JLBC - Monthly Fiscal Highlights

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

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“Year-to-date
through April,
General Fund
revenue
collections are
$(81.9) million
below forecast”.

May 2008

Summary
substantially below forecast for May. Since
almost all May individual and corporate
income tax revenues have already been
received, we are able to project that May
collections in those categories will be $(150)
million below the enacted budget forecast.
After accounting for sales tax collections, the
shortfall could increase to $(175) million. In
combination with the year-to-date April
shortfall of $(82) million, the May results could
put revenues $(257) million below forecast.

Total April General Fund revenue collections
were $1.14 billion, or (6.1)% below April of last
year. This amount was $(9.9) million below the
forecast used for the recently enacted FY 2008
budget revisions. Year-to-date through April,
General Fund revenue collections are $(81.9)
million below forecast. (See Table 1 for
summary information).
For the first 10 months of FY 2008, General Fund
collections are down (5.1)% when compared
to last year. When factoring in Urban Revenue
Sharing, the year-to-date collections of $7.33
billion are (6.6)% below last year. The April
decline in revenues includes 2 of the 3 main
tax categories:

The FY 2008 budget revision legislation (Laws
2008, Chapter 53) envisioned the possibility of
revenue collections coming in below forecast
for the year. Chapter 53 provides a
contingency of $364 million to address any
year-end shortfalls.

• Sales tax collections were down (6.1)%
compared to April 2007, and were $(27.7)
million short of the monthly forecast.
• Individual income tax collections were up
0.4%, which was $36.8 million above
forecast. The increase was due to the
Department of Revenue’s ability to process
returns and deposit payments more quickly
than last year.
• Corporate income tax collections were
down (29.5)%, which was $(16.2) million
below forecast.
(See page 11 for detail information).

The $364 million includes $152 million in surplus
cash funds. (Chapter 53 generated budget
solutions greater than the anticipated shortfall
at the time.) In addition, Chapter 53 permits
the use of the $212 million remaining in the
Budget Stabilization Fund (BSF).
With revenues potentially $(257) million below
forecast, the state would still have $107 million
in contingency funds remaining after
addressing the projected shortfall ($364 million
less $257 million). At this time, JLBC Staff does
not anticipate that June revenue losses would
exceed the remaining $107 million in

FY 2008 Budget Update
Although April General Fund revenues were
not far below the revised forecast, preliminary
May data suggests that revenues will be

Table of Contents
April Revenues ........................................................ 2
Recent Economic Indicators ................................ 4

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on May
30, 2008.

JCCR Meeting Summary
• Cochise Community College – Rev Bonds .... 7
• ADOT – Modular Housing Project..................... 7
• ADOT – Sprinkler and Fire Alarm Project ......... 7
• ASU – Memorial Union Renovations Project ... 7
• NAU – Infrastructure Upgrades Bond Project . 7
• NAU – Residence Life Warehouse Project ...... 7
• NAU – Applied Research Facility, Yuma ......... 7
Summary of Recent Agency Reports
• ADOA/GITA – AZNet Implementation............. 8

• ADOA – Health Insurance Report .................... 8
• AHCCCS – Systematic Alien Verification for

Entitlements Program ......................................... 8

• ADOC – Monthly Bed Plan ................................ 8
• ADOC – Operating Per Capita Cost Report.. 8
• Economic Estimates Commission – Budget
•
•
•
•
•
•
•

Stabilization Fund ................................................ 9
DES – TANF Work Participation.......................... 9
ADE – Federal Monies for English Learners ..... 9
DHS – Arnold v. Sarn ........................................... 9
DHS – Health Crisis Fund..................................... 9
DPS – Sworn Personnel Staffing.......................10
DPS – GIITEM Quarterly Report........................10
ADOT – MVD Wait Times ..................................10

2

Summary

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

(Continued)

contingency funds. Given the current
economic uncertainties, however, we cannot
discount that possibility. As a result, we may
need to explore further methods of increasing
the year-end contingency.
In addition, revenues by themselves will not
determine the overall General Fund surplus or
shortfall. The level of spending below
appropriations (otherwise known as
“revertments”) also affects the year-end
balance. The current budget assumes $85
million in revertments. These unspent
appropriations are difficult to predict in
advance.
FY 2009 Budget Update
Further FY 2008 shortfalls would also affect FY
2009. In March, JLBC Staff had estimated a FY
2009 shortfall of $1.9 billion, with an assumed
FY 2009 revenue growth rate of 1.2% above FY
2008. This rate was based on the 4-sector
March consensus forecast plus input from the

Finance Advisory Committee (FAC) meeting.
Since FY 2008 base revenues will be lower
than projected, FY 2009 revenues would
have to grow faster than 1.2% to keep the FY
2009 shortfall at no more than $1.9 billion.
With a shortfall of $257 million, for example, FY
2009 revenue would have to increase by
4.0%.
To gauge the likelihood of that growth, we
surveyed several FAC members in the last
week for their current perspective on FY 2009.
Their estimates ranged from flat to 3% growth,
suggesting the 1.2% projection from March
may still be valid. Under that 1.2% growth
scenario, the FY 2009 shortfall would rise to
$2.2 billion.
JLBC/JCCR Meetings – The Monthly Fiscal
Highlights include a summary of the May
JCCR meeting (page 7). There was no JLBC
meeting in May.

