JLBC - Monthly Fiscal Highlights

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

Summary
January General Fund revenue collections
were $662.5 million, or (21.9)% below January
2008. This level of collections was $(81.8)
million below the January revised budget
forecast.

represent December sales, reflect the third
month of double digit declines in sales tax
collections compared to the previous year.
• January individual income tax collections
were down (30.8)% compared to January
2008 and were $(57.7) million below the
forecast. January’s withholding tax
collection decrease of (14.7)% was the
largest decline since 1983.

The large January decrease of (21.9)% is
especially significant given the low 2008 base.
January 2008 collections were (14.4)% below
January 2007, giving us a 2-year decline of
(36.6)%.

www.azleg.gov/jlbc.htm

“January…
collections were
$(81.8) million
below the
January revised
budget

The Legislature enacted a revised FY 2009
budget during the 1st Special Session in the last
week of January. These revisions resolved a
projected $1.6 billion budget shortfall primarily
due to lower than expected revenue
collections. This shortfall was based on the
January 4-sector consensus revenue estimate,
including input from the Finance Advisory
Committee (FAC), two University of Arizona
econometric models, and the JLBC Staff
forecast. This January revenue estimate was
$8.49 billion, which would be a (9.7)%
reduction in base revenues compared to
FY 2008.

For the first 7 months of FY 2009, General Fund
collections are down (12.0)% when compared
to last year (excluding Urban Revenue Sharing
and one-time transfers). (See Table 1 and
page 2 for more information). JLBC Staff had
previously reported on these January results at
the Joint Appropriations Committee meeting
earlier this month.
The state’s two largest revenues categories
experienced significant declines:
• January sales tax collections were down
(12.1)% compared to January 2008 and
were $(11.3) million short of the January
forecast. January marked the 13th
consecutive month of year-over-year
reductions. The January results, which

forecast”.

Beginning with this Monthly Fiscal Highlights,
revenue collections are being measured
against the newly enacted revised FY 2009
budget.

Table of Contents
January Revenues.................................................. 3
Economic Indicators.............................................. 4
JCCR Meeting Summary
•
•
•
•
•

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
February 27, 2009.

February 2009

University – Building Renewal............................ 8
UA – Residence Hall ........................................... 8
Maricopa Community College Bond ............. 8
Lottery – Building Renewal Allocation Plan.... 8
ADOA – Partial Rent Exemption for DOR....... 8

Summary of Recent Agency Reports
•
•
•
•

AHCCCS – GME Residency Positions .............. 8
AHCCCS – Immigration Status.......................... 8
DOC – Report on Bed Plan ............................... 9
ACJC – Criminal Justice Enhancement Fund 9

ACJC – County Attorneys/Indigent Defense. 9
Comm for Postsecondary Ed – Grants............ 9
DPS – GIITEM Quarterly Report ......................... 9
Supreme Court – Criminal Case Processing ....
and State Aid to the Courts Fund .................... 9
• Supreme Court – Lengthy Trial.......................... 9
• DWR – Assured & Adequate Water Supply . 10
•
•
•
•

Other Issues
• State Appropriations Limit ............................... 10
• Truth in Taxation K-12 Property Tax Rates ..... 10

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JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

Summary

(continued)

Given the (21)% January revenue decline,
revenues may fall further below the recently
enacted budget forecast. As noted earlier,
year-to-date revenues are (12)% below FY
2008. In comparison, the budget presumes a
(9.7)% revenue decline. As a result, the JLBC
Staff has notified the Appropriations
Committees that they need to begin
contingency planning for an additional
budget shortfall. The potential shortfall could
be as much as $425 million, which would
represent a (14)% decline in revenues.
This estimate does not represent a new
forecast, but a planning figure in light of the
January results. A more formal forecast will be
available with the next meeting of the FAC,
which is scheduled to occur in March.
Economic Indicators – The release of another
month of economic data points to an
economy that is rapidly deteriorating. Revised
employment data reveals that job losses in
Arizona in 2008 were significantly higher than
previously estimated. Instead of shedding
(116,500) jobs in 2008, as previously reported,
the state experienced a loss of (152,300) jobs.
The labor market worsened further in January
and now the job decline is (5.9)% compared to
the same month in the prior year, the largest
contraction since April 1946 (see page 5).
Building permitting activity in 2008 reached its
lowest level since 1975. Air passenger traffic at
Sky Harbor International Airport fell by (5.4)% in
2008, the steepest decline since 1980. The
median price of a single family home in
Greater Phoenix in January was (44.0)% below
the level in the same month last year.
JLBC/JCCR Meetings – The Monthly Fiscal
Highlights includes a summary of the February
JCCR meeting (page 8). There was no JLBC
meeting in February.
February Reports – The JLBC Staff released the
following 2 reports in February:
FY 2009 and FY 2010 Appropriations Limit
The Arizona Constitution limits certain state
spending to no more than 7.41% of
personal income. The JLBC Staff has
calculated that spending would be 6.1%
of personal Arizona income under the
revised FY 2009 budget and 6.6% under
the FY 2010 JLBC Baseline. The Baseline
represents the current spending level plus
funding formula growth for FY 2010. Since
spending is likely to be adjusted

