributions to Arizona counties and cities

189,784
957,057

160,029
1,022,768

306,852
1,086,955

Debt service:
Principal
Interest
Bond issuance costs

248,055
84,928
2,424

284,815
92,371
2,546

302,202
94,344
1,996

Non-capital, including asset preservation
Capital outlay

146,168
833,731

333,929
599,819

156,678
623,829

2,779,848

2,873,111

2,980,277

<351,196> $

<372,558> $

<234,170>

Total expenditures
Excess <deficiency> of revenues over <under>
expenditures

$

2012 Comprehensive Annual Financial Report

72

Table A-2

2006
$

2007

316,491
1,207,265
770,596
13,686
407,891
32,044
13,566
1,490
739
28,351
1,214
1,702
6,490
2,801,525

$

43,372
10,470
161,496
111,378
95,198
2,309
424,223
-

$

2008

262,264
1,159,379
792,717
15,303
334,376
72,548
34,971
1,799
928
55,393
1,133
1,434
7,088
2,739,333

$

44,875
3,876
184,240
118,940
103,801
455,732
-

2009

253,742
1,159,474
768,046
13,822
494,584
79,747
38,609
463
697
59,197
940
1,367
6,206
2,876,894

$

44,322
4,089
171,134
135,629
110,982
466,156

2010

219,165
1,064,147
696,075
11,975
531,981
94,521
27,498
876
427
33,221
936
1,788
21,579
2,704,189

$

46,056
10,471
163,570
111,346
131,665
463,108

-

2011

199,672
1,002,312
692,632
9,527
544,498
146,936
31,503
936
596
15,853
866
1,800
6,370
2,653,501

$

52,971
115,061
94,014
101,142
363,188

-

-

2012

206,545
991,335
704,727
9,799
736,803
219,743
10,078
845
436
9,083
798
2,554
9,913
2,902,659

$

81,477
200,216
120,716
98,115
500,524
-

216,281
1,010,548
700,620
10,735
770,900
157,437
9,645
1,842
351
11,130
821
3,096
8,177
2,901,583

80,627
135,908
118,230
114,327
449,092
-

206,903
1,190,962

114,795
1,217,883

173,405
1,241,110

404,569
1,100,959

244,836
1,046,576

254,210
1,022,512

305,218
1,004,768

173,745
83,017
1,252

100,395
90,836
1,592

192,663
102,583
3,447

199,687
126,932
3,967

144,232
143,133
121

201,219
144,748
2,099

196,338
137,213
3,043

250,736
663,316

63,273
741,506

158,991
989,882

142,604
1,077,835

217,338
998,502

313,179
709,250

286,217
701,657

2,994,154

2,786,012

3,328,237

3,519,661

3,157,926

3,147,741

3,083,546

<451,343> $

<815,472> $

<504,425> $

<245,082> $

<181,963>

<192,629> $

<46,679> $

(continued)

2012 Comprehensive Annual Financial Report

73

Arizona Department of Transportation
Statement of Revenues, Expenditures, and Changes in Fund Balances
for fiscal year ended June 30 (continued)
(Thousands of Dollars)

2003
Other financing sources <uses>
Transfers in
Transfers out for debt service
Transfers out other
Capital leases
Sale of capital assets
Insurance recovery
Debt issuance
Debt issuance - refunding bond
Premium from debt issuance
Payment to refunded bond escrow agent
Total other financing sources<uses>

$

2004

383,136 $
<321,327>
<61,809>
7,229
1,082
331,475
90,530
28,147
<107,735>
350,728

Net change in fund balances before accounting change

<468>

Cumulative effect of accounting change for year 2003
Special item - State appropriation for Statewide
Transportation Acceleration Needs (STAN)
Net change in fund balances
Fund balances - July 1
Fund balances - June 30

$

Debt service as a percentage of non-capital expenditures
Debt service as a percentage of total revenues

17.2%
13.8%

2012 Comprehensive Annual Financial Report

74

449,100 $
<374,852>
<74,249>
16,023
1,407
319,942
130,573
31,647
<145,965>
353,626
<18,932>

40,399
39,931
421,954
461,885

2005

-

$

<18,932>
452,884
433,952 $
16.7%
15.2%

388,046
<374,162>
<13,885>
18,392
1,518
292,645
24,726
337,280
103,110
103,110
433,952
537,062
16.9%
14.5%

Table A-2

2006
$

2007

262,216 $
<251,891>
<10,325>
11,118
537
118,250
147,400
22,407
<161,726>
137,986
<54,643>
-

$

<54,643>
537,062
482,419 $
11.1%
9.2%

2008

225,499 $
<186,856>
<38,643>
2,129
10,162
577
325,000
26,201
364,069
317,390

9.4%
7.0%

303,513 $
<231,563>
<71,950>
28,233
1,765
711,479
31,862
773,339

43,447

-

$

321,996
1,044,809
1,366,805

2010

239,447 $
<221,232>
<17,252>
2,127
887
796,819
58,123
858,919

321,996

245,000
562,390
482,419
1,044,809

2009

271,408 $
<266,934>
<9,013>
3,088
1,765
32,628
32,942
<471,483>

-

$

43,447
1,366,805
1,410,252

12.8%
10.4%

-

$

<471,483>
1,410,252
938,769 $

13.5%
12.2%

2012 Comprehensive Annual Financial Report

75

2011

13.3%
10.8%

2012

331,547 $
<331,547>
<2,400>
3,712
2,529
349,698
38,876
392,415
147,333

120,921

147,333
938,769
1,086,102
14.3%
12.0%

330,856
<330,856>
1,815
1,818
269,001
499,725
90,753
<560,228>
302,884

-

$

120,921
1,086,102
1,207,023
14.1%
12.1%

76

20,346
$ 229,578

16,386
$ 269,251
$ 452,885

Total general and other governmental funds

2,288
277,884

$ 537,063

33,348
$ 313,520

$

$ 166,420
57,123
$ 223,543

2005

2,159
258,236

$ 482,419

39,898
$ 300,293

$

$ 172,784
9,342
$ 182,126

2006

2,688
495,428

$ 1,044,809

49,002
$ 547,118

$

25,359
803,215

3,212
774,644

505,691
57,899
563,590

2008

$ 1,366,805

$

$

$ 507,723
$
(10,032)
$ 497,691
$

2007

2,692
1,078,478

$ 1,410,315

3,574
$ 1,084,744

$

$ 230,885
94,686
$ 325,571

2009

1,894
576,331

$ 938,769

9,743
$ 587,968

$

$ 270,550
80,251
$ 350,801

2010

2012 Comprehensive Annual Financial Report

NOTE: 1 GASB 54 rules state that Fund Balances should be reported with the categories listed in the above table for 2011.
Years 2003 - 2010 will continue to be reported in the old format until 10 years of information is available.

