JLBC - Monthly Fiscal Highlights

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

www.azleg.gov/jlbc.htm

Summary
March General Fund revenue collections were
$403.0 million. This amount was (16)% below
March of last year. January and February had
broken a string of 15 consecutive months of
double digit percent declines in revenues
compared to the prior year.
The return to a double digit decline, however,
is more a function of income tax refund
processing than a new slump in economic
activity. Compared to 2009, more refunds
were processed in March than February,
which caused a significant decline in
individual income tax revenues last month.
Since this shift in refund activity had already
been factored into the forecast, March
collections were actually $3.3 million over the
budget for the month. Year-to-date, revenues
are (14.1)% below the prior year, and $(30.4)
million below the enacted budget forecast.

“Year-to-date,
revenues are
(14.1)% below
the prior year,
and $(30.4)
million below the

Preliminary April results suggest that the yearto-date revenue loss may grow from $(30)
million in March to $(50) million in April. Given
that the state remains in the midst of
processing income tax returns, it is difficult to
gauge the impact of the April results on the
accuracy of the year-end revenue forecast.
March 2010 General Fund spending was
$361.8 million. March expenditures were

enacted budget

lower than the prior year due to an Arizona
Department of Education (ADE) payment to
school districts being deferred. Year-to-date
spending is ($668.1) million less than the prior
year.
Fiscal year to date, General Fund revenues
are $5.44 billion compared to spending of
$7.11 billion for a shortfall of $(1.67) billion. This
shortfall is slightly less than February’s $(1.71)
billion.
The Treasurer’s daily borrowing averaged
$647 million. This level continues to be near
the borrowing cap of $700 million with the
servicing bank.
Budget News
Revised Revenue Forecast - The JLBC Staff
updated its 4-sector consensus forecast as
part of the April 13th Finance Advisory
Committee meeting (see p. 8). In general,
the Committee anticipated better economic
conditions over the next several years, but
warned that the return to 2007’s pre-recession
conditions will take 3 to 5 years.
While the enacted March budget presumes a
(9.4)% revenue decline in FY 2010, the April
FAC consensus forecasts a (10.7)% reduction.
Given the year-to-date drop of (14.1)%, both
forecasts seem too optimistic. As a result, the

Table of Contents

forecast.”
Summary

• Budget News ....................................................... 1

March Revenues..................................................... 3
Economic Indicators .............................................. 5
FAC Meeting Summary.......................................... 8
JLBC Meeting Summary
This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on April 30,
2010

April 2010

• SPB, ACJC, and DOH – Fund Transfers ............ 8
• DHS – Capitation Rates...................................... 8
• GITA – Public Safety Communication ............ 8

JCCR Meeting Summary
• ADOA – Emergency Building Renewal ........... 9

• ADOA – Rent Exemptions .................................. 9
• SFB – Lease-Purchase Issuance ........................ 9
• SFB – Lease-Purchase Refinancing .................. 9

March Spending ..................................................... 9
Summary of Recent Agency Reports
•
•
•
•
•
•
•

AHCCCS – Capitation Rate Increases .......... 10
Agriculture – Fee Authority Plan..................... 10
Comm Colleges – Workforce Development10
ADE – Budget Status Report............................ 10
DEQ – Fee Authority Plan................................. 10
SFB – Building Renewal Spending .................. 10
Water Resources – Fee Authority Plan .......... 10

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Summary

(continued)

Table 1

March
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2010
Difference From
Difference
Collections
Budget Forecast
From FY 2009
$ 403.0
$ 3.3
$ (160.6)
$ 5,438.5
$ (30.4)
$ (320.9)

JLBC Staff has projected that revenues will fall
(12.0)% this fiscal year.

“…the projected
FY 2014 ending
balance ranges
from a $700
million surplus to
a $(1) billion
shortfall.”