•

downward to resolve the budget shortfall
in FY 2010, the FY 2010 percentage is likely
overstated.
TNT Revisions
• The JLBC Staff released its calculation of
the Truth in Taxation (TNT) adjustments to
property tax rates. Each year the K-12
Qualifying Tax Rate (QTR) is adjusted to
offset increases in the value of existing
property. Based on the most recent
information, assessed values are expected
to increase by 10.8% in FY 2010, of which
4.2% would be due to new construction,
and 6.6% to higher value of existing
properties. Based on forecasted rates, the
FY 2010 JLBC Baseline already included
additional funding to ADE for Basic State
Aid. These latest rates will result in a $17.5
million downward adjustment in the JLBC
Baseline.

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JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

January Revenues
Table 1

General Fund Revenues
Compared to Forecast and FY 2008 Collections
($ in Millions)
FY 2009
Difference From
Difference From
Collections
June ’08 Forecast 1/
Jan ’09 Forecast 2/
$ 662.5
$ (264.6)
$ (81.8)
$ 4,791.2
$ (993.1)
$ (81.8)

January
Year-to-Date
____________
1/ Enacted FY 2009 budget (June 2008).
2/ Revised JLBC Baseline

“Sales Tax
collections
were…down
(12.1)%
compared to last
January, and
were $(11.3)

Sales Tax collections were $357.8 million in
January. These revenues were down (12.1)%
compared to last January, and were $(11.3)
million below the budget forecast. Table 2
displays the January growth rates for the
largest categories.
Table 2

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

Jan
(13.7)%
(18.6)%
1.3%
(3.8)%
1.3%

YTD
(11.0)%
(19.9)%
4.5%
(5.7)%
(4.8)%

million below the
budget forecast”.

As noted in previous months, retail and contracting together account for two-thirds of all
sales tax revenues. The retail sector decreased
by (13.7)% and contracting fell by (18.6)%.
As noted in the table above, through January,
taxable sales in the retail category are down
(11.0)% from the prior fiscal year. The largest
subcategory within retail is the General
Merchandise and Miscellaneous Retail
Table 3

category, which is down (5.9)%. The largest
subcategory decline is in Motor Vehicles,
which represents 21.1% of the total, and is
down (32.3)% compared to the prior year.
Taxable retail sales by category are shown in
Table 3. (Eric Jorgensen)
Individual Income Tax collections were $332.0
million in January, or (30.8)% below last year.
January collections were $(57.7) million less
than the budget forecast. Table 4 displays
January and year-to-date growth rates for
individual categories.
Table 4

Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

January
(14.7)%
(42.6)%

YTD
(3.9)%
(25.8)%

42.6

20.5%

Historically, January represents the second
largest month for individual income tax
collections after April. On average, 13.3% of

YTD (7-Month) Taxable Retail Sales by Subcategory

General/Misc. Merchandise
Motor Vehicles/Misc. Auto.
Bldg Materials and Supplies
Food and Liquor Stores
Furniture, Home Furnishings
Clothing and Accessories
Manufacturing
Other Subcategories
Total

Difference
From FY 2008
$ (185.8)
$ (482.8)

% of
Total Sales
30.4%
21.1%
7.5%
7.4%
6.9%
5.8%
5.6%
15.4%
100.0%

% Change
Over FY 2008
(5.9)%
(32.3)%
(13.6)%
(2.4)%
(14.2)%
(12.0)%
(10.5)%
4.3%
(11.0)%

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JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

January Revenues

(Continued)

net collections accrue in January compared
to 14.4% in April. In light of this, January’s net
revenue decline of (30.8)% is a cause for
concern. In terms of the individual categories
of the tax, January’s withholding decline of
(14.7)% was the steepest since March 1983.

