ARIZONA

MONTHLY FISCAL HIGHLIGHTS
October 2004
General Fund revenue collections were $543.9 million in October. This amount is $38.3 million over the forecast for the month and
(2.5)% less than October of last year. We received the second federal cash assistance payment of $87.2 million in October of last
year. Adjusting for that one-time revenue source in FY 2004, collections are 15.5% over October of last year.
Collections for the first 4 months of the fiscal year total $140.3 million over the budgeted forecast. The General Appropriation Act
included a provision that any revenue exceeding the budgeted forecast for the first six months of FY 2005 will be dedicated for
specific purposes. Any “excess” FY 2005 revenue will be divided evenly between the General Fund and the Budget Stabilization
Fund.
October collections for the Big 3 revenue categories were $61.7 million over the same month last year. Sales tax collections once
again were strong, with an increase of $26.3 million (based on preliminary numbers). Individual income tax collections were $17.8
million over last year, and corporate income tax collections were up $17.6 million.
This report also includes a comparison of Arizona’s level of federal funding with other states.
General Fund Revenues
Compared to Adopted Forecast and FY 2004 Collections
($ in Millions)
FY 2005
Difference
Difference
Collections
From Forecast 1/
From FY 2004
October
$ 543.9
$ 38.3
$ (14.1) 2/
Year-to Date
$ 2,323.9
$ 140.3
$ 214.8 2/
____________
1/ Enacted FY 2005 budget (May)
2/ Including the receipt of $87.2 million federal cash assistance grant in October, 2003.

Sales Tax revenue increased by 9.9% on a year-over-year
basis in October and was $7.1 million above the forecast for
the month. Year-to-date, collections are 9.7% over the first 4
months of last fiscal year and $33.6 million over forecast for
the period. The following is based on collections through
September:
• Retail sales tax receipts have increased by 6.6%.
• Contracting continues to exhibit the large increases begun
last year, with a year-to-date increase of 17.7%.
• Restaurants and bars collections are up 9.3%.
• Use tax receipts (all of which is retained by the state) are up
17.7%
Individual Income Tax collections for October were 9.6%
above last year. Withholding tax collections decreased by
(0.3)% compared to last year due to 2 fewer processing days
for the month. Estimated/final payments were up almost 20%
over last year, and refunds were (54.1)% less. Year-to-date
total individual income tax collections are 11.2% above last
year, and $47.6 million above the forecast for through October.

Corporate Income Tax revenue of $35.1 million was double
October collections last year. While October is not a large
collection month, this brings the increase in year-to-date
corporate collections to $38.8 million or 24.1% over forecast.
Recent Economic Indicators: Preliminary estimates showed
real U.S. Gross Domestic Product (GDP) expanded at a 3.7%
seasonally adjusted annual rate in 2004’s third quarter. Rising
personal consumption expenditures and residential fixed
investment were among the major contributors. However, the
U.S. Index of Leading Economic Indicators dropped for the
fifth consecutive month in October, suggesting slower growth
in the months ahead. Consumer expectations, interest rates,
and vendor performance were among the factors pushing the
index lower.
U.S. semiconductor billings (three-month moving average)
lost a bit of its recent momentum, falling (1.7)% in September
from the previous period. Even so, they were running 20.1%
above the level from a year ago.

JLBC
This report has been prepared for the Arizona Legislature by the Joint Legislative Budget Committee Staff on November 23, 2004. This report can
Page 1
also be found on our Website at http://www.azleg.state.az.us/jlbc.htm

Joint Legislative Budget Committee

Monthly Fiscal Highlights – October 2004

The U.S. Consumer Price Index (CPI) jumped 0.6% in
October (0.3% on a three-month moving average basis).
Excluding the effects of food and energy prices, the core CPI
increased 0.2% in October. The index for all categories has
increased 2.8% in the last 12 months.
Consumer sentiment faded again in October. The U.S.
Consumer Confidence Index declined (4.0)% from the prior
month, with future expectations and the assessment of current
conditions both driving the index downward.
Arizona’s economy continued to improve in October, with
total non-farm employment rising by 2.5% on a year-overyear basis. Manufacturing added 300 jobs in October but was
still slightly below its level from a year ago. Meanwhile, the
unemployment rate remained unchanged at 4.8%.
The Behavior Research Center’s Arizona Consumer
Confidence Index held course in the fourth quarter 2004
survey. The index was virtually unchanged at 101.1. The
assessment of current conditions remained strong, but the
expectations for future business conditions, employment and
income were slightly less positive than three months ago.