April Revenues
Table 1

General Fund Revenues
Compared to Enacted Forecast and FY 2007 Collections
($ in Millions)
FY 2008
Difference From
Difference
Collections
Chapter 53 Forecast
From FY 2007
April
$ 1,137.5
$ (9.9)
$ (73.5)
Year-to-Date
$ 7,328.5
$ (81.9)
$(516.1)

Sales Tax collections were $373.8 million in
April. This amount was down (6.1)% compared
to last April, and $(27.7) million below forecast.
In the first 10 months of FY 2008, sales tax
revenues are down (2.1)% compared to last
year. Table 2 displays the April and year-todate growth rates for selected categories.

collections together account for two-thirds of
all sales tax revenues. The retail sector
declined by (5.3)%, and contracting fell by
(18.9)%. Retail and contracting continue the
negative trend, with the 3-month rolling
average for contracting down (15.4)% from
the prior year, and retail down (6.7)%.

Table 2

Through March (the latest available
subcategory data), taxable sales in the retail
category are down (1.6)% from the prior
year. Within retail, the largest subcategory,
General Merchandise and Miscellaneous
Retail, is down (0.7)%. The single largest
subcategory decline continues to be Motor
Vehicles, with a (14.1)% decline. Taxable
retail sales by subcategory are shown in
Table 3.

Sales Tax Growth Rates
April
Year-to-Date
Retail
(5.3)%
(3.4)%
Contracting
(18.9)%
(9.8)%
Utilities
(3.4)%
7.0%
Use
7.0%
10.0%
Restaurant & Bar
(1.0)%
0.3%
There were significant variations in April
collections by sector. Retail and contracting

“…FY 2009
revenues will
have to grow
faster than 1.2%
to keep the FY
2009 shortfall at
no more than
$1.9 billion”.

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

3

April Revenues
Table 3

(Continued)

Taxable Retail Sales by Subcategory

General/Misc. Merchandise
Motor Vehicles/Misc. Auto.
Bldg Hardware, Mfg Home
Food and Liquor Stores
Furniture, Home Furnishings
Clothing and Accessories
Manufacturing
Other Subcategories
Total
Individual Income Tax collections were $606.0
million, or 0.4% above last year. Year-to-date,
income tax collections are (5.3)% below last
year. April collections were $36.8 million
greater than the recently enacted budget
forecast. Table 4 displays individual category
growth rates.
Table 4

“Corporate
Income Tax
collections were
$125.2 million, or
(29.5)% below
last year”.

Individual Income Tax Growth Rates
April
Year-to-Date
Withholding
(0.5)%
2.0%
Estimated +
5.0%
(3.9)%
Final Payments
Refunds
9.8%
17.8%
April withholding was (0.5)% below last year.
The April decline brings year-to-date
collections down to 2.0% over the prior year.
Estimated and final payments increased yearover-year by 5.0% in April. Based on
preliminary May data, however, the April
increase appears to be inflated. We had
originally forecasted a (4.1)% decrease in
payments due to the slowing economy and
implementation of the 5% income tax cut
authorized by Laws 2006, Chapter 354.
In May 2007, the state processed $173 million
in estimated and final payments, compared
to approximately $32 million in May of this
year. This drop-off suggests that the 5% April
growth is due to quicker than expected
income tax processing, rather than a real
underlying trend change in tax payments.
April refunds of $321.2 million were $28.8
million, or 9.8% over the prior year. The actual
amount of refunds for the month exceeded
the forecast by $11.2 million.