“U.S. Consumer
Confidence
Index for
February
declined from
37.4 to 25.0, the
third straight
month with a
new record-low
number for the
index.”

The (42.6)% decline in estimated and final
payments in January brought the level of
collections for this category to $112.5 million,
the lowest amount for this month in 5 years.
Estimated and final tax payments for the first 7
months of FY 2009 were $400.4 million, which
represent a decline of (25.8) % from last year.
On a cumulative basis, tax payments are
considerably below the levels recorded in any
of the 3 preceding years.

January 2008, but was $(16.9) million below
the revised budget forecast for the month.
(Martin Lorenzo)
The Lottery Commission reports that ticket
sales for the month of January were $47.1
million, which was $8.9 million higher than sales
in January 2008. Year-to-date, ticket sales are
up 1.5% compared to last year. Through
January, a total of $25.2 million in lottery
revenues has been deposited into the General
Fund.

Refunds increased by 42.6% in January. While
this was a large percentage increase, it is
important to note that January refunds
typically comprise less than 3% of total refunds
for the year. Thus, it is too early to draw any
inferences regarding refunds from this month
alone. (Hans Olofsson)
Corporate Income Tax collections were a
negative $(3.5) million, as refunds exceeded
payments. This level is $11.0 million higher than

Economic Indicators
NATIONAL
The Conference Board’s U.S. Consumer
Confidence Index for February declined from
37.4 to 25.0, the third straight month with a
new record-low number for the index.
Consumer confidence is now down by
(67.3)% compared to a year ago. According
to the Conference Board, increasing
concerns about business conditions,
employment and earnings have brought the
index to its lowest level ever.
The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings in the U.S.
fell by (12.4)% between November and
December last year, from $3.1 billion to $2.7
billion. This was the third largest decline in
semiconductor sales in the last 32 years. SIA
attributed the large decline to the “global
economic recession.”

The Conference Board’s U.S. Index of Leading
Economic Indicators increased by 0.4% in
January. Year-over-year, the index is down by
(2.9)%. Five of the 10 components that make
up the index advanced during the month. As
reported previously, the increase in the index is
not the result of improved economic
conditions but rather the outcome of recent
Fed policy, which has produced an increase in
money supply.
The U.S. Consumer Price Index increased by
0.3% in January. January was the first monthover-month increase of the index since
September 2008. The CPI increase in January
was primarily due to a 1.7% increase in energy
prices. Compared to the same month last
year, the CPI is down by (0.2)%.

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JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

Economic Indicators
ARIZONA

“According to
the U.S. Census
Bureau, a total of
17,762 singlefamily residential
building permits
were issued in
Arizona in 2008,
the lowest level
since 1975.”

The most recent release of state economic
data clearly indicates that conditions are
rapidly deteriorating. This is especially evident
from newly revised employment data
released by the Arizona Department of
Commerce. This annual revision (commonly
referred to as “benchmarking”) revealed that
more jobs were lost in 2008 than previously
estimated. Under the old estimate, the State
of Arizona lost (116,500) jobs in 2008, or (4.3)%
of its workforce. The benchmarking of
employment data showed that the actual job
loss in 2008 was 35,800 higher than previously
estimated or (152,300) in total.
The Department’s most recent Workforce
Report indicates that job losses continued to
increase in January. According to this report,
the state shed (155,400) jobs in January
compared to the same month in the prior
year. This equates to a year-over-year job
decline of (5.9)%, the sharpest contraction
since April 1946 when job losses were reported
to be (7.1)%.
The data revision also revealed that the
construction sector fared more poorly in 2008
than previously assumed. The benchmarked
data showed that the state lost on average
(4,000) more construction jobs per month last
year than previously reported. The trend of
job losses carried over into the new calendar
year as the construction sector shed another
(9,800) employees in January. The
construction sector now employs (47,600)
fewer workers than a year ago. To provide
some perspective, the current number of
construction employees (153,100) in the state
is roughly the same as in January of 1999.
The benchmarking process showed that the
manufacturing sector lost on average (3,600)
more jobs per month in 2008 than previously
estimated. This means that instead of a 2008
job loss of (2.4)%, as previously reported,
manufacturing employment decreased by
(4.0)% last year. With the industry paring
another (2,300) jobs in January, the state’s
total manufacturing employment of 168,500 is
now comparable to the level in June of 1993.
The employment services sector is a segment
of the labor market that has been
disproportionately affected by the state’s