The 4-sector consensus envisions a return to
baseline revenue growth starting in FY 2011,
but at a slightly lower level than the enacted
budget. The consensus anticipates a 3.4%
increase in FY 2011 revenues, compared to
the budgeted growth of 4.2%. The 4-sector
consensus projects even higher growth in the
out years, ranging from 7.2% to 9.6% through
FY 2015.
For more information, see FAC Meeting.
Long-Term Budget Projections - Based on the
updated revenue estimates, the JLBC Staff
revised its long term budget projections
through FY 2014 on April 23rd. Based on the
JLBC revenue estimate, the FY 2010 budget is
now projected to end FY 2010 with a $(150)
million shortfall. This shortfall is presumed to be
carried over into FY 2011 and eventually
resolved as part of that year’s budget.
The carry-forward shortfall and the lower 4sector revenue estimate results in a projected
FY 2011 shortfall of $(368) million. This estimate
is based on the passage of the budgetrelated ballot propositions in May and
November.
If these ballot propositions fail, the FY 2011
shortfall would rise to $(892) million. This $524
million increase is due to 2 factors. First,
rejection of the 1 cent sales tax would trigger
conditional spending reductions that would
offset $862 million of the $918 million from the
tax increase for a net loss of $(56) million.
Second, failure of the “First Things First” and
“Growing Smarter” ballot propositions in
November would result in the loss of $(469)
million in anticipated General Fund revenue.
The FY 2011 shortfall could grow by another
$(400) million to $(1.3) billion depending on
the outcome of Congressional efforts to
extend the enhanced federal match rate for
Medicaid programs. While the enacted
March budget eliminated $385 million in
General Fund support for Proposition 204
programs starting in January 2011, the new

federal health care law requires states to
retain their current Medicaid eligibility levels.
If states reduce their coverage, they risk losing
all federal Medicaid funding.
In response, the Legislature has transmitted SB
1043 to the Governor. The bill restores
Proposition 204 funding if the Congress
extends the enhanced federal match rate
under the federal stimulus program to June
2011. The current enhanced match rate is
scheduled to end in December 2010. If
extended, the enhanced match rate would
generate sufficient savings to offset the cost
of restoring Proposition 204. In that
circumstance, the FY 2011 shortfall would not
increase.
The U.S. House has passed the enhanced
match extension, but the U.S. Senate has not
yet acted. While 30 states have assumed the
extension in their budgets, that outcome is not
guaranteed. If Congress did not approve the
extension, the state would have to decide
whether to incur the $385 million cost of
Proposition 204 without the offsetting savings.
Doing so would increase the overall FY 2011
shortfall to $(1.3) billion.
Beyond FY 2011, numerous factors affect the
FY 2014 estimates. Depending on the
particular assumptions, the projected FY 2014
ending balance ranges from a $700 million
surplus to a $(1) billion shortfall.
For more information, see Long Term Budget
Projections.
Potential ADE Shortfall - The Department of
Education is reporting that they may have an
$80 million shortfall in FY 2010 due to higher
than expected student growth and a
reduction in land endowment earnings. This
estimate is still subject to change and could
be revised considerably over the next 2
months. Any ADE shortfall would be over and
above the $150 million revenue shortfall
forecasted by JLBC Staff. One potential
solution being discussed is to shift the use of
federal stimulus funds from FY 2011 to FY 2010
to pay a portion of this amount in the current
fiscal year.

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JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

March Revenues

“The retail sector
increased by
0.8% compared
to March 2009…
the first positive

Sales Tax collections were $269.3 million in
March. These revenues were down (4.6)%
compared to last March, and were $(9.4)
million below the forecast. The March decline
marked the 26th consecutive month of yearover-year reductions. March collections
continue the single digit percentage decline
which began in February, after a string of 15
consecutive months of double digit declines
compared to the previous year.
Table 2 displays the March growth rates for the
largest categories.
Table 2

Sales Tax Growth Rates
Compared to Prior Year

month in retail
collections
compared to the
same month in
the prior year
since November
2007.”

Retail
Contracting
Utilities
Use
Restaurant & Bar

March
0.8%
(33.6)%
(1.3)%
(1.9)%
3.9%

YTD
(7.1)%
(40.1)%
0.4%
(20.6)%
(2.7)%

As noted in previous months, retail and contracting together account for about 30% of all
sales tax revenues. The retail sector increased
by 0.8% compared to March 2009. This is the
first positive month in retail collections
compared to the same month in the prior year
since November 2007. However, contracting
continued its poor performance, with a (33.6)%
decrease compared to March of last year.
Individual Income Tax net revenues were
$(18.8) million in March as refunds exceeded
withholding and payments. Collections were
$(26.4) million below the forecast. Year-todate collections are down by (12.0)%.
As indicated in Table 3 below, withholding tax
payments increased by 0.9% in March, the
second consecutive month of increase after
16 months of declines.
Table 3

Individual Income Tax Growth Rates
Compared to Prior Year
Withholding
Estimated +
Final Payments
Refunds