$ 433,952

$ 18,592
190,640

$ 155,755
48,619
$ 204,374

$ 20,786
232,079

$ 134,938
48,696
$ 183,634

2004

All other governmental funds
Reserved:
Debt service
Capital projects
Unreserved, reported in:
Non-major special revenue funds
Unassigned
Nonspendable
Restricted
Committed
Total all other governmental funds

General Fund (State Highway Fund):
Reserved
Unreserved
Nonspendable
Restricted
Committed
Total General Fund

2003

Arizona Department of Transportation
Fund Balances of Governmental Funds
for fiscal year ended June 30
(Thousands of Dollars)

-

719,966
24,462
744,428

-

9,765
229,559
102,350
341,674

1

$ 1,086,102

$

$

$

$

2011

-

(8,128)
847,789
37,352
877,013

-

8,235
240,481
81,294
330,010

$ 1,207,023

$

$

$

$

2012

Table A-3

Table A-4
Arizona Department of Transportation
Expenditures of Federal Awards1
for the fiscal year ended June 30
(Thousands of Dollars)

Fiscal
Year
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

FAA
$

488
3,844
7,938
3,902
715
610
4,338
4,203
480
242

FRA

FTA

NHTSA

$-

$ 19,261
21,451
22,769
13,853
15,530
10,169
8,837
8,466
5,549
6,618

$
1,132
120
101
106
101
69
96
84
87

FHWA
$

755,092
904,735
574,068
571,867
523,810
353,192
389,575
456,924
384,416
433,472

FMCSA
$

BLM

1,518
3,891
4,148
4,734
2,642
1,769
2,231
282
434
466

$
1,004
124
268
57
544
162
152
79
30

BIA USGSA USDA

Sub-total

FHWA

Total

$ - $ 541
<21>
278
-

$ 776,980
936,057
609,167
594,725
542,860
366,364
405,212
470,401
391,042
440,915

$ 85,557
169,779
82,267
31,776
31,472
40,559
33,268
42,323
36,324
25,439

$ 862,537
1,105,836
691,434
626,501
574,332
406,923
438,480
512,724
427,366
466,354

$ 80
-

SOURCE: Single Audit Reports - fiscal years 2003 through 2012
NOTE: 1 Federal Aviation Administration (FAA); Federal Railroad Administration (FRA); Federal Transit
Administration (FTA) - previously Urban Mass Transit Administration (UMTA); National Highway
Transportation Safety Administration (NHTSA); Federal Highway Administration (FHWA); Federal
Motor Carrier Safety Administration (FMCSA); Bureau of Land Management (BLM); and Bureau of
Indian Affairs (BIA)

Total Expenditures of Federal Awards

$1,200,000

Thousands of Dollars

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
2003

2004

2005

2006

2007

2008

Fiscal Year

2012 Comprehensive Annual Financial Report

77

2009

2010

2011

2012

$

94,075
93,040
65,781
56,282
54,918
51,667
45,002
42,298
57,703
52,533

Admin.

$

10,993
4,373
5,418
10,705
9,804
7,512
3,848

Aeronautics
$ 39,632
37,070
34,721
116,697
132,874
138,788
118,147
125,889
93,656
45,644

Highway
$

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

2003

2004

1

2005

476,447
475,290
225,679
311,605
324,104
233,732
60,138
261,714
429,571
374,328

Maintenance

Highway

NOTE: 1 Includes Non-capital, including asset preservation.

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

Fiscal
Year

Thousands of Dollars

78

$

93,557
163,035
83,230
48,571
37,285
48,760
36,771
42,440
39,205
30,235

Fiscal Year

2007

2008

Government-wide Expenses

1,312,999
1,279,459
1,309,112
1,505,835
1,415,075
1,334,003
1,394,609
1,393,808
1,183,797
1,149,593

2009

$ 1,419
-

2012 Comprehensive Annual Financial Report

2006

$ 116,095
99,949
102,926
133,243
112,880
105,961
96,937
91,676
86,845
83,090

Motor
Vehicle

2010

$162,662
128,768
129,626
114,683
92,295
82,450
88,278
86,870
89,431
84,084

Distributions
to Arizona
Counties,
Cities and
Local
Premium Interest on
Other State Governmental on Long- Long-Term
Agencies
Assistance Term Debt
Debt

Arizona Department of Transportation
Government-wide Expenses by Function
for the fiscal year ended June 30
(Thousands of Dollars)

2011

9,394
6,871
9,815
8,460

Other

2012

$ 4,978
5,664
6,288
7,410
7,712
8,072
8,175
10,270
10,007
11,118

$

75
126
147
2,110
4,053
4,355
4,273
4,360
4,414
26,349

Highway
Expansion
and
Arizona Extension
Highways
Loan
Magazine Program

$ 2,301,939
2,282,401
1,957,510
2,307,429
2,185,569
2,013,206
1,872,429
2,076,000
2,011,956
1,869,282

Total

Table A-5

$

127,347
133,661
124,307
139,396
150,024
158,019
134,068
126,267
118,225
117,412

Charges for
Services
$

161,992
220,759
146,936
90,619
79,747
72,679
67,241
58,948
44,008
34,160

$2,200,000

$2,300,000

$2,400,000

$2,500,000

$2,600,000

$2,700,000

$2,800,000

$2,900,000

$3,000,000

2003

2004

$

2005

776,814
743,718
575,448
552,488
523,728
354,024
387,614
484,276
418,174
453,758

Program Revenues
Governmental
Capital Grants
Operating Grants
and
and Contributions Contributions

NOTE: 1 Includes transfers for multiple years.