(Continued)

deteriorating economy. This sector lost
(42.000) jobs, or a third of its workforce, from
the peak in September 2006 to January 2009.
Year-over-year, the industry declined by
(24.1)% in January.
January marked the 10th consecutive month
with rising unemployment. Revised data
shows that the state’s unemployment rate
increased to 7.0% in January, a 0.4% increase
from the prior month. This is the highest
unemployment rate in the state since January
1993.
The Department of Commerce reported that
39,076 initial claims for unemployment
insurance were filed in January, an increase
of 100.2% over last year. The total number of
initial jobless claims in January was the highest
on record.
According to the U.S. Census Bureau, a total
of 17,762 single-family residential building
permits were issued in Arizona in 2008, the
lowest level since 1975. In percentage terms,
single-family permitting activity fell by (52.8)%
between 2007 and 2008. During the height of
the housing construction boom in 2004 and
2005 more than 80,000 permits were issued
annually. The multi-family sector also
performed poorly in 2008. Census data shows
that 7,470 multi-family permits were issued in
the state last year, a (37.6)% decline from the
level in 2007. The last time fewer than 7,000
multi-family permits were issued in the state
was in 1993.
According to ASU’s January report,
foreclosures continue to have a negative
impact on the Greater Phoenix housing
market. In terms of existing single-family
homes, ASU reported that a total of 6,960
homes were sold in Greater Phoenix in
January. Nearly half of these resales (48.4%)
were for previously foreclosed properties.
Compared to the same month last year,
traditional resales are up by 49.3% and
foreclosed sales by 87.2%.
The large volume of foreclosed homes on the
market is taking its toll on home prices.
According to the January report, the Greater
Phoenix single-family median resale home
price was $136,000 for traditional homes and
$135,055 for foreclosed properties. These
figures represent a year-over-year price

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

Economic Indicators
decline of (44.0)% and (35.2)%, respectively.
At the height of the housing boom in June
2006, the median resale price was $267,000.
The S&P/Case-Shiller Home Price Index is a
measure of the change in housing prices
based on repeat sales. According to the
most recent release of this measure, home
prices in Phoenix fell month-over-month by
(5.1)% in December. Compared to last year,
housing prices are down by (34.0)%. Phoenix
home prices have fallen by (45.5)% since the
peak in June of 2006.
Based on MLS data, January had an 8.8
months supply of housing, the same as in the
prior month. The comparable figure last year
was 14.7 months. As reported previously, this
housing inventory measure may be currently
understated due to the large number of
foreclosed homes not included in the MLS
database.
A total of 39.9 million passengers entered and
exited aircraft at the Phoenix Sky Harbor
International Airport in 2008. This was a
decrease of (5.4)% from the prior year and
the sharpest decline in passenger traffic since
1980. The total number of individuals that
either enplaned or deplaned at Sky Harbor
last year was roughly comparable to the level
in 2004.
AHCCCS caseloads in February increased to a
total of 1,165,019 members, a 4.4% increase
over the prior month. At current levels, the
AHCCCS caseloads are 7.5% above January
2008 levels. The revised FY 2009 budget
funded a projected caseload growth of 7.8%,
or a total of 1,234,901 members.
There were a reported 86,965 TANF recipients
in the state in December, an increase of
3.1% from the prior month. Year-over-year,
caseload is up by 6.4%. The FY 2009 budget
assumes the TANF caseload will grow by
2.5%.
The Supplemental Nutrition Assistance
Program (SNAP), formerly known as Food
Stamps, provides assistance to low-income
households to purchase food. In December,
there were a total 773,083 food stamp
recipients in the state, an increase of 3.2%
over the prior month. Compared to the
same month last year, food stamp

(Continued)

participation was up 24.5%.
The Department of Corrections’ (ADC) inmate
population increased by an average of 77
inmates per month between November and
January. ADC now has an average
population of 39,572 inmates, or 1,838 more
inmates than in the same period last year.
(Hans Olofsson, Martin Lorenzo)

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JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

Economic Indicators

(Continued)