% of
Total Sales
28.4%
23.3%
8.0%
7.8%
7.0%
6.2%
5.6%
13.8%
100.0%

YTD % Change
Over FY 2007
(0.7)%
(14.1)%
(6.4)%
1.9%
(3.3)%
(2.8)%
(4.6)%
22.2%
(1.6)%

Corporate Income Tax collections were $125.2
million, or (29.5)% below last year. This amount
is $(16.2) million below the recently enacted
budget forecast for the month.
April is the third of four large collection months
for corporate income tax, as taxpayers make
their quarterly payments. Through 10 months,
collections are down (24.6)% from last year.
Payments have decreased by (11.4)%, while
refunds have increased by over 140%.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

Recent Economic Indicators
NATIONAL
According to the Bureau of Economic
Analysis’ (BEA) preliminary 2008 1st quarter
estimate of U.S. Real Gross Domestic Product
(GDP), the economy grew by 0.9%, higher
than the BEA advance 2008 1st quarter
estimate of 0.6%. The common definition of a
recession is two consecutive quarters of
negative change in the GDP.
In the 1st quarter, weakness in private
domestic investment, personal expenditures
for durable goods, and net imports were
offset by increased personal expenditures for
services, exports, and state and local
government spending.
In April, the Conference Board’s U.S.
Consumer Confidence Index fell (5.5)% from
March, to 62.3. At its current level, the index
stands (41.4)% below April 2007’s reading of
106.3.
The U.S. Index of Leading Economic Indicators
increased slightly for the second straight
month in April by 0.1% and is down (1.8)%
year-over-year. Six of the 10 components that
make up the composite index increased in
April. Stock prices, the interest rate spread,
and building permits were the largest positive
contributors while the index of consumer
expectations, average weekly manufacturing
orders, and manufacturers’ new orders for
non-defense capital goods were the largest
negative contributors.
U.S. semiconductor billings (3-month moving
average) increased by 3.5% in April and by
2.3% year-over-year. The Semiconductor
Industry Association reports that healthy sales
of electronic products globally have driven
the demand for semiconductors.
Semiconductor sales in the U.S. grew more
slowly than worldwide sales.
The U.S. Consumer Price Index (CPI) (3-month
moving average) increased slightly by 0.2% in
April. The year-over-year increase was 3.9%.
ARIZONA
April total statewide non-farm employment
decreased, year-over-year, by (0.2)%. In
comparison, the average year-over-year
growth rate for April in the past 10 years was
3.1%. Arizona’s unemployment rate remained
virtually flat at 3.9% due in part to a

decreased civilian labor force. Overall, the
private sector lost 5,700 jobs in April,
whereas the government sector gained
1,100 jobs, mostly in federal and local
jurisdictions. A majority of the jobs lost in
April occurred in the construction industry.
Construction employment decreased by
(1.6)% in April and by (11.5)% year-over-year
with the specialty trade sub-sector reporting
the most losses among all sub-sectors. April
was the eighth consecutive month of job
losses. The average year-over-year growth
rate for April in the past 10 years was 5.5%.
Manufacturing employment decreased by
(0.3)% in April and by (1.8)% year-over-year.
Between January and March, the number
of building permits authorized (3-month
moving average) statewide, totaled 2,413,
including 1,714 single-family residential
building permits and 699 multi-family
building permits. The number of permits
authorized in the single family segment
increased 8.8% over the prior period, while
the number of permits in the multi-unit
segment increased 14.8%. Despite this
increase, year-over-year, permitting activity
in the single-family and multi-family
segments are down (56.7)% and (48.2)%,
respectively.
The Real Estate Center at Arizona State
University reported the Greater Phoenix
single-family median resale home price in
April fell (4.5)% from March levels, and
(20.8)% from levels a year ago, to $210,000.
With the decline in sales price, the number
of single-family homes sold increased 28.8%
month-over-month to 5,585 homes. The
Center’s 5,585 reported single-family home
sales, however, includes 2,025 trustee sales.
A trustee sale transfers ownership to a bank
or other person or entity as a result of
foreclosure. Including these trustee sales,
the number of single family homes sold is up
15.0% year-over year. Data from a year
ago, excluding trustee sales, was not
available.
In April, the townhouse-condominium
median price remained unchanged for the
third straight month at $165,000. The number
of units bought and sold however, increased
21.9% above March levels, to 835. Year-overyear, the median resale price and number of
units sold decreased (10. 8)% and (36.0)%,
respectively.

“The number
of permits
authorized in
the single
family
segment
increased
8.8% over the
prior period...”

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

5

Recent Economic Indicators

(Continued)