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

Fiscal Year

Thousands of Dollars

79

2006

$

1,826,980
1,795,291
1,792,989
1,874,415
2,067,464
2,097,476
2,186,859
2,056,503
1,907,984
1,798,243

$

2008
Fiscal Year

2007

1

2009

9,604
16,079
8,965
22,331
38,772
9,998
11,026
27,120
24,775
21,304

Revenues

Government-wide Revenues

5,583
5,773
6,541
7,418
9,379
10,969
11,293
11,452
12,800
13,477

Taxes

Other

2012 Comprehensive Annual Financial Report

$

Charges for
Services

Business-Type

$

2010

11,388
9,402
16,347
33,588
59,528
57,760
28,538
19,245
8,352
19,803

Income from
Investments

General Revenues
Governmental

Arizona Department of Transportation
Government-wide Revenues
for the fiscal year ended June 30
(Thousands of Dollars)

1

$

2011

2012

783
555
514
1,612
4,788
5,563
3,518
2,764
1,588
2,440

$

2,920,491
2,926,089
2,672,047
2,722,367
2,933,412
2,766,485
2,830,157
2,786,956
2,536,411
2,461,022

Income from Government-wide
Investments
Revenues
- $
851
500
<18>
<3>
381
505
425

Revenues

Other

Business-Type

Total

Table A-6

80

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

2003

$ 666,828
669,811
566,794
534,535
704,929
1,006,512
466,337
491,995
408,410
439,045

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

$ 15,818,053
15,159,086
14,620,099
13,951,802
13,285,438
12,211,861
11,806,376
10,780,474
10,179,585
9,621,204

Restricted

2004

$ 106,932
125,860
126,415
113,053
209,650
236,186
189,669
234,548
208,032
211,796

Unrestricted

Governmental Activities

Invested in
Capital Assets,
Fiscal Net of Related
Year
Debt

Thousands of Dollars

2005

$16,591,813
15,954,757
15,313,308
14,599,390
14,200,017
13,454,559
12,462,382
11,507,017
10,796,027
10,272,045

Total
43
54
92
131
173
225
249
499
810
1,126

$ 76,882
76,192
75,619
74,703
74,115
71,708
67,713
65,273
63,900
63,225

Restricted
$

2007
2008
Fiscal Year

2009

2010

2012 Comprehensive Annual Financial Report

2006

Total

825
$ 77,750
192
76,438
<663>
76,438
<406>
74,428
132
74,420
102
72,035
<30>
67,932
<204>
65,568
892
65,602
780
65,131

Unrestricted

Business-type Activities

Primary Government Net Assets By Component

$

Invested in
Capital Assets,
Net of Related
Debt

Arizona Department of Transportation
Net Assets by Component
for fiscal year ended June 30
(Thousands of Dollars)

2011

$ 107,757
126,052
125,752
112,647
209,782
236,288
189,639
234,344
208,924
212,576

$

Invested in Capital
Assets, net of related debt

Restricted

Unrestricted

$ 743,710
746,003
642,213
609,238
779,044
1,078,220
534,050
557,268
472,310
502,270

Unrestricted

Primary Government

Restricted

2012

$ 15,818,096
15,159,139
14,620,191
13,951,933
13,285,611
12,212,086
11,806,625
10,780,973
10,180,395
9,622,330

Invested in
Capital Assets,
Net of Related
Debt

16,669,563
16,031,194
15,388,156
14,673,818
14,274,437
13,526,594
12,530,314
11,572,585
10,861,629
10,337,176

Total

Table A-7

Table B-1
Arizona Department of Transportation
Highway User Revenue Fund Collections
for the fiscal year ended June 30
(Thousands of Dollars)

Fiscal
Year
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

Motor Vehicle
Fuel Tax
Revenues

Motor Vehicle
Operators'
Motor Vehicle
Motor
License
Reg. Fee
Carrier Tax
Fees and
Revenues
Revenues
Other Fees

Motor Vehicle
License
(In Lieu) Tax
Revenues

$

$

$

538,352
636,507
633,771
637,054
697,771
725,787
710,115
701,965
656,881
633,826

180,685

$ 17,085

175,179
170,453
178,953
196,151
194,308
178,112
163,463
163,689
158,726

17,466
17,157
18,930
21,758
22,473
20,824
18,573
16,623
23,302

$

69,765
64,361
59,431
58,500
60,630
57,085
56,495
50,789
42,829
39,906

Total
Deposited
to Arizona
Hwy. User
Rev. Fund

228,317

$ 1,034,204

275,132
331,080
349,399
400,787
389,503
372,168
318,689
309,688
276,279

1,168,645
1,211,892
1,242,836
1,377,097
1,389,156
1,337,714
1,253,479
1,189,710
1,132,039

SOURCES: Basic Financial Statements - fiscal years 2003 through 2012

Highway User Revenue Fund Collections
$1,500,000
$1,350,000

Thousands of Dollars

$1,200,000
$1,050,000
$900,000
$750,000
$600,000
$450,000
$300,000
$150,000
$0
2003

2004

2005

2006

2007 2008
Fiscal Year

2009

2012 Comprehensive Annual Financial Report
81

2010

2011

2012

Table B-2
Arizona Department of Transportation
Highway User Revenue Fund Distributions
for the fiscal year ended June 30
(Thousands of Dollars)

Fiscal

State
Highway

Cities and

Year
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

Fund
$ 401,172
522,556
520,484
513,379
680,530
688,451
636,094
483,047
570,801
537,668

Towns
$ 306,376
341,502
339,900
346,443
415,556
417,541
385,759
362,965
344,699
324,431

Counties
$ 190,857
212,739
211,741
215,817
258,871
260,107
240,309
226,110
214,731
202,105

Department
of Public

Economic
Strength

Safety
$ 123,211
79,216
78,626
84,950
10,000
10,000
63,999
52,216
48,698
54,416

Project Fund
$
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

Other

1

$ 11,588
11,631
60,141
81,247
11,140
12,057
10,553
128,141
9,781
12,419

Total
$1,034,204
1,168,644
1,211,892
1,242,836
1,377,097
1,389,156
1,337,714
1,253,479
1,189,710
1,132,039

The Highway User Revenue Fund receives certain Motor Vehicle Division revenues
from the Motor Vehicle Division Clearing Fund. These monies are distributed to the
State Highway Fund and various counties and cities, based on statutory formulas.
SOURCES: Basic Financial Statements - fiscal years 2003 through 2012
NOTE: 1 An appropriation for Arizona State Parks is included. Fiscal years 2005,
2009, 2010, 2011 and 2012 include distributions to State General Fund.