Table 5

ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate
- Initial Unemployment Insurance Claims
- 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, Traditional Sales
Single-Family, Foreclosed Sales
Townhouse/Condominium, Traditional Sales
Townhouse/Condominium, Foreclosed Sales
- Greater Phoenix Median Home Sales Price
Single-Family, Traditional Sales
Single-Family, Foreclosed Sales
Townhouse/Condominium, Traditional Sales
Townhouse/Condominium, Foreclosed Sales
S&P/Case-Shiller Home Price Index (Jan. 2000 = 100)
- Months Supply of Housing, (ARMLS)
- Phoenix Sky Harbor Air Passengers
- Arizona Average Natural Gas Price
($ per thousand cubic feet)
- Consumer Confidence Index (1985 = 100)
- Business Leaders Confidence Index
- Arizona Personal Income
- Arizona Population
- AHCCCS Recipients
- TANF Recipients
- SNAP (Food Stamps) Recipients
- DOC Inmate Growth (3-month average)
United States
- Real Gross Domestic Product
(seasonally adjusted annual growth rate)
- Consumer Confidence Index (1985 = 100)
- Leading Indicators Index (2004 = 100)
- U.S. Semiconductor Billings (3-month moving average)
- Consumer Price Index, SA (1982-84 = 100)

Time Period

Current Value

Change From
Prior Period

Change From
Prior Year

January
January
January
January
January
Nov-Jan
Nov-Jan

7.0%
39,076
2.49 million
168,500
153,100
$58.2 million
$149.9 million

0.4%
13.6%
(2.9)%
(1.3)%
(6.0)%
(2.5)%
8.7%

2.6%
100.2%
(5.9)%
(4.3)%
(17.5)%
(22.7)%
(14.2)%

Oct-Dec
Oct-Dec

722
294

(15.6)%
(40.8)%

(54.5)%
(64.6)%

January
January
January
January

3,590
3,370
335
280

(16.8)%
8.4%
(23.9)%
(1.8)%

49.3%
87.2%
(40.2)%
100.0%

January
January
January
January
December
January
December
November

$136,000
$135,005
$125,000
$104,745
123.93
8.8 months
3.2 million
$7.95

(6.8)%
(9.0)%
(8.9)%
(12.4)%
(5.1)%
(0.0) months
7.1%
40.2%

(44.0)%
(35.2)%
(29.0)%
(32.9)%
(34.0)%
(5.9) months
(2.3)%
(21.5)%

1st Quarter 2009
1st Quarter 2009
3rd Quarter 2008
July 1, 2008
February
December
December
Nov-Jan

44.2
32.1
$214.8 billion
6.50 million
1,165,019
86,965
773,083
39,572

N/A
(24.3)%
(0.3)%
146,759
4.4%
3.1%
3.2%
77 inmates

(58.4)%
(20.5)%
2.2%
2.3%
7.5%
6.4%
24.5%
1,838 inmates

4th Quarter 2008

$11.5 trillion

(6.2)%

(0.8)%

February
January
Oct-Dec
January

25.0
99.5
$2.70 billion
212.174

(33.2)%
0.4%
(12.4)%
0.3%

(67.3)%
(2.9)%
(26.2)%
(0.2)%

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

JCCR Meeting
At its February 24, 2009 meeting, the Joint
Committee on Capital Review considered the
following issues:
Universities – Review of University Lottery Bond
Projects – Building Renewal – The Committee
gave a favorable review of $103.1 million
(Arizona State University $13.2 million;
University of Arizona $51.4 million; and
Northern Arizona University $38.5 million) for
the Universities’ remaining Building Renewal
projects. These issuances represent a portion
of the $800 million University Lottery Bonding
package as authorized by the FY 2009
Education Budget Reconciliation Bill. The
proposed debt service is designed to be
funded with 2 separate revenue streams.
Approximately $11.2 million, or 80%, will come
from state Lottery proceeds, while $2.8 million
will come from local university funds.
University of Arizona – Review of Residence
Halls and Residence Life Building Renewal –
The Committee gave a favorable review to
the University of Arizona for its proposal to
spend $159.3 million in system revenue bonds
to construct two new residence halls and
$37.3 million in system revenue bonds for
residence life building renewal projects. For
both issuances, the proposed debt service will
be paid from dorm rental revenues, for a cost
of $11 million from FY 2010 to FY 2011 and a
cost of $14.7 million starting in FY 2012.