The Phoenix metropolitan area supply of
housing indicator continued to improve in
April -- indicating it would take 11.4 months to
sell the current inventory of homes. This is 8.1
fewer months than January levels, but 2.4
months longer than a year ago. This indicator
uses the ratio between the number of homes
listed for sale on the Arizona Regional Multiple
Listing Service (ARMLS) and the number of
homes sold in a given month to gauge the
supply and demand of homes.
The Arizona Business Conditions Index (BCI)
increased 5.9% in April to 52.2 and is down
(10.8)% year-over-year. April was the second
consecutive month in which an increase in
the index was reported since November 2007.
The index is now above the critical 50-point
mark. A reading below 50 suggests a
slowdown in the overall level of economic
activity in the near term. Whereas this
indicator suggests improvement in the level of
economic activity in April, other economic
indicators reflect continued weakness. The
new orders sub-index was the largest positive
contributor to the overall index, whereas the
price index indicated further upward pressure
on prices.
An alternative measure of business in the
state is the University of Arizona’s Business
Leaders Confidence Index (BLCI). In the 2nd
quarter of 2008, the BLCI fell to 36.9. Like the
BCI, a reading below 50 indicates a
contracting or slowing economy. At 36.9, the
index is (30.4)% below the index a year ago,
and (8.7)% below the prior quarter. All 6
components, including; the National
Economy, Arizona Economy, Industry Sales,
Industry Profits, Industry Hiring, and Capital
Expenditures, contributed to the lower
reading relative to the prior quarter. Like
recent surveys, the sales expectations
component continued to post the highest
results while the national economy remains
the lowest.
AHCCCS caseload’s in May totaled 1,103,481
members, 2,114 members, above the April
totals. Year-over-year, the AHCCCS caseload
has increased by 5.4%, or 56,901 members.
The number of TANF recipients decreased
(0.9)% in March and (11.1)% year-over-year
to 79,063 recipients. The state budget
projects 84,700 recipients in FY 2008.

Between February and April, the Department of
Corrections’ (ADC) inmate population
increased by an average of 252 inmates per
month to an average population of 38,374
inmates. In the department’s FY 2008 budget,
ADC received funding for an increase of 160
inmates per month. While monthly inmate
growth between February and April exceeds
the budgeted increase, fiscal year-to-date
growth totals 151 inmates per month.

6

Recent Economic Indicators

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

(Continued)

Table 5

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
S&P/Case-Shiller Home Price Index
- Months Supply of Housing (ARMLS)
- 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
- Real 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)
*Includes 2,025 trustee sales

Time Period

Current Value

Change From
Prior Period

Change From
Prior Year

April
April
April
April
Feb-Apr
Feb-Apr

3.9%
2.67 million
178,800
200,200
$65.6 million
$155.0 million

(2.5)%
(0.2)%
(0.3)%
(1.6)%
(3.1)%
(7.0)%

5.4%
(0.2)%
(1.8)%
(11.5)%
(15.4)%
(6.7)%

Jan-Mar
Jan-Mar

1,714
699

8.8%
14.8%

(56.7)%
(48.2)%

April
April

5,585*
835

28.8%
21.9%

15.0%
(36.0)%

April
April
February
April
February
February

$210,000
$165,000
172.72
11.4 months
3.3 million
$8.79

(4.5)%
(0.0)%
(4.1)%
(1.8) months
(0.8)%
NA

(20.8)%
(10.8)%
(20.8)%
2.4 months
0.6%
(2.7)%

December
April

118.5
52.2

(0.5)%
5.9%

(0.4)%
(10.8)%

4th Quarter 2007
2 st Quarter 2008
4th Quarter 2007
July 1, 2007
May
March
Feb-Apr

79.8
36.9
$212.5 billion
6.34 million
1,103,481
79,063
38,374

(21.7)%
(8.7)%
0.8%
173,066
0.2%
(0.9)%
252 inmates

(24.2)%
(30.4)%
5.5%
2.8%
5.4%
(11.1)%
2,096 inmates

1st Quarter 2008

$11.7 trillion

0.9%

2.5%

April
April
Jan-Mar
Feb-Apr

62.3
102.0
$3.42 billion
213.2

(5.5)%
0.1%
3.5%
0.2%

(41.4)%
(1.8)%
2.3%
3.9%

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

7

JCCR Meeting
At its May 13, 2008 meeting, the Joint
Committee on Capital Review considered the
following issues:
Cochise Community College District – Review
of Revenue Bond Projects – The Committee
gave a favorable review to Cochise
Community College District’s $11.1 million
bond projects. The project would finance
new student housing facilities and a science
building on their Douglas campus with a total
revenue bond issuance of $11.0 million and
with $0.1 million in district funds. Also, the
Committee recommended that A.R.S. 15-1446
be clarified regarding the financial cap on
community college lease-purchase issuances
and Committee review for these issuances.
Arizona Department of Transportation –
Review of Grand Canyon Airport Modular
Housing Project – The Committee gave a
favorable review for the Arizona Department
of Transportation (ADOT) to spend $2.5 million
to construct 15 modular homes and related
infrastructure at the Grand Canyon National
Park Airport. The new modular homes would
cost $153,700 each, including the new home,
installation of utilities, basic appliances,
paving, and removal of existing modular
homes.
Arizona Department of Transportation –
Review of Sprinkler and Fire Alarm Systems
Project – The Committee gave a favorable
review of the $1.1 million to install automatic
fire sprinkler and alarm systems at 7 existing
ADOT equipment services buildings with the
requirement that ADOT seek Committee
review prior to expending the $164,500 of
undesignated monies. Currently, 7 of the 21
statewide equipment repair shops operated
by ADOT are out of compliance with life
safety code requirements per the National
Fire Protection Association and the State Fire
Marshal.
Arizona State University – Review of Memorial
Union Fire Renovations Bond Project – The
Committee gave a favorable review of
Arizona State University’s $13 million cost
increase for the Memorial Union Fire
Renovations bond project. The Committee
additionally recommended that ASU submit
for review any change in the current $40.0
million estimated insurance reimbursement
amount in excess of $500,000 and a revised