2012 Comprehensive Annual Financial Report

82

Table B-3
Arizona Department of Transportation
Fuel Tax Rates
for the fiscal year ended June 30
(Cents per Gallon)

Fiscal

Gasoline

Year

Tax

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002

$

Use Fuel
Tax

0.18
0.18
0.18
0.18
0.18
0.18
0.18
0.18
0.18
0.18
0.18

1

$ 0.26
0.26
0.26
0.26
0.26
0.26
0.26
0.26
0.26
0.26
0.26

SOURCE: Arizona Revised Statutes §28-5606
NOTES: Gasohol is currently taxed at the same
rate as gasoline and use fuel. Use fuel
is primarily diesel.
1

Lightweight motor vehicles under
26,000 pounds pay $.18 per gallon.

2012 Comprehensive Annual Financial Report

83

Table B-4
Arizona Department of Transportation
Motor Vehicle Fuel Tax - Top Ten Suppliers
for fiscal year ended June 30
(Thousands)

Fiscal Year

Gallons from Top Revenue from Top All Motor Vehicle
Ten Suppliers
Ten Suppliers
Fuel Tax Revenue

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

3,025,722
2,898,241
2,905,890
2,871,995
2,839,622
2,807,989
2,588,981
2,545,685
2,627,194
2,553,905

$

589,607
564,353
569,974
565,889
559,609
552,977
504,052
504,128
515,901
498,892

$

Revenue Percentage
from Top Ten
Suppliers

688,642
686,591
683,880
698,959
753,036
772,100
750,574
723,425
697,428
668,643

85.6%
82.2%
83.3%
81.0%
74.3%
71.6%
67.2%
69.7%
74.0%
74.6%

SOURCE: Revenue & Fuel Tax Administration reporting, based on gallonage
data reported by fuel suppliers.
NOTE: Above data reflects a change in gasoline and use fuel gallons reported
by the Revenue & Fuel Tax Administration for 2003 - 2012.

Motor Vehicle Fuel Tax Sources
$800,000
$700,000

Thousands of Dollars

$600,000
$500,000
$400,000
$300,000

$200,000
$100,000
$0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
All Fuel Tax Revenue

Top Ten Suppliers

2012 Comprehensive Annual Financial Report
84

85

3.8%
2.5%
12.3%
13.8%
39.0%
23.0%
94.4%

25

2003
Percentage of
Total Gallons
Sold

7
2
6
3
5
2

Suppliers
within
Range

25

4
4
8
2
4
3

Suppliers
within
Range

94.6%

1.6%
3.9%
16.7%
9.4%
27.6%
35.4%

2004
Percentage of
Total Gallons
Sold

25

3
4
6
6
3
3

Suppliers
within
Range

94.5%

1.5%
3.1%
13.0%
27.0%
19.0%
30.9%

2005
Percentage of
Total Gallons
Sold

25

5
2
5
6
3
4

Suppliers
within
Range

94.7%

2.4%
2.4%
12.0%
21.8%
17.6%
38.5%

2006
Percentage of
Total Gallons
Sold

25

6
1
5
6
3
4

Suppliers
within
Range

97.2%

2.0%
1.0%
11.1%
24.5%
18.2%
40.4%

2007
Percentage of
Total Gallons
Sold

Table B-5

23.4%

24.2%

845,256

75.8%

2,650,746

24.5%

887,406

75.5%

2,730,911

25.7%

963,551

74.3%

2,781,197

25.5%

2012 Comprehensive Annual Financial Report

981,647

74.5%

2,871,528

(continued)

NOTE: Above data reflects a change in gasoline and use fuel gallons reported by the Revenue & Fuel Tax Administration for 2003 - 2010.

Diesel % of Total

788,622

76.6%

Gasoline % of Total

Total Gallons of Use
Fuel (Diesel) (Thousands)

2,575,965

Total Gallons of
Gasoline (Thousands)

NOTE: Above data reflects a change in gasoline and use fuel gallons reported by the Revenue & Fuel Tax Administration for 2003 - 2010.

< 25
26 - 50
51 - 100
101 - 200
201 - 300
> 300

Range - in
Millions of
Gallons

Arizona Department of Transportation
Gasoline Volume Sold - Top Twenty-Five Suppliers
for fiscal year ended June 30

86

1.5%
4.2%
12.1%
11.1%
34.8%
32.7%
96.4%

25

2008
Percentage of
Total Gallons
Sold

8
6
3
5
3

Suppliers
within
Range

25

7
5
2
3
3
5

Suppliers
within
Range

96.8%

3.3%
5.2%
3.2%
11.4%
17.9%
55.8%

2009
Percentage of
Total Gallons
Sold

25

7
8
1
2
3
4

Suppliers
within
Range

96.5%

2.7%
9.2%
1.5%
9.8%
21.7%
51.6%

2010
Percentage of
Total Gallons
Sold

25

7
5
3
3
3
4

Suppliers
within
Range

96.8%

3.2%
4.9%
4.6%
15.3%
19.0%
49.8%

2011
Percentage of
Total Gallons
Sold

25

15
1
1
3
1
4

Suppliers
within
Range

98.1%

5.9%
1.3%
1.8%
16.1%
7.7%
65.3%

2012
Percentage of
Total Gallons
Sold

Table B-5

25.5%

24.7%

864,455

75.3%

2,634,840

24.0%

824,996

76.0%

2,607,660

24.1%

829,530

75.9%

2,616,186

24.2%

2012 Comprehensive Annual Financial Report

837,151

75.8%

2,616,570

NOTE: Above data reflects a change in gasoline and use fuel gallons reported by the Revenue & Fuel Tax Administration for 2003 - 2010.

Diesel % of Total

959,406

74.5%

Gasoline % of Total

Total Gallons of Use
Fuel (Diesel) (Thousands)

2,797,714

Total Gallons of
Gasoline (Thousands)

NOTE: Above data reflects a change in gasoline and use fuel gallons reported by the Revenue & Fuel Tax Administration for 2003 - 2010.

