JLBC - Monthly Fiscal Highlights

1716 W. Adams
Phoenix, AZ 85007
Phone:
(602) 926-5491
Fax:
(602) 926-5416

www.azleg.gov/jlbc.htm

May 2007

What’s Inside
April General Fund revenue
collections were $1.21 billion, or
1.8% above April 2006. This
amount was $(24.4) million below the January JLBC Baseline
FY 2007 forecast. For the fiscal
year-to-date, collections are
$26.3 million above the JLBC
Baseline FY 2007 forecast. Excluding Urban Revenue sharing
distributions, year-to-date base
collections are 8.1% above last
year. (See Table 5 on page 9.)
Of the major categories, individual income tax collections
actually declined from last
April. While revenues from
withholding and payments increased, these additional collections were offset by the
growth in refunds. As previously
mentioned in last month’s edition of the Highlights, slower
processing of returns in March
shifted a large number of these
refunds into April. For the
month, individual income tax
revenues were $(26.8) million
below the forecast.
April sales tax revenues
continued to be sluggish. Retail
collections grew only 3.5%, and
contracting collections
decreased (0.9)% on a year-

over-year basis. This is the
second month in a row
contracting collections have
declined. The reduction in
contracting is tied to the level
of construction activity. On a
month-over-month basis,
construction employment
declined by 600 jobs in April. By
way of comparison, April-overMarch construction employment has grown at an average
rate of 1,600 jobs over the last
10 years.
Corporate income tax collections continued to perform well,
with April collections being
$17.7 million higher than forecasted.
April’s revenue trends appear
to be continuing in May. Based
on month-to-date May collections, individual income tax
revenues will likely be below
forecast in this month as well.
May’s level of final payments is
running substantially below last
year while refunds are slightly
above May 2006.
Based on these month-to-date
results, May is likely to bring the
year-to-date total for all General Fund revenues below the

forecast. June will also be important in determining yearend revenues, as estimated
quarterly payments for both the
individual and corporate income tax are due.
The House and Senate budget
proposals both include a projected year end FY 2007 surplus
of over $525 million. Falling below the forecast in FY 2007 will
reduce this forecasted carry
forward into FY 2008. The impact in FY 2008 would then depend on whether the potential
FY 2007 shortfall could be recouped by exceeding the current 6.0% base growth forecast
for FY 2008.
In other fiscal news this month,
the JLBC met on May 10th and
the JCCR met on May 16th
(pages 4-5).
The JLBC approved $27.5 million
worth of transfers within the
Department of Corrections
FY 2007 budget to align it with
actual projected expenditures.
The JLBC also gave a favorable
review to a Department of
Commerce proposal to reallocate some 21st Century Fund
monies.

Table of Contents
Recent Economic Indicators .......................................... 3

JCCR Meeting Summary (cont’d)
• SFB – Bond Refinancing ............................................... 5
• ASU – Downtown Campus Student Housing............ 5

JLBC Meeting Summary
• Atty General – Settlement Allocation ....................... 4
• Atty General – Antitrust Enforcement Funds............ 4
• Commerce – 21st Century Fund ................................. 4
• ADC – Transfer of Appropriations .............................. 4
• ADE – AIMS Study Guides Funding ............................ 5
• DEQ – Indirect Cost Recovery Fund .......................... 5
• DPS – GIITEM Expenditures .......................................... 5
• ADOT – Third Party Progress Report ........................... 5

Summary of Recent Agency Reports
• ADOA/GITA – AZNet Implementation ...................... 6
• Corp Comm – Corporation Filings ............................. 6
• ADC – Monthly Bed Plan Update .............................. 6
• ADE – Budget Status Report ....................................... 6
• DHS – Arnold v. Sarn..................................................... 6
• Land Dept – Trust Land Activities ............................... 7
• OSPB – Federal Revenue Maximization .................... 7
• ADOT – MVD Wait Times.............................................. 7

JCCR Meeting Summary
• ADOA – Rental Rates................................................... 5
• ADOA/DJC – Building Renewal Funding .................. 5
• State Fair – Building Renewal Allocation .................. 5

Other Issues
• DEMA Emergency Transfer ......................................... 8

March Revenues............................................................... 2

This report has been prepared for the Arizona
Legislature by the Joint
Legislative Budget Committee Staff on May 30, 2007.