financing plan. The $13 million increase will
be funded with insurance reimbursements.
The Committee first favorably reviewed the
$40 million bond project in December 2007,
which now has increased to a total cost of
$53 million.
Northern Arizona University – Review of
Infrastructure Upgrades Bond Project – The
Committee gave a favorable review to
Northern Arizona University’s (NAU)
infrastructure upgrade project to be financed
with a $15 million system revenue bond
issuance. NAU will use this bond issuance to
fund utility infrastructure projects, which
include utility extensions, electrical upgrades,
chiller installation, and chiller tie-ins.
Northern Arizona University – Review of New
Residence Life Warehouse Bond Project – The
Committee gave a favorable review of a new
16,800 square foot residence life warehouse
that will be used to store items for residential
life including carpeting, appliances, and
snow removal equipment. The project is to be
financed with a $3.9 million system revenue
bond issuance, which will be funded with
auxiliary funds such as dorm fees.
Northern Arizona University – Review of
Revised Applied Research Facility Bond
Project, Yuma – The Committee gave a
favorable review of NAU’s revised Applied
Research Facility on its Yuma campus to be
financed with a $2.5 million system revenue
bond issuance. The Committee first favorably
reviewed the project in May 2006 for $4 million
in lease-purchase agreements, but NAU now
seeks to add 2,225 sq. ft. to the 10,000 sq. ft.
facility.

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

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. In the third quarter of FY
2008, AZNet has completed work at
the Registrar of Contractors
headquarters and at Department of
Economic Security sites in Flagstaff
and Bisbee. A project to replace
end-of-life routers has been
completed at 138 of 142 ADOT sites
statewide.
Arizona Department of Administration
– Semi-Annual State Employee
Health Insurance Report – Pursuant to
A.R.S. § 38-658, the Arizona
Department of Administration
(ADOA) is submitting their required
semi-annual report of the health
insurance program. The Health
Insurance Trust Fund had receipts of
$685 million for Plan Year (PY) 2007,
with expenses of $654 million,
increasing the balance by $11 million
to $128 million as of September 30,
2007. The program provides health
insurance for 131,496 active state
employees, retirees, and
dependents. Of this amount, 29,561
are active employees and 36,929 are
retirees. Annual cost per member
averaged $4,202 for active
employees and $7,402 for retirees.
Statute requires ADOA to report on
performance standards for the
program, as well as customer
satisfaction. In PY 2007, nearly
$98,000 in penalties was assessed to
vendors, an improvement from the
$500,000 in penalties assessed for PY
2007. Penalties were imposed for
failure to meet goals for
responsiveness to customer service
calls.

AHCCCS – Report on Systematic
Alien Verification for Entitlements
Program – Pursuant to A.R.S. § 362903.03, the Arizona Health Care
Cost Containment System
(AHCCCS) is providing its quarterly
report on the collection and
verification of documentation
associated with the Systematic
Alien Verification for Entitlements
(SAVE) program. A.R.S. § 362903.03 requires all AHCCCS
applicants to provide
documentation verifying their
immigration status to qualify for
AHCCCS services. If AHCCCS
determines this documentation to
be fraudulent, the applicant is
referred for prosecution.
AHCCCS, in conjunction with DES,
verified the immigration status of
18,993 individuals between
October 1, 2007 and December 31,
2007. Table 1 below shows the
number of verifications completed
by agency by month. This is a
decrease of (266) below the 19,259
verifications that were completed
during the previous quarter. During
this period, AHCCCS and DES did
not identify any fraudulent
documents using the SAVE
program. In the previous quarter
which ended September 30, 2007,
AHCCCS and DES also did not
identify any fraudulent residency
documents. In addition, in the
October 1 through December 31
time period, 7 citizens were referred
for prosecution pursuant to State
and Federal law regarding
fraudulent schemes, theft, and
artifices. This is an increase of 5
above the number of citizens that
were referred for prosecution
during the previous quarter.
Table 1