March
0.9%
(1.4)%

YTD
(3.8)%
(24.4)%

37.1%

4.7%

March refunds totaled $(342.2) million, which
was 37.1% above the prior year, and a $(25.3)

million loss relative to the forecast. In part, this
increase is due to a shift in refunds from
February to March.
Corporate Income Tax net collections were
$66.5 million in March. This amount was $26.0
million above the forecast for the month.
March is not one of the 4 traditionally large
collection months for corporate income tax.
April collections are currently running below
forecast, so it is possible that some of the
increase in March represents payments which
would have normally been received in April.
Year-to-date, corporate collections are (44.9)%
below last year.
The Lottery Commission reports that March
ticket sales were $55.5 million, which is 21.8%
above sales last year. Year-to-date, ticket
sales are $50.9 million or 14.3% above last
year. While ticket sales have increased,
distributions to state beneficiaries are down
$(8.5) million. As we have noted in previous
months, it appears that sales have increased
as prize payouts have increased (which
reduces payments to state beneficiaries).
Non-General Funds
Tobacco Tax revenues were $26.6 million in
March. Collections were down (20.4)%
compared to the prior year, and were $(2.5)
million below the estimate for the month. Yearto-date collections are down by (14.4)%.
Less than 10% of tobacco taxes are deposited
directly into the General Fund. The remainder
primarily goes to AHCCCS and the
Department of Health Services to defray the
General Fund cost of operating those
programs.
Highway User Revenue Fund (HURF) revenues
consist of gasoline and use fuel (diesel) tax,
motor carrier fees (commercial carriers),
vehicle license tax and registration fees, and
various other fees.
HURF collections of $98.2 million in March were
down $(12.3) million or (11.1)% compared to
March of last year. Year-to-date, total HURF
collections of $882.9 million are down $(56.7)
million or (6.0)% compared to the prior year.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Table 4

State of Arizona
General Fund Revenue:

Change from Previous Year and Enacted Budget Forecast
March 2010
Current Month

FY 2010 YTD (Nine Months)

Change From
Actual

March 2009

March 2010

Amount

Change from
Actual

Forecast

Percent

Amount

Percent

March 2009

March 2010

Amount

Forecast
Percent

Amount

Percent

Taxes
Sales and Use
Income - Individual
- Corporate
Property
Luxury - Tobacco
- Liquor
Insurance Premium
Estate
Other Taxes
Sub-Total Taxes

$269,271,852

($12,897,781)

(4.6) %

($9,356,743)

(3.4) %

$2,538,178,364

($383,743,017)

(18,809,855)

(90,643,480)

--

(26,429,673)

--

1,774,339,603

(242,217,974)

(13.1) %
(12.0)

($29,060,081)
(44,550,017)

(2.4)

66,484,298

21,662,247

48.3

26,042,410

64.4

209,686,374

(170,665,436)

(44.9)

37,654,058

21.9

666,075

47,198

7.6

181,075

37.3

13,064,033

1,464,838

12.6

2,438,215

(162,481)

(6.2)

(652,603)

(21.1)

19,280,450

(3,495,794)

(15.3)

342,806

(1.1) %

2.7

(2,099,650)

(9.8)

(235,112)

(1.1)

2,959,549

629,651

27.0

479,549

19.3

21,752,895

276,866

1.3

90,845,362

962,081

1.1

11,475,362

14.5

266,333,220

12,558,128

4.9

9,616,927

3.7

0

2,151

384,828

261,646

212.4

51,444

15.4

876,698

204.2

762,174

140.1

750,276
$414,605,772

707,594
($79,692,820)

(100.0)
-(16.1) %

0
721,276
$2,460,653

--0.6 %

1,306,083
$4,844,325,850

($784,684,045)

(13.9) %

($27,517,451)

(0.6) %

Other Revenue
Lottery

6,880,200

License, Fees and Permits

2,672,889

Interest

(65,287)

5,502,700

399.5

1,688,589

581,767

(9,360,846)

(94.1)

(45.6)

22,256,426

(11,427,774)

(33.9)

3.9

27,424,043

(5,030,953)

(15.5)

(1,787,756)

(991,808)

(31.7)
(56.6)

TOTAL BASE REVENUE

1,127,300

(21.8)

--

(4,066,406)

Sub-Total Other Revenue

(8.3)

(5,440,226)

(65,287)

2,132,244
0

(2,346,600)