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2007

What’s Inside
“It increasingly
appears that some
of the past individual income tax
gains were onetime, resulting in
slower FY 2007
growth.”

The JCCR gave a favorable
review to an Arizona Exposition
and State Fair Board proposal
to allocate $1.1 million in FY
2007 Building Renewal monies
toward the repair of the Coliseum roof. The total cost to
repair the roof is estimated to
be $5.2 million. The JCCR also
reconsidered, and gave a fa-

(continued)

vorable review to, an ASU student housing project at the
Downtown Phoenix Campus.
The Committee had previously
given the project an unfavorable review at its January
meeting, as the campus was
not authorized by the Legislature. The Universities have since
worked on a proposal to en-

hance legislative oversight of
future capital projects.
The Monthly Fiscal Highlights
also include a summary of recent statutory reports to JLBC
(pages 6-7).

April Revenues
Sales Tax collections were $398.2 million in April,
or 3.5% above last year. Table 1 displays the April
and year-to-date growth rates for the major
categories.
Table 1

Sales Tax Growth Rates
April
Retail
3.5%
Contracting
(0.9)%
Utilities
5.4%
Use
2.6%
Restaurant & Bar
9.1%

YTD
4.0%
12.5%
13.1%
0.6%
8.5%

April collections continued to grow below the
forecasted rate. Retail collections increased
3.5%, and for the second month in a row contracting collections decreased from last year.
For the month, overall sales revenues were
$(17.4) million below the January JLBC Baseline
forecast.
Individual Income Tax collections were $603.7
million in April, or (2.8)% below last year. Table 2
displays the April and year-to-date growth rates
for individual categories.

Withholding collections grew at a healthy rate;
however, these gains were offset by slow growth
in payments and a high level of refunds. The increase in refunds was partially due to the previously enacted 5% tax cut, as well as the timing of
when those returns were processed. Slower
processing in March resulted in more returns being processed in April, which in turn generated
an increase in refunds.
In total, FY 2005 individual collections grew 29%,
and FY 2006 collections grew 24%. It increasingly
appears that some of the past individual income
tax gains were one-time, resulting in slower FY
2007 growth.
Corporate Income Tax collections were $177.6
million in April, or 9.7% above last year. While prior
year one-time gains appear to be impacting individual income tax collections, corporate collections continue to grow at a substantial rate. Yearto-date, corporate revenues are almost 20%
above last year. This result is surprising, given that
corporate collections grew 42% in FY 2005 and
almost 25% in FY 2006.

Table 2

Individual Income Tax Growth Rates
April
YTD
Withholding
14.2%
9.3%
Estimated +
3.9%
13.2%
Final Payments
Refunds
33.5%
25.8%

Table 3

General Fund Revenues
Compared to Enacted and Revised Forecasts and FY 2006 Collections
($ in Millions)
FY 2007
Difference From
Difference From
Difference
Collections June 2006 Forecast 1/ Jan 2007 Forecast 2/ From FY 2006
April
$ 1,211.0
$ 36.2
$ (24.4)
$ 21.3
Year-to Date
$ 7,844.6
$ 242.1
$ 26.3
$ 514.1
____________
1/ Originally enacted FY 2007 budget (June 2006)
2/ JLBC January Baseline Budget

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2007

3

Recent Economic Indicators
Inflation continues to reflect the
rising cost of gasoline. The U.S.
Consumer Price Index (CPI) (3month moving average)
climbed 0.7% in April, which
followed a similar increase the
prior month. Gasoline prices
soared by more than 10% in
April, although they were up by
only 3.2% on a year-over-year
basis. Food prices, which were
3.7% higher than a year ago,
also were rising faster than the
general price level. Excluding
the effects of food and energy
costs, the core CPI rose 0.2% in
April and was 2.3% above its
level from a year ago.
U.S. semiconductor billings decreased (2.2)% in March (3month moving average), continuing a trend that began late
last year. Sales by American
manufacturers were down
(10.3)% from the volumes
posted a year ago. The Semiconductor Industry Association
reported that global semiconductor sales were running 3.2%
ahead of last year’s results.
Although unit sales of personal
computers, mobile phones and
other consumer products were
expanding, excess supplies of
electronic components were
pushing prices lower.
The U.S. Index of Leading Economic Indicators dipped (0.5)%
in April, following a revised 0.6%
gain in March. The leading index has oscillated in a relatively
narrow range for several
months and has not signaled a
firm trend for the economy.
Building permits, unemployment
insurance claims, and manufacturing hours worked were
among the factors driving the
index downward, while stock
prices and the money supply
were the only components that
made positive contributions.
Meanwhile, consumer sentiment moved higher. The U.S.
Consumer Confidence Index
climbed 1.6% in May after retreating the previous 2 months.