Maricopa County Community College District
– Review of General Obligation Bond
Issuance – The Committee gave a favorable
review to the issuance of $220 million in
general obligation bonds. At the June 22,
2004 meeting the Committee gave a
favorable review to the entire $951.4 million
bond proposal, with the provision that the
Maricopa County Community College District
(MCCCD) return for Committee review prior
to each issuance. The voters of Maricopa
County subsequently approved the district’s
bond program in November 2004. The district
has already issued $430.3 million in bonds.
Arizona State Lottery Commission – Review of
FY 2009 Building Renewal Allocation Plan –
The Committee gave a favorable review to
the Lottery Commission’s FY 2009 Building
Renewal Allocation Plan totaling $68,000 from
the State Lottery Fund. The commission plans
to use the funds to install a new fire
suppression system.
Arizona Department of Administration –
Consider Recommending Partial Rent
Exemption for the Department of Revenue –
The Committee recommended the $7,900
partial rent exemption for the second half of
FY 2009 requested for the Department of
Revenue (DOR).

Summary of Recent Agency Reports
AHCCCS – Report on Graduate Medical
Education Residency Positions – The Arizona
Health Care Cost Containment System
(AHCCCS) has submitted its annual report on
the number of new residency positions. The
report discusses the positions created by the
additional $4,000,000 GF ($12,000,000 Total
Funds) in the FY 2007 budget. The agency
indicates that the increased appropriation
provided partial funding for an additional 422
residency positions in FY 2008, an increase of
78 positions over FY 2007. AHCCCS provided
a portion of the funding for these positions,
with the remaining funding coming from other
sources such as Medicare and the hospital’s
own funds. Of the 422 newly-funded
positions, 31 are located in rural areas. The FY
2009 budget revisions reduced funding for
Graduate Medical Education by $7,000,000

GF ($20,517,000 Total Funds). (Amy Upston)
AHCCCS – Report on Systematic Alien
Verification for Entitlements Program –
Pursuant to A.R.S. § 36-2903.03, the Arizona
Health Care Cost Containment System
(AHCCCS) provided its quarterly report on the
collection and verification of documentation
associated with the Systematic Alien
Verification for Entitlements (SAVE) program.
AHCCCS, in conjunction with the Department
of Economic Security (DES), verified the
immigration status of 18,543 individuals
between July 1, 2008 and September 30,
2008. During this period, AHCCCS and DES
did not identify any fraudulent documents
using the SAVE program. (Amy Upston)

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

Summary of Recent Agency Reports
State Department of Corrections –
Report on Bed Plan – The State
Department of Corrections (ADC)
has provided a report to JLBC Staff
with updated information related to
their bed plan. Highlights of the
report are as follows:
•

•

ADC anticipates awarding a
new contract for up to 1,200
out-of-state provisional beds by
the end of February 2009.
ADC is not going to renew the
Community Accountability
Program contract, which
expires July 17, 2009, due to the
cost, performance and success
rate of the current vendor.
According to ADC, between
April 1, 2006 and January 31,
2009, 468 violators were referred
to the program. Of this amount,
145 offenders satisfactorily
completed the program, 18
offenders are currently
participating in the program,
and 305 offenders failed to
complete the program. ADC
anticipates releasing an RFP for
a new contract in February
2009. (Martin Lorenzo)

Arizona Criminal Justice
Commission – Report on Criminal
Justice Enhancement Fund –
Pursuant to A.R.S. § 41-2401C, the
Arizona Criminal Justice Commission
(ACJC) is required to provide an
annual report by December 1 on
Criminal Justice Enhancement Fund
(CJEF) monies distributed to law
enforcement agencies. CJEF
consists of a 47% assessment on
certain fines, penalties, and
forfeitures imposed and collected
by the courts. In FY 2008, CJEF
revenues totaled $48.0 million and
the total funds available (including
the beginning balance and
adjustments) for the fiscal year was
$66.5 million. In FY 2008, CJEF
revenues grew by 4.1%. (Jon
McAvoy)

Arizona Criminal Justice
Commission – Report on State Aid
to County Attorneys Fund and
Indigent Defense – Pursuant to
A.R.S. § 41-2409E, the Arizona
Criminal Justice Commission (ACJC)
is required to report on the
expenditures of monies for the prior
fiscal year in the State Aid to
County Attorneys Fund and State
Aid to Indigent Defense Fund by
January 8 each year.
In FY 2008, the State Aid to County
Attorneys Fund was allocated $1.2
million. The State Aid for Indigent
Defense Fund was allocated $1.1
million.
ACJC reports that counties used the
monies in 3 main areas: additional
staffing to process more cases,
technological purchases to improve
case management, and
specialized courts such as DUI/drug
courts and early disposition courts.
The ACJC report states that
although Fill the Gap funding
increased, case processing times
have not met the Supreme Court
guidelines. (Jon McAvoy)
Commission for Postsecondary
Education – Report on
Postsecondary Education Grant
Program – A.R.S. § 15-1855 requires
the Commission for Postsecondary
Education to report annually on its
Postsecondary Education Grant
(PEG) program.
The PEG program provides grants to
students attending private
postsecondary institutions. The
program was launched in March
2007. In FY 2008, a total of $3.9
million was disbursed to 2,442
grantees representing 23 private
postsecondary schools. According
to the commission, there was a
waiting list of unfunded PEG
students at the end of FY 2008 due
to budget reductions. (Marge Zylla)