< 25
26 - 50
51 - 100
101 - 200
201 - 300
> 300

Range - in
Millions of
Gallons

Arizona Department of Transportation
Gasoline Volume Sold - Top Twenty-Five Suppliers
for fiscal year ended June 30 (continued)

Table C-1
Arizona Department of Transportation
Highway User Revenue Fund
Legal Debt Margin
for the fiscal year ended June 30
(Thousands of Dollars)

Fiscal Year

Debt Limit

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

1,2

N/A
N/A
N/A
N/A
N/A
N/A
1,300,000
1,300,000
1,300,000
1,300,000

Total Principal
Applicable to the
Total Principal
Legal Debt Limit as a Percentage
Applicable to Limit Margin
of Debt Limit
N/A
N/A
N/A
N/A
N/A
N/A
1,223,425
1,161,355
1,017,360
932,700

N/A
N/A
N/A
N/A
N/A
N/A
76,575
138,645
282,640
367,300

N/A
N/A
N/A
N/A
N/A
N/A
94.11%
89.34%
78.26%
71.75%

NOTES: 1 The statutory limitation on the issuance of bonds, as outlined in
ARS §28-7510, applies only to the Highway User Revenue Fund
(HURF). The only limitation on Maricopa County Regional Area
Road Fund (RARF) and Grant Anticipation Notes (GARVEE) is the
ability to secure the debts with available excise tax monies and
available grant revenues, respectively, pursuant to the applicable
bond resolutions.
2

As stated in House Bill 2206 of the Second Regular Session of
the Forty-seventh Legislature, the $1.3 billion debt limit is eliminated
from ARS §28-7510. The general effective date of this change
was September 21, 2006.

2012 Comprehensive Annual Financial Report
87

Table C-2
Arizona Department of Transportation
Highway Revenue Bonds
Bond Coverage
for the fiscal year ended June 30
(Thousands of Dollars)

Fiscal

Pledged
1,2

Year

Principal

Interest

Total

Revenues

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

$ 67,885
71,770
68,140
64,190
60,645
57,825
54,830
44,265
51,155
44,490

$ 71,113
83,960
87,661
89,825
75,538
73,785
62,222
60,459
53,149
41,932

$ 138,998
155,730
155,801
154,015
136,183
131,610
117,052
104,724
104,304
86,422

Coverage

$ 392,648
504,175
502,874
509,183
658,616
635,140
624,408
461,763
557,854
540,540

2.8
3.2
3.2
3.3
4.8
4.8
5.3
4.4
5.3
6.3

SOURCES: Highway User Revenue Fund Schedule fiscal years 2003
through 2012; Debt Service Funds fiscal years 2003
through 2012.
NOTES: 1 Includes vehicle license tax revenues distributed directly
to the State Highway Fund. Fiscal year 2005 is net of a $118
million distribution to the State General Fund. Fiscal year
2009 is net of $66 million, 2010 is net of $44 million and 2011
is net of $45 million distribution to the State General Fund.
2

The Highway Revenue Bonds are secured by a prior lien
on and pledge of motor vehicle and related fuel fees and
taxes.

Highway Revenue Bonds - Bond Coverage
$700,000

Thousands of Dollars

$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
2003

2004

2005

2006

2007

2008

2009

Fiscal Year
Revenue

Debt Service

2012 Comprehensive Annual Financial Report

88

2010

2011

2012

Table C-3
Arizona Department of Transportation
Transportation Excise Tax Revenue Bonds
Bond Coverage
for the fiscal year ended June 30
(Thousands of Dollars)

Fiscal

Pledged
1

Year

Principal

Interest

Total

Revenues

Coverage

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

55,460
45,970
33,315
13,825
19,045
80,375
208,625
199,400
190,415

$ 48,129
42,496
38,225
17,193
10,673
1,566
14,318
23,553
31,533

$103,589
88,466
71,540
31,018
29,718
81,941
222,943
222,953
221,948

$ 216,281
206,545
199,672
219,165
253,742
262,264
316,491
316,806
288,600
268,721

2.1
2.3
2.8
7.1
8.5
N/A
3.9
1.4
1.3
1.2

SOURCE: Maricopa County Regional Area Road Fund Report
NOTES: Bond coverage ratio is based upon total Maricopa
County Transportation Excise Tax collections.
1

The Transportation Excise Tax Revenue Bonds are
secured by transportation excise taxes collected by
the Department of Revenue on behalf of Maricopa
County.

Transportation Excise Tax Revenue Bonds - Bond Coverage

Thousands of Dollars

$350,000
$300,000
$250,000
$200,000

$150,000
$100,000
$50,000
$0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Revenue

Debt Service

2012 Comprehensive Annual Financial Report
89

Table C-4
Arizona Department of Transportation
Transportation Excise Tax Revenue Bonds
Debt Service Revenue and Cost Per Capita
for the fiscal year ended June 30
(Thousands)

Fiscal

Maricopa
County

Total
1

Year

Principal

Interest

Cost

Revenue

2011
2010
2009
2008
2007
2006
2005
2004
2003

$ 45,970
33,315
13,825
19,045
80,375
208,625
199,400
190,415

$ 42,496
38,225
17,193
10,673
1,567
14,318
23,553
31,533

$ 88,466
71,540
31,018
29,718
81,942
222,943
222,953
221,948

$ 206,545
199,672
219,165
253,742
262,264
316,491
316,806
288,600
268,721

Cost

Revenue

Population per capita per capita
3,880
3,817
4,023
3,955
3,907
3,793
3,649
3,538
3,406

$

23
19
8
8
22
61
63
65

$

53
52
54
64
67
83
87
82
79

SOURCES: Maricopa County Regional Area Road Fund Report; population data from the
U.S. Census Bureau available only through 2011
NOTE: 1 Based upon total Maricopa County Transportation Excise Tax collections.