The Conference Board reported that consumers were
more upbeat about current
conditions and had an improved view of the labor market. However, their outlook for
business conditions in the next 6
months remained cautious.

sales price was $265,000 in
April, which matched the April
2006 median price and was
(0.2)% below March 2007. The
4,855 single-family homes sold
reflected a (9.8)% drop from
March and an (18.8)% decline
from a year ago.

Arizona’s economy added
98,600 jobs in the 12 months
ending April 2007. However,
April’s increase of 3,800 positions was a fraction of the 9,200
average gain reported during
the last 10 years. Total nonfarm employment increased
3.7% on a year-over-year basis.
Arizona’s unemployment rate
edged up to 4.0% in April, while
the nation’s jobless rate increased to 4.5%

The attached-home segment
was faring somewhat better.
The townhouse-condominium
median sales price set another
record by climbing to $184,950
in April, a 5.7% improvement
from a year ago, while the
number of units sold dipped to
1,305, which was down (3.3)%
from the prior month and (6.1)%
on a year-over-year basis.

The key goods-producing sectors remained mired in a hiring
slump. Manufacturing lost (200)
jobs in April, bringing its yearover-year loss to (700). The
construction industry shed another (600) workers in April, its
5th loss in the last 6 months.
Over the last 10 years, construction employment registered an average increase of
1,500 jobs in April.
Much of the retrenchment in
construction activity can be
traced to the housing industry.
The number of single-family
residential building permits issued (3-month moving average) increased 2.7% in April but
it remained (26.1)% below the
level from a year ago.
The recent surge in the number
of multi-family permits issued
raised its 3-month moving average to 1,452, a 41.7% jump
from a year ago. Overall, the
number of housing units authorized statewide dropped (23.9)%
for the year to date through
April.
The Realty Studies group at
Arizona State University announced that the Greater
Phoenix single-family median

The Arizona Business Conditions
Index (BCI) rebounded by 7.0%
in April to 60.1 and remained
well above the mark of 50 associated with a growing economy. The index got its biggest
boost from the production
component, reversing its recent
trend, while new orders also
improved.
The Department of Corrections’
inmate population increased
by an average of 264 inmates
per month from February
through April, which followed a
large jump in the prior period.
The total population grew by
2,290 inmates from a year ago,
a 6.8% increase.
The number of TANF recipients
decreased (1.0)% to 79,797 in
March and was (10.3)% below
the level reported in March
2006. The AHCCCS caseload
jumped 0.9% in May for the 2nd
consecutive month and now
stands 0.2% higher than the
total from a year ago.

“The construction
industry shed another (600) workers
in April, its 5th loss in
the last 6 months.”

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2007
Table 4

RECENT ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate
- Non-Farm Employment – Total
Manufacturing
Construction
- Contracting Tax Receipts (3-month average)
- Retail Sales Tax Receipts (3-month average)
- Residential Building Permits (3-month moving average)
Single-unit
Multi-unit
- Greater Phoenix Existing Home Sales
Single-Family
Townhouse/Condominium
- Greater Phoenix Median Home Sales Price
Single-Family
Townhouse/Condominium
- 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
- TANF Recipients
- 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)

Change From
Prior Period

Change From
Prior Year

Time Period

Current Value

April
April
April
April
Feb-Apr
Feb-Apr

4.0%
2.73 million
186,800
246,800
$75.3 million
$166.0 million

0.1%
0.1%
(0.1)%
(0.2)%
(10.7)%
(7.2)%

(0.2)%
3.7%
(0.4)%
2.7%
3.0%
3.8%

Feb-Apr
Feb-Apr

4,069
1,452

2.7%
7.7%

(26.1)%
41.7%

April
April

4,855
1,305

(9.8)%
(3.3)%

(18.8)%
(6.1)%

April
April
March
February

$265,000
$184,950
3.89 million
$9.03

(0.2)%
2.2%
18.9%
11.1%

0.0%
5.7%
2.2%
10.4%

0.2%
7.0%

0.2%
(9.0)%

March
April

120.4
60.1

1st Quarter 2007
2nd Quarter 2007
4th Quarter 2006
July 1, 2006
May
March
Feb-Apr