The Arizona Leading Index decreased (0.7)% in August.
Although hours worked in manufacturing improved,
production, delivery times, and inventories posted negative
results. The Arizona Business Conditions Index, derived
from a survey of supply chain managers, dropped by 7.5% in
October. A reduction in new orders was largely responsible
for the decline.
Among state programs, the AHCCCS caseload continued to
increase in October. Average enrollment for the last three
months was 5.6% higher than the previous three-month period.
The number of TANF recipients (3-month average) declined
to 113,554 in September, a (2.0)% drop from the previous
three-month period.
From August through October, the Department of
Corrections' inmate population increased by an average of
121 from the previous three months. The average head count
was 1,057 higher than the level from a year ago.

RECENT ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate
- Jobs
- Contracting Tax Receipts (3-month average)
- Retail Sales Tax Receipts (3-month average)
- Residential Building Permits - (3-month moving average)
Single-unit
Multi-unit
- Arizona Tourism Barometer
- Phoenix Sky Harbor Air Passengers
- Arizona Average Natural Gas Price
($ per thousand cubic feet)
- Leading Indicators Index
- Business Conditions Index
(>50 signifies expansion)
- Consumer Confidence Index
- Business Leaders Confidence Index
- Arizona Personal Income
- Arizona Population
- AHCCCS Recipients (3-month average)
- TANF Recipients (3-month average)
- DOC Inmate Growth (3-month average)
United States
Gross Domestic Product
- (seasonally adjusted annual growth rate)
- Consumer Confidence Index
- Leading Indicators Index
- U.S. Semiconductor Billings -(3-month moving average)
- Consumer Price Index - (3-month moving average)

Time Period

Current Value

Change From
Prior Period

Change From
Prior Year

October
October
July-September
July-September

4.8%
2.38 million
$55.4 million
$131.8 million

0.0%
1.1%
10.0%
(4.0)%

(0.7)%
2.5%
17.7%
6.6%

September
September
July
September
August

7,293
754
89.5
3.02 million
$5.53

(4.6)%
6.2%
(1.8)%
(10.4)%
(1.3)%

27.6%
34.5%
3.1%
9.6%
14.3%

(0.7)%
(7.5)%

1.6%
(4.0)%

August
October

124.2
62.0

4th Quarter 2004
4th Quarter 2004
2nd Quarter 2004
1st Quarter 2004
August-October
July-September
August-October

101.1
65.5
$158.8 billion
5.76 million
777,684
113,554
32,385

3rd Quarter 2004

$10.9 trillion

3.7%

3.9%

October
October
July-September
August-October

92.8
115.1
$3.3 billion
190.1

(4.0)%
(0.3)%
(1.7)%
0.3%

13.6%
1.1%
20.1%
2.8%

(0.2)%
(4.1)%
1.4%
0.9%
5.6%
(2.0)%
121 inmates

10.1%
5.1%
6.4%
3.2%
3.8%
(12.2)%
1,057 inmates

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State of Arizona
General Fund Revenue: Change from Previous Year and January Revised Forecast
October 2004
Current Month

FY 2005 YTD (Four Months)

Change From
October 2003

Actual
October 2004

Percent

Amount

Change from
Revised Forecast
Percent

Amount

October 2003

Actual
October 2004

Amount

Revised Forecast

Percent

Percent

Amount

Taxes
Sales and Use

$292,004,300

$26,272,962

9.9 %

$7,056,898

2.5 %

$1,168,273,912

$102,857,390

Income - Individual

203,622,310

17,825,780

9.6

14,775,628

7.8

850,196,346

85,661,421

11.2

9.7 %

$33,585,700
47,615,390

3.0 %
5.9

- Corporate

35,109,943

17,610,320

100.6

11,650,411

49.7

199,714,695

70,067,062

54.0

38,843,736

24.1

Property

2,006,777

(899,569)

(31.0)

(485,693)

(19.5)

2,334,829

(6,956,563)

(74.9)

(799,408)

Luxury

5,060,985

208,619

4.3

145,985

3.0

20,246,480

1,243,159

6.5

586,480

3.0

444,427

(110,580)

(19.9)

168,422

61.0

100,880,443

30,409,020

43.2

6,578,168

7.0

Estate

2,266,156

(740,123)

(24.6)

591,156

35.3

15,020,647

1,389,868

10.2

8,320,647

124.2

Other Taxes

1,024,981

(226,812)

(18.1)

154,981

17.8

1,173,472

(20.4)

(2,306,528)

(66.3)

Insurance Premium

Sub-Total Taxes

$541,539,879

$59,940,597

12.4 %

$34,057,788

6.7 %

$2,357,840,824

(300,976)
$284,370,381

13.7 %

$132,424,185

(25.5)