SAVE Immigration Status Verifications
October 1, 2007–December 31, 2007
Month
AHCCCS
DES Total
October
1,361
5,568
6,929
November
1,150
5,240
6,390
December
1,009
4,665
5,674
Total
3,520
15,473 18,993

Arizona Department of Corrections
– Report on Monthly Bed Plan
Update - The Department of
Corrections (ADC) has provided a
report to JLBC Staff with updated
information related to their bed
plan. Some highlights of the report
are as follows:
•

•

•

The department extended the
response deadline from April 14
to May 5 for the Request for
Proposal for additional
provisional beds. The
additional provisional beds are
to replace the cancellation of
ADC contract with the State of
Indiana for 1,260 beds.
The Arizona Department of
Administration has secured
$200 million in lease-purchase
financing for the construction
of 4,000 new state beds,
including: 1,000 female beds in
Perryville, 1,000 male beds in
Tucson, and 2,000 male beds in
Yuma. Construction for the
initial 1,000 beds is estimated to
be completed in July 2009.
Management and Training
Corporation is currently in the
process of securing financing
for 2,000 new private beds
located in Kingman.
Construction for these beds is
anticipated to be completed
16 months from the time
financing is secured.

Arizona Department of Corrections
– Report on FY 2006 Operating Per
Capita Cost Report – The FY 2007
General Appropriation Act required
ADC to provide an operating per
capita cost report for FY 2006. Like
in FY 2005, the department
contracted with a private vendor
to complete the report and an
accompanying technical manual.
The operating cost per inmate
housed in state facilities in FY 2006
totaled $61.74 per day, as
compared to a FY 2005 cost of
$58.21 per day. The daily cost per
inmate was $51.44 in county jails,
$53.36 for in-state private beds, and

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

9

Summary of Recent Agency Reports
$48.31 for out-of-state rented
provisional beds.
Economic Estimates Commission –
Report on the Budget Stabilization
Fund - Pursuant to A.R.S. § 35144(F), the Economic Estimates
Commission (EEC) is annually
required to calculate the amount
of monies that may be deposited
to or withdrawn from the Budget
Stabilization Fund (BSF). The EEC
estimate is calculated based on a
formula that compares the growth
rate of real adjusted Arizona
personal income in the most recent
calendar year to the average in
the last 7 calendar years.
The formula recommends a BSF
withdrawal whenever the annual
adjusted personal income growth
rate is both less than the average
growth rate and 2%. According to
a EEC report issued May 22, 2008,
the calendar year 2007 growth rate
was 2.88% compared to the trend
growth rate of 3.63%. Thus, the BSF
formula does not recommend a
fund withdrawal in FY 2008 since
growth was above 2%. In the
absence of the 2% floor, the
formula would have called for a
BSF payout of $71.7 million as the
growth rate of 2.88% was (0.75)%
below the trend growth of 3.63%.
Compared to the formula
calculation, the Legislature has
instead already approved a BSF
withdrawal of $487 million for FY
2008.
Department of Economic Security –
Quarterly Report on Progress in
Meeting Federal Work Participation
Requirements – A footnote in the FY
2008 General Appropriation Act
requires the Department of
Economic Security (DES) to report
quarterly on progress made in
meeting federal Temporary
Assistance for Needy Families
(TANF) work participation
requirements.
The federal Deficit Reduction Act
(DRA) of 2005 changed the

calculation that determines a
state’s required work participation
rate for clients receiving TANF cash
assistance. Prior to Federal Fiscal
Year (FFY) 2007, the required work
rate was reduced based on
caseload decline since 1995. With
the implementation of the DRA, the
reduction is based on caseload
decline since 2005. For FFY 2007,
DES had a work participation rate
of 26.1% and a minimum required
rate of 25%. For FFY 2008, it is
expected that the minimum
required rate will be 21.2%. DES
currently estimates it has achieved
a year-to-date work participation
rate of 15.2%. Failure to meet the
required rate will result in a federal
corrective action plan and
eventually in fines up to 5% of the
total Federal TANF Block Grant,
about $10 million.
Department of Education – Report
on Federal Monies for English
Learners – Pursuant to A.R.S. § 15756.10, paragraph 3, the Arizona
Department of Education (ADE)
recently submitted a report that
includes an itemized list of all
federal monies received by the
department for English language
learners in FY 2007. As required by
statute, the report includes a list of
how much of these monies were
distributed to school districts on a
district by district basis and the
purposes for which these federal
monies are designated. The report
cites all federal monies received for
FY 2007 that could be used in
whole or in part for language
acquisition programs, which
totaled to $332.2 million. That sum
includes $260.3 million for Title I-A,
$6.4 million for Title 1-C, $48.1 million
for Title II, and $17.4 million for Title
III.
Department of Health Services –
Report on Arnold v. Sarn – Pursuant
to a footnote in the FY 2008
General Appropriation Act, the
Department of Health Services
(DHS) has submitted the 3rd quarter
report (January-March 2008) on