106.3
53.0
$198.1 billion
6.17 million
1,046,580
79,797
36,278

0.9%
2.1%
1.4%
3.6%
0.9%
(1.0)%
264 inmates

(3.7)%
(8.6)%
8.0%
3.6%
0.2%
(10.3)%
2,294 inmates

1st Quarter 2007

$11.5 trillion

1.3%

2.1%

May
April
Jan-Mar
Feb-Apr

108.0
137.3
$3.34 billion
205.2

1.6%
(0.5)%
(2.2)%
0.7%

3.2%
(0.7)%
(10.6)%
2.6%

JLBC Meeting
At its May 10, 2007 meeting, the Joint
Legislative Budget Committee (JLBC)
considered the following issues:
Attorney General – Review of Allocation of Settlement Monies – The Committee gave a favorable review of the
allocation plan from the Budget Car
and Truck Sales consent agreement.
The consent judgment is a result of allegations that Budget deceptively advertised used vehicles. The AG’s office
stands to gain $125,000, specifically for
attorney costs and fees associated
with the case. The money will be deposited into the Consumer Fraud Revolving Fund.
Attorney General – Review of Intended
Use of Monies in the Antitrust Enforcement Revolving Fund – The Committee
gave a favorable review of the expenditure of $318,000 in Antitrust Enforcement Revolving Fund monies. A

footnote in the FY 2007 budget requires review of expenditures in excess
of $232,400 from this fund. The fund
has a sufficient balance to support the
expenditures on personnel and operating expenses, which are consistent
with statute.
Department of Commerce – Review of
First Quarterly Expenditure Report for
the Arizona 21st Century Competitive
Initiative Fund – The Committee gave
a favorable review of the transfer of $1
million from the $5 million allocation for
assistance in obtaining federal research grants to education ($500,000)
and research and development
($500,000) programs. The Committee
also favorably reviewed the first quarterly expenditure report.
Additionally, the Committee requested
that Science Foundation Arizona
(SFAz) track the number of awards per

investment program that result in
commercial products, track the
amount of licensing and royalty revenue earned by grant recipients, and
provide a breakdown of dollars leveraged from other sources. These items
are to be provided when submitting
results for the first year performance
measures. The Committee further requested that SFAz provide numeric
goals for the performance measures of
the $2.5 million discretionary grants
program in its next quarterly report.
Department of Corrections – Consider
Approval and Review of Requested
Transfer of Appropriations – The Committee gave a favorable review to the
transfer of $27.5 million within the department’s operating line items and
Special Line Items, as recommended
by JLBC Staff. The adjustments conform to the current House and Senate
FY 2007 supplemental estimates.

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2007

JLBC Meeting

5

(Continued)

Department of Education – Report of
Plan to Fund AIMS Study Guides with
Achievement Testing Monies – The
Committee gave a favorable review
of the department’s plan to spend
$3.6 million in FY 2006 carry forward
and FY 2007 surplus monies to fund the
cost of AIMS study guides for FY 2007.
In addition to the favorable review, the
Committee also asked the department
to provide statistics on the performance of tutored versus non-tutored
students on AIMS retakes by May 29,
2007.
Department of Environmental Quality –
Review of Intended Use of Monies in
the Indirect Cost Recovery Fund – The
Committee gave a favorable review
of the department’s use of Indirect
Cost Recovery Funds in excess of $10.5
million, as required by a footnote in the
FY 2007 budget. The department expended $9 million from this fund in the
first three quarters of the year, and

expects an FY 2007 total expenditure
of $11.8 million. The additional expenditures will be used for salaries, rent
costs and other operating expenditures.
Department of Public Safety – Review
of the Expenditure Plan for the Gang
and Immigration Intelligence Team
Enforcement Mission – The Committee
gave a favorable review for the use of
an additional $4.0 million for non-DPS
law enforcement agencies and
equipment purchases. This amount
includes $1.6 million for the Maricopa
County Sheriff’s Office, $1.9 million for
the City of Phoenix Police Department,
and $45,100 for the United States Immigration and Customs Enforcement
Agency.

the third quarter of FY 2007, given the
progress ADOT is making in increasing
its use of third parties and reducing the
quality assurance backlog. The Committee asked ADOT to provide a progress report by April 30, 2008, indicating whether the 4% sampling rate for
third party transaction review has retained statistical validity.