(continued)

Arizona Department of Public Safety
– Quarterly Report on GIITEM –
Pursuant to Laws 2008, Chapter 285
(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). In the second
quarter of FY 2009, DPS spent or
encumbered $4.0 million of the
monies appropriation for the DPS
immigration staff. During the
second quarter, DPS did not spend
any of the $10 million for FY 2009
local law enforcement grants.
Currently, the agency is spending
the remaining portion of the nonlapsing FY 2008 appropriation.
(Martin Lorenzo
Supreme Court – Report on Criminal
Case Processing and State Aid to
the Courts Fund – The Supreme Court
is required to report on the Criminal
Case Processing and Enforcement
Improvement Fund and the State
Aid to the Courts Fund annually by
January 8.
In FY 2008, statewide court revenue
collections increased by $23.5
million, or 6.6%, to $382.0 million.
Total case filings increased by 5.4%.
In FY 2008, a total of 63,443 criminal
cases were filed in Superior Courts
throughout the state, which
represents an increase of 2.8% over
FY 2007. (Jon McAvoy)
Supreme Court - Report on Arizona
Lengthy Trial Fund -The Supreme
Court is required to report annually
on the Lengthy Trial Fund (LTF). The
fund is intended to reimburse jurors
who lose their regular employment
income while serving as jurors.
In FY 2008, LTF revenues totaled
$835,800 and the total reimbursement for trials was $518,300. In
FY 2008, 760 jurors serving on 211 trials
were paid from the LTF. (Jon
McAvoy)

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

Summary of Recent Agency Reports
Department of Water Resources –
Assured and Adequate Water
Supply Fund – Pursuant to a FY 2008
General Appropriation Act footnote,
the Department of Water Resources
(DWR) has submitted the amount of
fees collected by the Assured and
Adequate Water Supply (AAWS)

program. The AAWS Administration
Fund consists of monies that are paid
to the DWR for applications related
to assured and adequate water
supplies. DWR reports that for the
quarter ending December 31, 2008,
the department collected $141,800.
This amount is $(10,400), or (6.8)%,

Other Issues
State Appropriations Limit – A.R.S. §
41-1273 requires JLBC Staff to
annually report on how state
spending compares to the
constitutional appropriations limit.
The Arizona Constitution limits the
appropriation of certain state
revenues to no more than 7.41% of
Arizona personal income. Including
1st special session adjustments, total
FY 2009 state appropriations (both
General and Other Funds) would be
$13.65 billion, or 6.10% of personal
income. The FY 2010 JLBC Baseline
includes spending of $14.65 billion,
which is 6.57% of personal income.
Revenues subject to the limit
include: 1) taxes, 2) university
collections, and 3) licenses, fees,
and permits. These revenues may
either be deposited in the General
Fund or used for a dedicated
purpose. The following appropriated
revenues are not subject to the limit:
1) interest and dividends earnings,
2) sales, rentals, and service receipts,
3) federal grants, 4) gifts and
donations, and 5) monies received
by the state as a trustee, custodian,
or agent.
Truth in Taxation K-12 Property Tax
Rates – A.R.S. § 41-1276 requires the
JLBC Staff to annually calculate and
report the Truth in Taxation (TNT)
adjustments to the K-12 property tax
rates. The K-12 property tax rates
consist of the Qualifying Tax Rate
(QTR) and the State Equalization Tax
Rate (SETR). Pursuant to Laws 2006,
Chapter 354, the SETR was
suspended from FY 2007 through FY
2009. The JLBC Baseline assumes the

repeal of the SETR in FY 2010.
Each year these rates are adjusted
to offset increases in the valuation of
existing property, with the intended
result of producing no change in
statewide property tax liability.
Based on the most recent
information submitted by county
assessors, statewide primary
assessed values are expected to
increase by 10.8% in FY 2010, of
which 4.2% would be due to new
construction, and 6.6% would be
due to the higher value of existing
properties. The TNT adjustment is
made to only offset growth in the
assessed valuation of existing
property.
Since the state share of K-12
education costs depends on the
amount of revenues generated from
the QTR, any reduction in this rate
requires the state to provide the
Arizona Department of Education
(ADE) with additional funding for
Basic State Aid. Based on the
forecasted rates, the FY 2010 JLBC
Baseline already included additional
funding to ADE for Basic State Aid.
Due to the difference between the
forecasted and actual rates, the
JLBC Baseline would need to be
adjusted downward by $17.5 million
to reflect the revised rates.