(Continued)

settling the Arnold v. Sarn lawsuit.
DHS reports that several meetings
have been held between the
parties, the Court Monitor, and the
Maricopa County vendor,
Magellan. They have agreed to a
performance improvement plan to
address the results of the 2007
Court Monitor’s audit. The plan will
focus on training staff, improving
treatment plans, improving clinical
supervision, and improving
competency. Additionally, the
court order requires DHS to achieve
the same percentage scores
received on the 2006 audit by
October 2008.
DHS further reports that progress
continues to be made on the cases
identified in November by the
Court Monitor which needed
immediate attention. As of April, 46
cases have been unofficially closed
and the remaining are being
finalized for closure.
Department of Health Services –
Report on Expenditures from the
Health Crisis Fund – Pursuant to
A.R.S. § 36-797, the Department of
Health Services (DHS) is required to
report expenditures from the Health
Crisis Fund. The Health Crisis Fund
receives up to $1,000,000 annually
from the Medically Needy Account
of the Tobacco Tax and Health
Care Fund. The Governor may
declare a health crisis or a
significant potential for a health
crisis and authorize monies from the
Health Crisis Fund for the
emergency.
On April 21, 2008, the Governor
signed Executive Order 2008-20
authorizing the transfer of $50,000
from the Health Crisis Fund to DHS
to provide resources to control a
measles outbreak in Pima County.
This was followed up with Executive
Order 2008-23 on May 20, 2008
which authorized an additional
$350,000 for the same purpose.
According to the more recent
Executive Order, there have been

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

Summary of Recent Agency Reports
21 cases of measles identified in Pima
County and 6,000 potentially
exposed individuals have required
monitoring.
In total, the Governor has authorized
$500,000 from the Health Crisis Fund
in FY 2008. In addition to the
expenditures referenced above, the
Executive previously authorized
$100,000 to control syphilis outbreaks.
Arizona Department of Public Safety –
Quarterly Report on GIITEM –
Pursuant to Laws 2007, Chapter 255
(General Appropriation Act), the
Arizona Department of Public Safety
(DPS) is required to report quarterly
on the Gang and Immigration
Intelligence Team Enforcement
Mission (GIITEM).
DPS Personnel:
In the third quarter of FY 2008, DPS
spent or encumbered $2.1 million of
the $10 million appropriation for the
100 DPS immigration staff. Fiscal
year-to-date, DPS has spent a total
of $5.9 million from this appropriation.
Of the 100 DPS personnel, at least 50
sworn DPS positions are to be used
for immigration and border security
and up to 50 DPS positions are to
expand GIITEM’s public awareness,
investigation and intelligence efforts.
As of March 31, 2008, 65 of the 100
DPS positions were filled, of which 36
were assigned to immigration
enforcement, including 34 sworn
officers and 2 civilians, and 29 work
with gang enforcement, including 27
sworn officers and 2 civilians. During
the third quarter, DPS hired 7 new
DPS sworn officers and 1 civilian for
immigration enforcement.
Local Law Enforcement Efforts (MultiJurisdictional Task Force):
In the first 3 quarters of FY 2008, DPS
spent or encumbered $949,800 of the
$10 million for local law enforcement
grants. As of March 31, 2008, 14
agencies statewide contributed one
detention officer to the Detention
Liaison (DLO) Program that assists
with collection of gang and human
smuggling intelligence information at

various correctional facilities.
Currently, 23 federal, county and
local law enforcement agencies
provide 51 officers to GIITEM efforts.
Another 6 agencies have
agreements but are unable to
provide GIITEM staff. This represents
no change in staffing above the
second quarter.
Arizona Department of Public
Safety – Report on Sworn Personnel
Staffing – Pursuant to Laws 2007,
Chapter 255 (General
Appropriation Act), the Arizona
Department of Public Safety (DPS)
is required to report quarterly on
sworn personnel staffing levels. As
of April 30, 2008, DPS had 1,355
authorized sworn full-time positions,
including 100 authorized
sworn/civilian positions for the
Gang and Immigration Intelligence
Team Enforcement Mission (GIITEM).
Of the 1,355 authorized sworn
positions, 1,207 (or 89%) are
currently filled, representing a net
increase of 12 positions in the 3rd
quarter
Arizona Department of
Transportation – Quarterly Report
on Motor Vehicle Division Wait
Times – A FY 2008 General
Appropriation Act footnote requires
the Arizona Department of
Transportation (ADOT) to report to
the Legislature quarterly on
customer wait times in Motor
Vehicle Division (MVD) field offices
and vehicle registration renewal by
mail turnaround times. Customer
wait time from receiving a ticket
until arriving at the counter
increased from 11.3 minutes in the
2nd quarter of FY 2008 to 13.6
minutes in the 3rd quarter.
Customer wait times in
metropolitan areas ranged from
just under 7 minutes in the Flagstaff
office to 22 minutes in the Central
Phoenix office.
For FY 2008, the footnote also
required ADOT to report the
amount of time it takes to receive a
numbered ticket. ADOT reports