Department of Transportation – Review
of Third Party Progress Report – The
Committee gave a favorable review
of the third party progress report for

JCCR Meeting
At its May 16, 2007 meeting,
the Joint Committee on
Capital Review (JCCR) considered the following issues:
Arizona Department Of Administration – Consider Approval of FY 2008 and FY
2009 Rental Rates for StateOwned Space – The Committee approved FY 2008
rental rates of $19.50 per
square foot for office space
and $7 per square foot for
storage space, contingent
upon funding approval in
the FY 2008 budget. The
current office space rate of
$15.50 has not been
changed since FY 2002.
Arizona Department Of Administration/Department Of
Juvenile Corrections – Review of DJC Well Renovation Project and ADOA
Building Renewal Allocations
– The Committee gave a
favorable review to the
proposal to reallocate

$200,000 in FY 2007 building
renewal monies to purchase
and install an arsenic removal system for the Department of Juvenile Corrections well renovation project.
Arizona Exposition And State
Fair Board – Review of FY
2007 Building Renewal Allocation Plan – The Committee gave a favorable review
to the request to use $1.1
million in FY 2007 to repair
the Coliseum roof. AESF has
recently become aware
that problems with the roof
are more serious than originally anticipated. Total cost
to repair the roof is estimated at $5.2 million. Funding for the project includes
the remaining $1 million in FY
2007 Building Renewal plus
$1.9 million in FY 2007 operating budget to restore
structural integrity to the
roof, and $2.3 million in
FY 2008 operating and Build-

ing Renewal funds to replace the current protective
membrane covering the
roof.
School Facilities Board –
Consider Approval of Refinancing Deficiencies Correction Bonds – The Committee approved the request to
refinance $88.6 million of
outstanding State School
Trust revenue bonds. The
current interest rate on these
bonds is 5.75%, and the SFB
hopes to refinance them at
4.09%. This will result in a
savings of approximately
$6.6 million over ten years.
Arizona State University –
Reconsider Review of Indirect Financing for Downtown Campus Student Housing Project – The Committee
gave a favorable review to
the proposal to enter in to
an indirect financing
agreement to develop student housing for the ASU

Downtown Phoenix Campus. Under this agreement,
Capstone Development will
construct 2 facilities to house
1,200 to 1,300 students in
downtown Phoenix. The project will be financed with
$116.6 million in tax exempt
bonds issued by Capstone,
which are estimated to be
paid off in 23 years with student housing fees. ASU will
acquire ownership of the
land and facilities when the
bonds have been repaid.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2007

Summary of Recent Agency Reports

ADOA / GITA – Quarterly Report on
AZNet Implementation – In December
2004, the Joint Committee on Capital
Review requested the Arizona Department of Administration (ADOA)
and the Government Information
Technology Agency (GITA) to report
quarterly on the Arizona Network
(AZNet), as created by the Statewide
Telecommunications Management
Contract. The most recent quarterly
report states that upgrades have
been completed in 7 key regions and
that Wide Area Network consolidation continues in the Flagstaff region.
These projects are designed to reduce carrier circuit costs. A pilot was
completed on a new remote access
system which will allow employees to
have secure access to agency networks while working from home. Additionally, end-of-life voice equipment has been replaced with IP telephone systems at the Arizona Department of Education and the Arizona Commission on the Arts. A similar replacement process has begun
at the Arizona Department of Transportation and will continue in the
fourth quarter of FY 2007.
Corporation Commission – Report on
Corporations Division Filings – Pursuant
to a footnote in the General Appropriation Act, the Corporation Commission submitted a quarterly report
on the status of reducing processing
delays in its Corporations Division.
For expedited filings, the amount of
time required to process the filings fell
from an average of 23 business days
on March 25, 2005 to 3.4 business
days on March 31, 2007. At the end
of the second quarter of FY 2007, the
turnaround time was 4.2 business
days. The commission’s goal for
processing expedited filings is 5 business days or less.
For regular filings, the amount of time
required to process the filings fell from
an average of 68 business days on