(Continued)

below collections for the same
period in FY 2008. (Leah Kritzer)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – FEBRUARY 2009

State of Arizona
General Fund Revenue:

Change from Previous Year and January Baseline Forecast
January 2009
Current Month

FY 2009 YTD (Seven Months)

Change From
January 2008

Actual
January 2009

Percent

Amount

Change from
Forecast
Percent

Amount

January 2008

Actual
January 2009

Forecast

Percent

Amount

Percent

Amount

Taxes
Sales and Use

357,760,734

($49,121,006)

(12.1) %

$2,359,077,154

($276,185,526)

Income - Individual

331,952,295

(147,664,454)

(30.8)

(57,681,469)

(14.8)

1,986,643,751

(263,741,229)

(11.7)

(57,681,469)

(2.8)

--

(16,897,815)

--

301,198,910

(98,369,166)

(24.6)

(16,897,815)

(5.3)

--

10,689,137

(495,337)

(4.4)

668,751

35,812,524

(226,486)

(0.6)

533,292

1.5

7.4

309,663

0.2

(53.3)

21,020

20.2

1.5

41,866

13.3

- Corporate
Property

(3,464,715)

11,038,587

($11,297,566)

668,751

77,489

13.1

668,751

6,210,585

501,385

8.8

533,292

309,663

122,370

65.3

309,663

Estate

21,020

13,676

186.2

21,020

Other Taxes

88,866

25,334

39.9

41,866

Luxury
Insurance Premium

Sub-Total Taxes

$693,547,199

($185,006,619)

(21.1) %

Lottery

1,483,600

(845,300)

(36.3)

License, Fees and Permits

2,739,945

414,160

17.8

($84,302,258)

(3.1) %

9.4
--

163,725,328

--

125,333

89.1
(10.8) %

355,975
$4,857,628,112

11,293,165
(142,789)
5,252
($627,862,116)

(10.5) %

(11.4) %

($11,297,566)

($84,302,258)

(0.5) %

6.7

(1.7) %

Other Revenue

Interest

457,034

Sales and Services

8,383,183

Other Miscellaneous

2,817,174

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

(6,974,461)
523,725
(1,686,032)

0

0

3,304,476

972,248

(93.9)

0.0

25,210,000

5,866,381

30.3

(231,855)

0

(7.8)

19,666,446

(1,143,100)

(5.5)

(231,855)

(1.2)

(1,594,066)

(1,594,066)

(14.3)

(77.7)

9,545,719

(54,763,057)

(85.2)

857,483

11.4

27,384,658

(3,094,756)

(10.2)

(37.4)

1,175,374

71.6

24,966,035

7,392,341

42.1

--

0

0

0

6.7

41.7

19,185,412

(7,595,660)

(28.4) %

$712,732,611

($192,602,279)

(21.3) %

2,304,476
2,511,412
($81,790,846)

-230.4

0

857,484

3.2

1,175,373

4.9

--

0

(19.5)

2,304,476
2,511,412

25,346,941

(6,122,553)

15.1 %

132,119,799

(51,864,744)

(28.2) %

(10.3) %

$4,989,747,911

($679,726,860)

(12.0) %

0.0

($81,790,846)

-10.0
1.9 %
(1.6) %

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

(60,639,783)

(3,594,872)

10,375,000

10,375,000

(50,264,783)

6,780,128

$662,467,828

($185,822,151)

6.3

0

0.0

(424,478,483)

(25,164,109)

--

0

0.0

225,921,792

222,045,613

--

-- %

0

0.0 %

(198,556,691)

196,881,504

-- %

(2)

0.0 %

(9.2) %

($81,790,848)

(1.7) %

(21.9) %

($81,790,846)

(11.0) %

$4,791,191,220

($482,845,356)

6.3

(2)

0.0

0

0.0