(Continued)

that they have been unable to
reliably document the wait time to
get a numbered ticket from an
MVD employee, despite trying
several different methods.

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2008

11

State of Arizona
General Fund Revenue:

Change from Previous Year and Enacted Forecast
April 2008
Current Month

FY 2008 YTD (Ten Months)

Change From
April 2007

Actual
April 2008

Percent

Amount

Change from
Forecast
Percent

Amount

April 2007

Actual

Forecast
Percent

Percent

April 2008

Amount

Amount

$3,700,796,798

($78,443,657)

(2.1) %

2,959,442,538

(165,940,452)

(5.3)

2,688,317

0.1

(23,589,846)

(3.7)

Taxes
Sales and Use

373,838,251

Income - Individual

605,994,371

2,327,180

0.4

36,804,939

6.5

125,213,564

(52,416,128)

(29.5)

(16,205,036)

(11.5)

607,514,730

(198,076,848)

(24.6)

- Corporate
Property
Luxury
Insurance Premium
Estate
Other Taxes
Sub-Total Taxes

($24,358,122)

(6.1) %

($27,672,438)

(6.9) %

($54,747,171)

711,222

542,265

320.9

202,484

39.8

13,259,619

(1,734,799)

(11.6)

6,163,100

830,161

15.6

910,100

17.3

50,735,872

(4,244,754)

(7.7)

(1,062,138)

57,471,361

15,452,331

2.6

(4,637,258)

(10.2)

297,794,905

7,640,751

51,881

(202,228)

(79.6)

51,881

--

320,003

891,460

815,805

62,736

8.3

765,484

--

1,248,186

10,696

$1,170,259,555

($57,761,805)

36.8

(4.7) %

(6,528,639)

($11,671,225)

(1.0) %

$7,631,112,651

($439,897,603)

-0.9
(5.5) %

366,407

(1.5) %

2.8
(2.1)
(1.5)

51,881

19.3

746,500

148.8

($80,183,308)

(1.0) %

Other Revenue
Lottery

6,301,600

1,228,900

24.2

2,831,600

81.6

31,655,119

(1,398,581)

(4.2)

License, Fees and Permits

4,474,588

823,142

22.5

104,788

2.4

30,927,749

(3,043,382)

(9.0)

1,801,200
(460,397)

6.0
(1.5)

Interest

4,934,542

(3,316,662)

(40.2)

1,031,242

26.4

81,213,678

(163,966)

(0.2)

(1,532,498)

(1.9)

Sales and Services

4,452,922

(2,253,940)

(33.6)

(1,830,020)

(29.1)

41,432,892

(1,963,554)

(4.5)

(5,024,264)

(10.8)

Other Miscellaneous

2,238,129

(2,777,549)

(55.4)

(856,765)

(27.7)

30,019,016

747,993

2.6

4,009,528

15.4

--

0

0

33,670,598

21,812,521

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

0

0

--

0

1,836,689

1,661,836

--

444,689

24,238,470

(4,634,273)

(16.1) %

$1,194,498,025

($62,396,078)

(5.0) %

1,725,534
($9,945,691)

31.9
7.7 %

248,919,052

(0.8) %

$7,880,031,703

15,991,031
($423,906,572)

-183.9

0
609,104

-1.8

6.9 %

(597,327)

(0.2) %

(5.1) %

($80,780,635)

(1.0) %

Other Adjustments
Urban Revenue Sharing
Budget Plan Transfers
Sub-Total Other Adjustments
TOTAL REVENUE

(57,044,911)
0
(57,044,911)
$1,137,453,114

(11,109,023)
0

24.2
--

(11,109,023)

24.2 %

($73,505,101)

(6.1) %

0
0
0
($9,945,691)

0.0
-0.0 %
(0.9) %

(570,449,107)

(111,090,223)

18,876,179

18,876,179

--

(92,214,044)

20.1 %

(1,123,821)

0.2 %

($516,120,616)

(6.6) %

($81,904,456)

(1.1) %

(551,572,928)
$7,328,458,775

24.2

0
(1,123,821)

0.0
(5.6)