19,521,917

--

3,115,921
(223,105)

25,964,900

37.8

(211,858)

Other Miscellaneous
Transfers and Reimbursements

121.9

732,889

(20.6)

Sales and Services
Disproportionate Share

3,780,200

(693,722)

0
(379,036)

---

115,921
0
(1,923,105)

--

0

0

--

33,905,690

3,813,832

-12.7

(592,770)
903,536
(2,250,622)
0
(3,785,948)

4.5
9.5
(50.5)
4.2
(7.6)
-(10.0)

14,512,862

(840,130)

(5.5) %

852,862

6.2 %

129,654,743

(29,792,567)

(18.7) %

(2,909,915)

(2.2) %

$429,118,634

($80,532,950)

(15.8) %

$3,313,515

0.8 %

$4,973,980,593

($814,476,612)

(14.1) %

($30,427,366)

(0.6) %

Other Adjustments
Urban Revenue Sharing
Budget Plan Transfers
Leaseback Proceeds

(52,387,052)

8,252,731

26,231,427

(88,346,341)

0.0

(471,483,471)

74,274,579

0

0.0

200,586,708

(316,144,527)

--

0

0.0

(61.2)

0

0.0

--

0

--

735,419,300

735,419,300

--

0

0.0

-- %

0

0.0 %

464,522,537

493,549,352

-- %

0

0.0 %

$402,963,009

($160,626,560)

(28.5) %

$3,313,515

0.8 %

$5,438,503,130

($320,927,260)

(5.6) %

($30,427,366)

(0.6) %

Highway User Revenue Fund

$98,210,000

($12,258,000)

(11.1) %

($11,304,000)

(10.3) %

$882,888,000

($56,723,000)

(6.0) %

($41,102,000)

(4.4) %

Tobacco Tax (All Funds Total)

$26,554,421

($6,810,488)

(20.4) %

($2,487,650)

(8.6) %

$244,651,047

($41,074,871)

(14.4) %

$1,877,346

0.8 %

TOTAL GENERAL FUND REVENUE

(26,155,625)

0

0

(80,093,610)

Sub-Total Other Adjustments

0

-(77.1)

Non-General Funds

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Economic Indicators
NATIONAL

producing sector
of the economy,
however, has
sustained
significantly
larger job losses
(12.8%) in the last
12 months than
the serviceproviding sector
(1.9%).”

In April, the Conference Board’s U.S. Consumer
Confidence Index increased to 57.9, up 5.6
points from a revised March level of 52.3. The
April reading was at its highest level since
September 2009. The latest survey result from
the Conference Board suggests that
consumers are slowly gaining confidence in
the economic outlook. The index was close to
100 prior to the onset of the recession.
In March, the Conference Board’s U.S. Index of
Leading Economic Indicators was 109.6, a 1.4%
increase over the prior month, and the largest
gain since July 2009. The index has
advanced in each of the last 12 months.
Much of the sustained increase can be
attributed to the financial components of the
index (interest rate spread and money supply),
which reflect the Federal Reserve’s efforts to
restore liquidity in the banking system.

ARIZONA
The JLBC Staff has posted a new set of graphs
on its website called Tracking Arizona's
Recovery. These graphs measure the current
status of certain key economic indicators
compared to the peak of the expansion in
2007, including employment, retail and
contracting sales taxes and foreclosure
activity. In general, this data suggests that
the state's economy has bottomed out and
has stabilized, but at levels far below 2007.
Another of the tracking indicators is the Federal
Reserve Bank of Philadelphia’s coincident
index which gauges current economic activity
in each state. The index combines four
indicators: employment, average hours
worked in manufacturing, unemployment rate,
and inflation-adjusted wages.
The March state coincident index for Arizona
increased by 0.1% over the prior month’s
reading. The index has remained essentially
flat for the last 6 months, but remains 11.5% off
the August 2007 peak.
Arizona Coincident Economic Activity Index
230

220

Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), increased by 0.1%
in March. Compared to the same month in
the prior year, the CPI was up by 2.4%. The
core CPI, which excludes food and energy
prices, remained unchanged in March and
was 1.2% above last year’s level. Given the
currently high unemployment rate and low
industrial capacity utilization rate, most analysts
consider the near-term risk of high inflation to
be insignificant.
The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings (3-month
moving average) in the U.S. were $3.61 billion
in February, a (3.7)% decrease from the prior
month but a 47.8% improvement over February
2009 levels. Sales of semiconductors are now