Transportation Excise Tax Revenue and Cost Per Capita

$100
$90

Thousands of Dollars

$80
$70
$60
Revenue

$50

Cost

$40
$30
$20
$10
$0
2003

2004

2005

2006

2007

2008

2009

2010

Fiscal Year

2012 Comprehensive Annual Financial Report
90

2011

Amount of Debt per Capita1

NOTE:

SOURCES:

Debt as a Percentage of Personal Income

Total Primary Government

Business-Type Activities
Notes payable
Total Business-type Activities

Transportation Excise Tax Revenue Bonds
Grant Anticipation Notes (GARVEE)
Premium on bonds
Capital leases
Advances and notes payable
Total Governmental activities

Governmental Activities
Highway Revenue Bonds

343

1.26%

1,868,640

145,536
145,536

602,890
182,295
9,358
1,557
192,849
1,723,104

734,155

$

$

$

350

1.26%

1,957,567

151,545
151,545

488,400
169,145
34,423
916
180,438
1,806,022

932,700

2003

$

$

$

345

1.17%

1,984,266

142,414
142,414

289,000
308,585
60,481
1,121
165,305
1,841,852

1,017,360

2004

$

335

1.07%

$ 2,004,258

146,454
146,454

80,375
363,970
76,721
5,910
169,473
1,857,804

$ 1,161,355

2005

$

322

0.96%

$ 1,996,349

150,494
150,494

325,430
90,852
11,130
195,018
1,845,855

$ 1,223,425

2006

$

348

1.01%

$ 2,214,916

154,534
154,534

282,860
108,034
10,601
168,287
2,060,382

$ 1,490,600

2007

$

$

$

91

2012 Comprehensive Annual Financial Report

Previous years have been revised to reflect revisions in personal income and population estimates.

income is total personal income divided by total midyear population estimates of the U.S. Bureau of the Census.

through 2009 have been revised to reflect revisions made by the U.S. Bureau of the Census. Per capita personal

1 The Arizona population data are midyear population estimates of the U.S. Bureau of the Census. Years 2002

U.S. Bureau of the Census (also for population) population data only available through 2011

U.S. Bureau of Economic Analysis (for population, personal income, and per capita personal income figures);

$

$

$

2002

Arizona Department of Transportation
Ratios of Outstanding Debt by Type
for the fiscal year ended June 30
(Thousands of Dollars)

380

1.10%

2,468,170

2,170
2,170

350,955
298,280
128,586
7,535
56,739
2,466,000

1,623,905

2008

$

465

1.40%

$ 3,067,852

-

777,130
329,650
173,313
4,326
42,668
3,067,852

$ 1,740,765

2009

$

441

1.31%

$ 2,941,536

-

743,815
304,480
158,601
1,304
60,711
2,941,536

$ 1,672,625

2010

$

$

$

481

1.37%

3,116,222

-

877,845
392,495
180,225
4,910
59,892
3,116,222

1,600,855

2011

Table C-5

Table D-1
Arizona Department of Transportation
Number of Vehicle Registrations Per Year
for fiscal year ended June 30
(Thousands)

Change in Number
of Registered

Fiscal
Year

2

Total Vehicles

Vehicles

6,840
6,741
6,693
6,734
6,609
6,318
5,945
5,639
5,312
5,118

99
48
-41
125
290
373
306
327
193
479

2011
2010
2009
2008
2007
2006
2005
2004
2003
2002

Arizona
Population

1

6,483
6,413
6,596
6,499
6,362
6,192
5,975
5,759
5,591
5,452

Change in

Vehicles

Population

Per Person

69
-183
96
137
170
217
215
168
139
148

1.055
1.051
1.015
1.036
1.039
1.020
0.995
0.979
0.950
0.939

SOURCE: Vehicle registrations from Motor Vehicle Division's annual reports.
NOTES: 1 The Arizona population data are midyear population estimates of the U.S.
Bureau of the Census. Year 2010 has been revised to reflect revisions made by the
U.S. Bureau of the Census. Population data available only through fiscal year 2011.

Change in Vehicles Registered Compared to Population Change
600,000
500,000
400,000

Change

300,000
200,000

Vehicles
Population

100,000
<100,000>
2002

2003

2004

2005

2006

2007

2008

2009

<200,000>
<300,000>

2012 Comprehensive Annual Financial Report
92

2010

2011

Table D-2
Arizona Department of Transportation
Vehicle Registrations Per Year Compared to Fuel Sales
for fiscal year ended June 30
(Thousands)

Fiscal

Vehicle

Percentage

Fuel

Percentage

1

Year

Registrations

Change

Sales

Change

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

6,824
6,840
6,741
6,693
6,734
6,609
6,318
5,945
5,639
5,312

-0.2%
1.5%
0.7%
-0.6%
1.9%
4.6%
6.3%
5.4%
6.2%
3.8%

3,409,594
3,411,652
3,369,732
3,398,866
3,731,808
3,759,465
3,636,195
3,542,631
3,429,136
3,339,089

-0.1%
1.2%
-0.9%
-8.9%
-0.7%
3.4%
2.6%
3.3%
2.7%
2.9%

SOURCES: Vehicle registrations from Motor Vehicle
Division's annual reports; fuel sales from Motor
Vehicle Division data reported by fuel suppliers
NOTES: 1 Fuel sales include both gasoline and use fuel
(primarily diesel) sales. Fuel Sales numbers for
2009 and 2010 have been revised to reflect
revisions made to the Motor Vehicle Division
data.

Percentage Change in Vehicle Registrations and Fuel Sales
8.0%
6.0%
Percentage Change

4.0%
2.0%
0.0%
<2.0%>
<4.0%>
<6.0%>
<8.0%>
<10.0%>
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fiscal Year
Vehicle Registrations

Fuel Sales

2012 Comprehensive Annual Financial Report
93

Table D-3
Arizona Department of Transportation
Demographic and Economic Statistics
for the Last Ten Calendar Years

Calendar

Personal

Per Capita

Year Ended

Income 2

Personal

Population

December 31
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002

6,482,505
6,676,627
6,587,653
6,499,207
6,360,238
6,190,987
5,973,970
5,758,692
5,590,820
5,451,472

1

(in thousands)
227,286,519
223,716,314
219,026,704
223,961,131
218,587,551
206,958,398
188,152,439
170,026,128
155,607,258
148,174,872

Income

3

$ 35,062
33,507
33,248
34,460
34,368
33,429
31,495
29,525
27,833
27,181

Unemployment
Rate

9.5%
10.0%
9.7%
5.9%
3.8%
4.1%
4.7%
5.0%
5.7%
6.0%

SOURCES: U.S. Bureau of Economic Analysis (for population,
personal income, and per capita personal income figures);
U.S. Bureau of the Census (also for population); Arizona
Department of Economic Security's website,
www.workforce.az.gov (for unemployment rates)
NOTES: 1 The Arizona population data are midyear population
estimates of the U.S. Bureau of the Census. Previous
years have been revised to reflect revisions made by
the U.S. Bureau of the Census.
2

Personal income estimates for previous years were
revised to reflect revisions made by the U.S. Bureau of
the Census.