March 25, 2005 to 41 business days on
March 31, 2007. At the end of the
second quarter of FY 2007, the turnaround time was 43 business days.
The commission’s goal for processing
regular filings is 30 business days or
less.
Arizona Department of Corrections –
Report on Monthly Bed Plan Update –
The Department of Corrections (ADC)
has been providing monthly reports
to JLBC Staff updating the status of
several topics. The highlights include
the following:
Provisional Beds
• ADC awarded a contract for 1,260
medium security provisional beds at
the Indiana New Castle Facility at a
per diem rate of $64 per inmate.
The department began transferring
Arizona inmates to Indiana on
March 12. Due to ADC concerns
about staffing and program services and an April 24 disturbance
at the facility, the department has
ceased transferring additional inmates to Indiana for the moment.
At the time of the disturbance, 630
Arizona inmates were being held at
the New Castle facility, along with
1,038 Indiana inmates.
• In November 2006, ADC released
an RFP to rent 4,700 beds beginning
July 1, 2007. These beds would replace 2 Texas contracts that were
canceled by the vendors, and a
1,440 Diamondback contract that
expires at the end of FY 2007. Included in the RFP were also 2,000
new provisional beds to address
population growth.
• On May 2, ADC awarded 2 contracts that will be effective starting
July 1, 2007. One contract was
awarded to Correctional Corporation of America (CCA) for 2,160
minimum and medium security
level beds at the Diamondback
Facility in Watonga, Oklahoma at a
per diem rate of $59.45. ADC had
previously contracted 1,440 beds at
a per diem rate of $46.65. The second contract was awarded to Cornell Corrections for 1,340 minimum
and medium security beds at a fa-

cility in Hinton, Oklahoma at a per
diem rate of $56.95, which decreases to $54.50 effective May 1,
2008.
Community Accountability Program
• Between April 2006 and May 2007,
a total of 135 of 137 inmates referred to the program have enrolled. Of the inmates enrolled, 21
remain in the program, 24 completed the program, and 90 were
terminated by the program.
Department of Education – Budget
Status Report – Pursuant to A.R.S. § 35131(D) and a footnote in the FY 2007
General Appropriation Act, the Arizona Department of Education (ADE)
recently provided an update regarding its budget status for FY 2007. In
that report, ADE estimates that it will
experience a $14.3 million net funding
surplus for FY 2007. ADE had previously reported an estimated surplus of
$8.3 million.
Department of Health Services – Report on Arnold v. Sarn – Pursuant to a
footnote in the General Appropriation Act, the Department of Health
Services has submitted a quarterly
report on the department’s progress
toward settling the Arnold v. Sarn lawsuit. Previously, the plaintiffs had filed
a Motion for Non-Compliance as a
result of the Court Monitor’s 2005 Independent Review. As a result, the
parties agreed to a Joint Stipulation
requiring the department to develop
a plan that increases service capacity for independent living skills, housing support services, vocational/
work supports, and substance abuse
services. On April 4, 2007 the Court
Monitor officially certified that DHS
fulfilled its obligations under the Joint
Stipulation and the Motion for NonCompliance was withdrawn.
During the past quarter, DHS and the
plaintiffs filed additional pleadings
regarding an apartment-like complex
known as the Good Shepherd Properties. DHS had planned to offer rent
free housing at the property to up to
56 homeless adults with serious men-

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2007

Summary of Recent Agency Reports
tal illness (SMI). However, plaintiffs
argued this plan violates the terms of
the exit stipulations related to housing. Specifically, the stipulations state
that housing options must not exceed
8 SMI residents or, if more than 8 residents are present, adults with SMI
cannot occupy more than 25% of the
units. The Court heard oral arguments regarding the Good Shepherd
Properties in late April and on May 7,
2007 the judge ruled in favor of the
plaintiffs. As a result of the Court’s
ruling, DHS will be able to house a
maximum of 21 adults with serious
mental illness at the Good Sheppard
Properties and the remaining rooms
must be rented to non-SMI adults or
left vacant.
State Land Department – Quarterly
Report on State Trust Land Activities –
The FY 2007 General Appropriation
Act (GAA) provided the State Land
Department with $3.1 million in additional monies for the planning and
disposition of State Trust lands. A
GAA footnote also required the department to submit quarterly reports
to the JLBC regarding State Trust land
activities. During the third quarter of
FY 2007, the State Land Department
completed 3 sales auctions, selling
1,969 acres of Trust land valued at
$171.1 million. The department also
completed 1 lease auction, leasing
21 acres which will generate $52.8
million over the 65-year term of the
lease. In addition, the department
leased 358 acres of State Trust land
for right-of-way use valued at $7.9
million and began or continued
planning and engineering studies on
763,842 acres.
Fiscal year-to-date, the department
has sold 3,773 acres of State Trust
land valued at $250.2 million. By was
of comparison, through the first 3
quarters of FY 2006, the Land Department had sold 1,199 acres valued
at $360.3 million.
Governor’s Office of Strategic Planning and Budgeting – Report on Federal Revenue Maximization Initiative –
Pursuant to a General Appropriation