6.0 %

Other Revenue
Lottery

3,038,900

983,200

47.8

License, Fees and Permits

2,180,845

15,436

0.7

(2,729,400)

(24.0)

1,554,315

18.6

0

0.0

1,791,357

22.1

1,569,382

35.5

5,927,781

(8,856,379)

(59.9)

2,298,466

63.3

2,143,387

(5,494,174)

(71.9)

(2,632,960)

(55.1)

10,709,340

(6,208,223)

(36.7)

(3,163,502)

(22.8)

Other Miscellaneous

1,913,487

(2,001,706)

(51.1)

(261,266)

(12.0)

4,800,100

(4,931,559)

(50.7)

(2,172,269)

(31.2)

--

0

(5,625,187)

(100.0)

0

19,942,580

(68,198,639)

(77.4)

9,146,980

84.7

(94,995,072)

(61.3) %

7,901,032

15.2 %

8.5 %

$140,325,217

6.2 %

Transfers and Reimbursements
Sub-Total Other Revenue
TOTAL BASE REVENUE

0

411,535

8,630,100
9,896,760

Interest

0

64.3

0.0
(13.4)

Sales and Services
Disproportionate Share

614,165

0
(337,334)

--

0

7,839,789

(79,793,383)

(91.1)

7,020,089

856.4

18,685,790

(85,676,462)

(82.1) %

4,200,064

29.0 %

59,906,661

$560,225,669

($25,735,865)

(4.4) %

$38,257,852

7.3 %

$2,417,747,485

$189,375,309

--

One-Time Revenue
Urban Revenue Sharing

(31,089,382)

135

(0.0)

0

0

--

0

--

14,660,800

14,660,800

--

0

(2,406,025)

(97.4)

0

11,587,490

(41.5) %

135

(0.0) %

(2.5) %

$38,257,987

7.6 %

Budget Balancing Transfers
VLT Transfer
Judicial Enhancement
Sub-Total Transfers In
TOTAL REVENUE

63,190
(16,365,392)
$543,860,277

(667,285)

($14,148,375)

2.2

(124,357,525)

(2,669,137)

2.2

543

(0.0)

0

0

--

0

0.0

28,260,800

28,260,800

--

0

0.0

0.0

2,270,190

(8.1)

0

0.0

(93,826,535)
$2,323,920,950

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

(199,025)

--

25,392,638

(21.3) %

543

(0.0) %

$214,767,947

10.2 %

$140,325,760

6.4 %

Joint Legislative Budget Committee

Monthly Fiscal Highlights – October 2004

Direct Payments are funds that go directly from the federal
government to an individual and include Social Security,
Medicare, federal retirement and disability payments, food
stamps, housing assistance and farm payments. Arizona
received 1.75% of all direct payments in FFY 2003, ranking
40th nationally in per capita receipts. In 1998, Arizona ranked
34th nationally.
• Grants include all categorical block and formula grants-inaid to state and local governments and individuals. The
state received 1.68% of all federal grants in
FFY 2003, ranking 40th nationally in per capita receipts in
this category. In 1998, Arizona ranked 34th nationally.
• Procurement contracts are purchases by federal agencies.
Arizona received 3.03% of all federal procurement
contracts in FFY 2003, ranking 8th nationally in per capita
receipts. In 1998, Arizona ranked 15th nationally.
• Salary and Wages include payments to all military and
civilian employees of the federal government. Arizona
received 1.73% of all federal salaries and wages in
FFY 2003, ranking 28th nationally in per capita receipts. In
1998, Arizona ranked 26th nationally.

JLBC MEETING
The JLBC only considered Executive Session
Management settlements at its November 17th meeting.

Risk

ARIZONA’S SHARE OF FEDERAL FUNDS
FOR FFY 2003
Recent Census Bureau information compiled by Federal Funds
Information for the States (FFIS) shows that Arizona obtained
$37.8 billion in federal funds in Federal Fiscal Year (FFY)
2003. Arizona’s population represented 1.92% of the total
national population in 2003, while Arizona received 1.91% of
total federal funds (see Table 1 below). Arizona ranked 26th
nationally in overall per capita receipt of federal funds. In
1998, Arizona ranked 28th nationally.
Federal spending is separated into four major components:
Direct Payments, Grants, Procurement, and Salary and Wages.

Table 1

Federal Funding for Arizona, FFY 2003 & FFY 1998
Direct Payments

Grants

Procurement

Salaries and
Wages

Total

Total Funding ($ in Millions): 2003

18,675

7,235

8,557

3,335

$37,801

Arizona % of total federal funds: 2003

1.75

1.68

3.03

1.73

1.91%

Per capita rank: 2003

40

40

8

28

26th

Per capita rank: 1998

34

34

15

26

28th

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