3

Per capita personal income is total personal income
divided by total midyear population estimates of the
U.S. Bureau of the Census. Previous years have been
revised to reflect revisions in personal income and
population estimates.

4

The unemployment rates were revised to reflect a
revision made by the Arizona Department of Commerce
website, www.workforce.az.gov.

2012 Comprehensive Annual Financial Report
94

4

Table D-4
Arizona Department of Transportation
Principal Employers
Current and Nine Years Ago

Calendar Year Ended
December 31, 2011
Full-Time
Percentage
Equivalent
of Total State
Employees Rank Employment
49,800
1
1.64%
30,634
2
1.01%
24,825
3
0.82%
15,100
4
0.50%
13,308
5
0.44%
13,300
6
0.44%
12,792
7
0.42%
11,500
8
0.38%
11,185
9
0.37%
11,000 10
0.36%
0.00%
0.00%
0.00%
0.00%

Employer
State of Arizona
Wal-Mart Stores Inc.
Banner Health
City of Phoenix
Wells Fargo
Bank of America
Maricopa County
Raytheon Co.
Arizona State University
Apollo Group, Inc.
Honeywell, Inc.
Motorola
The Kroger Co.
U.S. Postal Service
Total

193,444

6.38%

Calendar Year Ended
December 31, 2002
Full-Time
Percentage
Equivalent
of Total State
Employees Rank Employment
59,348
1
2.30%
13,800
6
0.54%
13,973
4
0.54%
12,917
7
0.50%
0.00%
0.00%
13,860
5
0.54%
9,700 10
0.38%
0.00%
0.00%
17,500
2
0.68%
15,500
3
0.60%
9,837
8
0.38%
9,756
9
0.38%
176,191

6.84%

SOURCES: Business Journal, Book of Lists 2011 and 2002 for employers; Arizona
Department of Commerce website, www.workforce.az.gov (for annual
State employment)

2012 Comprehensive Annual Financial Report

95

96

Non-appropriated

Table E-1

2012
2011
2010
2009
2008
2007
2006
2005
2004
2003

2,262.0
2,267.0
2,153.0
2,255.0
2,255.0
2,223.0
2,223.0
2,227.0
2,223.0
1,632.0

87.0
52.0
46.0
46.0
46.0
46.0
46.0
48.0
48.0
48.0

1,075.0
1,111.0
1,657.0
1,755.0
1,751.0
1,730.0
1,688.0
1,665.0
1,649.0
1,596.0

368.0
373.0

4,548.0
4,548.0
4,548.0
4,748.0
4,744.0
4,691.0
4,649.0
4,626.0
4,605.0
3,981.5

2012 Comprehensive Annual Financial Report

NOTES 1 ECD FTE total was included in the Motor Vehicle Division 2003-2010.

756.0
745.0
692.0
692.0
692.0
692.0
692.0
686.0
685.0
705.5

23.0
22.0
23.0
28.0
28.0
60.0
72.0
72.0
72.0
72.0

1.0
2.0
2.0
3.0
3.0
3.0
3.0
3.0

44.0
44.0
43.0
24.0
24.0
49.0
38.0
31.0
13.0
11.0

68.0
68.0
68.0
52.0
52.0
112.0
113.0
106.0
88.0
86.0

4,616.0
4,616.0
4,616.0
4,800.0
4,796.0
4,803.0
4,762.0
4,732.0
4,693.0
4,067.5

Enforcement
Multimodal
Total
Arizona
Total Non&
Compliance Appropriated Highways
Fiscal
Planning Motor Vehicle
Appropriated
1
Year Administration Highways Division
Division
Division
FTEs
Magazine HELP Other
FTEs
Total All FTEs

Appropriated

Arizona Department of Transportation
Full-Time Equivalents (FTEs)
for the fiscal year ended June 30

97

37,855,484
10,567,194
105,371
4,908,005
356,896
152,944
45,260,476
47,244,102

935,955
2,728,234,208
710,073
4,907,328
11,641,168
$ 2,747,307,749

Total governmental funds capital assets

$ 33,844,604

1,798,104
384,415
350
7,077
21,667
122,946
9,395,568
3,571,783

$ 18,542,694

Improvements
other than
Buildings

$ 46,592,972

3,197,531
3,934,123
2,515,344
4,172,948
1,206,734
255,269
9,590,983
7,618,666

$ 14,101,374

Machinery
and
Equipment

12,207,437,415
-

-

$ 12,207,437,415

$

Infrastructure

3,459,047,385
-

-

$ 3,459,047,385

$

Construction
in
Progress

43,787,074
18,409,604,740
3,331,138
9,088,030
1,585,297
531,159
69,154,355
70,075,719

2012 Comprehensive Annual Financial Report

79,582,382

Total

Table E-2

$ 18,686,739,894

$

NOTE: 1 This schedule presents only the cost of the capital asset balances related to governmental funds. Accordingly, the cost of the capital assets reported
in the internal service fund are excluded from the above amounts. Generally, the capital assets of the internal service fund are included as governmental
activities in the statement of net assets.