Act footnote, the Governor’s Office
of Strategic Planning and Budgeting
(OSPB) has submitted its quarterly report on the status of a Federal Revenue Maximization Initiative. This report covers both the OctoberDecember 2006 time period as well
as the January-March 2007 time period.
The summary lists 7 ongoing projects,
a decrease of 2 from the October
report. This is the result of finalizing the
following projects:
Title IV-E Funding for Out-of-Home
• Placement: The Department of
Economic Security (DES) reports
that it has finalized the last claim
and that there will be no further
claims for this project.
• Juvenile Justice and Title XIX reimbursement: The Arizona Health
Care Cost Containment System
(AHCCCS) and 3 other state agencies had sought to identify possible
Title XIX services and funds for youth
in Arizona who are at risk for the juvenile justice system. After state legal review of the federal Center for
Medicare and Medicaid Services
denial of the state’s claim, the decision was made to discontinue the
project.
In addition to that project there was 1
other project with changes since the
last report:
• Family Planning/Behavioral Health:
The Department of Health Services
decided not to pursue a potential
project which would seek to obtain
enhanced federal funding for some
behavioral health counseling involving family planning. No explanation was given for the decision
not to pursue the project.
Arizona Department of Transportation
– Quarterly Report on Motor Vehicle
Division Wait Times – The Motor Vehicle Division (MVD) was appropriated
an additional 25 FTE Positions in FY
2007 for MVD customer service staff
to reduce customer wait time. Laws
2006, Chapter 344, requires the Ari-

7

(Continued)

zona Department of Transportation to
report to the Legislature quarterly on
customer wait times in MVD field offices and vehicle registration renewal
by mail turnaround times.
The number of MVD counter clerks
increased by 69, or 9.9%, from 698 in
FY 2006 to 767 in the 3rd quarter of
FY 2007, with a resultant decrease of
(10.2) minutes, or (36.7)%, in customer
wait time from receiving a ticket until
arriving at the counter (from 27.8
minutes in FY 2006 to 17.6 minutes in
the 3rd quarter of FY 2007). ADOT reports that there was an additional
wait time of 4 minutes from arrival at
the office until receiving a numbered
ticket.

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2007

Other Issues
DEMA Emergency Transfer
The Governor is authorized by A.R.S. §
35-192 to declare emergencies in response to major disasters. This section
also allocates $4 million from the General Fund to the Governor’s Emergency Fund every fiscal year for liabilities, expenses, and reimbursements
arising from these disasters. On April
12, 2007, $543,000 was transferred from
the General Fund to the Department
of Emergency and Military Affairs for
the Glassy-Winged Sharpshooter
Emergency.
On June 23, 2006, the Governor declared a state of emergency for
Cochise County related to the GlassyWinged Sharpshooter. The GlassyWinged Sharpshooter is an insect
which is a known carrier of bacteria
that can cause plant diseases. The
Governor’s declaration immediately
allocated $200,000 for the emergency. At the time, the Arizona Department of Agriculture requested
additional funding from the Governor’s Emergency Fund to continue its

program to eradicate the GlassyWinged Sharpshooter. At the August
1, 2006 meeting of the Arizona State
Emergency Council, the Council approved the allocation of $543,000 in
additional monies for the GlassyWinged Sharpshooter Emergency. The
additional monies will be used to reimburse the Department of Agriculture
for costs incurred in eradicating the
pest up to $528,000. The remaining
$15,000 will be retained by DEMA as
the cost of administering the funds.
As of May 16, 2007, the entirety of the
initial $200,000 allocation had been
expended and DEMA had paid
$181,300 of the $528,000 in reimbursements to the Department of Agriculture. In March 2007 the Governor
amended the Glassy-Winged Sharpshooter Emergency declaration to
include Yuma, Pima, Pinal, Maricopa,
and Santa Cruz Counties.
Of the $4 million allotted to the Governor’s Emergency Fund in FY 2007, a
total of $3 million has been allocated,

including the $543,000 discussed
above. This leaves $1 million in the
fund for FY 2007 emergencies.

Table 5

State of Arizona
General Fund Revenue: Change from Previous Year and January Baseline Forecast
April 2007
Current Month

FY 2007 YTD (Ten Months)

Change From
Actual

April 2006

April 2007

Amount

Change from
Actual

Revised Forecast

Percent

Amount

Percent

April 2006

April 2007

Amount

Revised Forecast
Percent

Amount

Percent

Taxes
Sales and Use

398,196,373

$13,292,234

Income - Individual

603,667,191

(17,707,095)

(2.8)

(26,826,467)

(4.3)

177,629,692

15,746,207

9.7

17,724,806

11.1

(1,031,043)

(85.9)

14,994,418

(1,329,641)

(8.1)

(394,942)

(2.6)

7.6

54,980,626

(158,957)

(0.3)

(2,608,277)

(4.5)

(11.5)

290,154,154

5.3

(6,666,715)

- Corporate
Property
Luxury
Insurance Premium

3.5 %

168,957

(791,389)

(82.4)

5,332,939

(1,196,586)

(18.3)

($17,408,227)

375,939

$3,779,240,455

$251,644,343

3,125,382,990

194,272,090

6.6

50,829,419

1.7

805,591,578

133,696,533

19.9

23,120,817

3.0

($58,376,505)

(1.5) %

42,019,030

8,498,574

25.4

254,109

186,145

273.9

254,109

Other Taxes

753,069

108,200

16.8

675,944

$1,228,021,360

$18,136,290

Lottery

5,072,700

4,640,300

43.4

33,053,700

(4,335,400)

(11.6)

License, Fees and Permits

3,651,446

(31,447)

(0.9)

(378,154)

(9.4)

33,971,131

6,551,264

23.9

Interest

8,251,204

301,268

3.8

651,204

8.6

81,377,644

31,667,444

63.7

Sales and Services

6,706,862

3,882,329

137.5

2,699,862

67.4

43,396,446

1,254,401

3.0

334,531

0.8

Other Miscellaneous

5,015,678

4,805,370

3,773,778

303.9

29,271,023

10,264,641

54.0

7,677,684

35.6

1.5 %

($31,715,909)

-876.4
(2.5) %

(571,457)

14,586,393

7.1 %

Estate

Sub-Total Taxes

(5,480,970)

(4.2) %

(12,134,368)

1,237,490

98,907

$8,071,010,254

$580,675,300

-8.7
7.8 %

(2.2)

381,216

(40.0)

614,720

98.7

$6,899,733

0.1 %

Other Revenue

Disproportionate Share
Transfers and Reimbursements
Sub-Total Other Revenue
TOTAL BASE REVENUE

--

--

0

0

174,853

74,730

--

28,872,743

13,672,550

89.9 %

$1,256,894,103

$31,808,840

2.6 %

74.6

1,535,900

0
(975,147)
7,307,443
($24,408,466)

0

(2,008,400)
(405,975)
10,065,385

--

0

(37.1)

3,775,180

(5.7)
(1.2)
14.1

--

0

(84.8)

11,858,077

(6,996,507)

--

33.9 %

232,928,021

38,405,843

19.7 %

19,438,405

9.1 %

(1.9) %

$8,303,938,275

$619,081,143

8.1 %

$26,338,138

0.3 %

46.7

One-Time Revenue
Urban Revenue Sharing
Sub-Total Transfers In
TOTAL REVENUE

(45,935,888)

(10,500,144)

29.6

0

0.0

(459,358,884)

(105,001,445)

29.6

0

0.0

(45,935,888)

(10,500,144)

29.6 %

0

0.0 %

(459,358,884)

(105,001,445)

29.6 %

0

0.0 %

7.0 %

$26,338,138

0.3 %

$1,210,958,215

$21,308,696

1.8 %

($24,408,466)

(2.0) %

$7,844,579,391

$514,079,698