$ 192,509,769

$ 46,059,297

879,017

$

Land

Administration
Highway:
Administrative and other services
Highway construction
Highway development
Materials engineering
Traffic engineering
Transportation planning and research
Highway maintenance
Motor Vehicle

Function and Activity

Buildings and
Improvements

Schedule by Function and Activity1
June 30, 2012

Arizona Department of Transportation
Capital Assets Used in the Operation of Governmental Funds

Table E-3
Arizona Department of Transportation
Capital Assets Used in the Operation of Governmental Funds
Schedule of Changes by Function and Activity1
for the fiscal year ended June 30, 2012

Governmental
Funds Capital
Assets
July 1, 2011

Function and Activity
Administration
Highway:
Administrative and other services
Highway construction
Highway development
Materials engineering
Traffic engineering
Transportation planning and research
Highway maintenance
Motor Vehicle

$

Additions

78,976,871

$

1,870,731

Deductions
$

Governmental
Funds Capital
Assets
June 30, 2012

<1,265,220> $

79,582,382

44,296,071
14,219,171,383
3,232,127
8,627,227
1,634,389
712,753
67,146,720
69,816,479

306,899
749,738,757
281,566
497,505
31,584
43,705
2,073,324
1,469,214

<815,896>
<18,352,785>
<182,555>
<36,702>
<80,676>
<225,299>
<65,689>
<1,209,974>

43,787,074
14,950,557,355
3,331,138
9,088,030
1,585,297
531,159
69,154,355
70,075,719

Functional sub-total

14,493,614,020

756,313,285

<22,234,796>

15,227,692,509

Construction in progress

3,561,984,731

546,779,362

<649,716,708>

3,459,047,385

$ 18,055,598,751

$ 1,303,092,647

$ <671,951,504> $

18,686,739,894

Total governmental funds capital assets

NOTE: 1 This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital
assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets
of the internal service fund are included as governmental activities in the statement of net assets.

2012 Comprehensive Annual Financial Report

98

Table E-4
Arizona Department of Transportation
Total Public Road Mileage by Highway Class and Governmental Ownership
for the calendar year ended December 31
(In Center Lane Miles)
2002

2003

2004

2005

2006

2007

2008

2009

2010

Functional Classification

1

Rural:
Interstate freeway
Principal arterial
Minor arterial
Major collector
Minor collector
Local
Total rural

996
1,187
1,274
4,473
2,289
27,450
37,669

980
1,141
1,276
4,233
2,117
26,004
35,751

980
1,187
1,343
4,301
2,210
26,016
36,037

981
1,167
1,363
4,332
2,188
27,015
37,046

981
1,168
1,359
4,303
2,186
27,819
37,816

980
1,167
1,357
4,301
2,185
27,685
37,675

980
1,167
1,358
4,302
2,191
27,525
37,523

980
1,167
1,378
4,342
2,134
30,845
40,846

980
1,259
1,276
4,338
1,735
31,157
40,745

Urban:
Interstate freeway
Urban expressway
Principal arterial
Minor arterial
Urban collector
Local
Total urban

172
153
1,000
1,274
1,732
15,188
19,519

187
145
1,087
1,189
2,200
16,969
21,777

188
150
1,156
1,279
2,161
17,142
22,076

188
156
1,400
1,790
1,645
17,564
22,743

188
168
1,400
1,791
1,632
17,380
22,559

188
171
1,400
1,792
1,632
17,735
22,918

188
176
1,399
1,807
1,632
17,735
22,937

188
176
1,400
1,808
1,649
17,817
23,038

188
175
1,390
1,752
1,631
17,806
22,942

Statewide composite:
Freeways and expressways
Arterials
Collectors
Locals
Total statewide composite

1,321
4,735
8,494
42,638
57,188

1,312
4,693
8,550
42,973
57,528

1,318
4,965
8,672
43,158
58,113

1,325
5,720
8,165
44,579
59,789

1,337
5,718
8,121
45,199
60,375

1,339
5,716
8,118
45,420
60,593

1,344
5,731
8,125
45,260
60,460

1,344
5,753
8,125
48,662
63,884

1,343
5,677
7,704
48,963
63,687

SOURCE: Arizona's Highway Performance Monitoring System (HPMS)
NOTES: 1. 2011 information is not available.

Total Public Road Mileage
70,000
60,000
50,000

Miles

40,000
Urban

30,000

Rural

20,000
10,000
0
2002

2003

2004

2005
2006
Calendar Year

2007

2008

2012 Comprehensive Annual Financial Report

99

2009

2010 1

Table E-5
Arizona Department of Transportation
Daily Vehicle Miles Traveled with Population Data
for calendar year ended December 31
(Thousands)

Calendar1
Year Ended Non-State
State
All Public Arizona2 Daily Miles
December 31 Highways Highways Highways Population per capita
2011
83,955
79,312
163,267
6,483
25.2
2010
84,427
79,699
164,126
6,413
25.6
2009
87,608
76,714
164,322
6,588
24.9
2008
86,886
81,496
168,382
6,499
25.9
2007
91,042
81,456
172,498
6,360
27.1
2006
89,016
82,178
171,194
6,191
27.7
2005
85,352
78,473
163,825
5,974
27.4
2004
75,070
81,808
156,878
5,759
27.2
2003
75,396
72,258
147,654
5,591
26.4
2002
72,964
69,311
142,275
5,451
26.1
SOURCES: Arizona's Highway Performance Monitoring System
(HPMS); ADOT Multimodal Planning Division office
records. The Arizona population data are midyear
population estimates of the U.S. Bureau of the Census.
NOTES: 1 Year 2011 is the latest population information avaible at
the time of publication.
2

Years 2002 through 2009 population information has been
revised to reflect revisions made by the U.S. Bureau of
the Census.
Daily Vehicle Miles Traveled

200,000
180,000
160,000

Thousands of Miles

140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2002

2003

2004

2005

2006

2007

2008

2009

Calendar Year
State Highways

Non-State Highways

2012 Comprehensive Annual Financial Report

100

2010

2011

Comprehensive Annual Financial Report
FISCAL YEAR

2012

Acknowledgements
The Comprehensive Annual Financial Report was prepared by Financial Management Services, Fiscal
Operations:
Keith Fallstrom
Anita Kleinman, CPA
Diane Wascher, CPA
Jennifer Crummey
Curtis Jarrell
Yolanda Flores
Joel Konopken
Winifred Gettings
Nichole Zumbrunnen
Jeffrey Aiazzi
Special acknowledgment goes to:
All Financial Management Services staff whose cooperation and hard work contributed to the
compilation of financial information that appears in this report.
A special thank you to Arizona Highways Magazine for their photographs and Communication and
Community Partnerships for their graphic design.

100 Years of Arizona History

Celebrating
1912-2012