(July 1992 = 100)

“The goods-

According to the advance estimate of the U.S.
Real Gross Domestic Product (GDP) for the 1st
quarter of 2010, the nation’s economy grew at
an annual rate of 3.2%, down from 5.7% in the
prior quarter. Economic growth in the 1st
quarter of 2010 was largely dependent on the
inventory cycle, which accounted for about
half of the overall growth in real GDP.
Consumer spending accelerated from 1.6% to
3.6% while both residential and non-residential
construction contributed negatively to
economic growth. State and local
government spending fell by (3.8)%, the largest
decline in almost 30 years.

back to pre-recession levels. The increase in
the demand for semiconductors is primarily the
result of growth in the sales of electronic
products in emerging economies, according
to SIA.

210

200

190
Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Employment
According to latest release of employment
data by Arizona Department of Commerce,
the state added 4,900 nonfarm payroll jobs in
March. This represented a 0.2% increase over
the prior month, or about one-third of the
average increase in the prior 10 years. Yearover-year, total nonfarm employment is down
by (3.2)%. The goods-producing sector of the

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Economic Indicators
economy, however, has sustained significantly
larger job losses (12.8%) in the last 12 months
than the service-providing sector (1.9%). The
year-over-year percentage decline in
employment is now approximately the same
in the government sector as in the private
sector.
The Arizona economy has lost a total of
(315,400) jobs since the recession started in
December 2007. This figure represents a
(11.6)% reduction in total nonfarm employment
in the state. See Tracking Arizona’s Recovery,
for historical information.

“The state’s
146,800
manufacturing
employees are
now the lowest
since August
1979.”

The construction sector shed (2,300) jobs in
March with most of these losses occurring in
specialty trades such as plumbing, painting
and electrical work. Year over year,
construction employment is down by (20.0)%,
or (27,500) jobs. With its 109,900 payroll
employees, the construction sector now
represents no more than 4.6% of the total
workforce in the state, the lowest such figure in
more than 20 years. During the height of the
real estate boom, almost one in ten
employees in the state worked in the
construction industry.
The manufacturing sector lost (400) jobs in
March, which was comparable to job losses for
the same month in the prior 10 years. Year
over year, manufacturing employment is down
by (6.6)%, or equivalently (10,300) jobs. About
one-third of these job losses have occurred in
the computer and electronic parts sub-sector
of the industry. The state’s 146,800
manufacturing employees are now the lowest
since August 1979.
The state’s unemployment rate rose to 9.6% in
March, following a 0.3% increase in January
and another 0.1% increase in February. The
state’s unemployment rate in March 2009 was
8.7%. The national unemployment rate
remained unchanged at 9.7% last month.
The Department of Commerce reported that
27,064 initial claims for unemployment
insurance were filed in March. This
represented (30.9)%, or (12,110), fewer claims
than a year ago. March marked the fifth
consecutive month with a year-over-year
decline in claims. Initial jobless claims peaked
in April when more than 41,000 individuals
filed for benefits.

(Continued)

Housing
Two new housing indicators are being added
to the MFH – notice of trustee sales and
pending foreclosures in Maricopa County.
After a homeowner defaults on their
mortgage, the initial step in the foreclosure
process is the filing of a “Notice of Trustee
Sale” with the County Recorder. In March, a
total of 8,045 Notice of Trustee Sales were
recorded. While this measure has fallen
(24.7)% since the measure reached a recent
high of 10,689 in March 2009, the prerecession average was 1,108 notices a month.
Once a Notice of Trustee Sale has been
recorded, the property becomes a pending
foreclosure. In March, there were a total of
49,102 pending foreclosures, down (2.6)%
from the prior month when the measure
reached a recent high, but up 23.5% on a
year-over-year basis. See Tracking Arizona’s
Recovery, for historical information.
Housing construction remains weak. An
average of 1,352 permits have been issued
per month between January and March 2010.
At an annualized rate, this would equate to
16,224 permits. In a normal market, approximately 35,000 permits would be issued in a
year.
State Agency Data
Participation in income driven programs saw
slight declines, but remained significantly
above last year.
In April, AHCCCS caseloads equaled 1.36
million members, a (0.1)% decline over the prior
month. AHCCCS caseloads are currently
13.3% above April 2009 levels. The FY 2010
budget funded a projected June caseload
growth of 14.4%, for a total of 1,435,445
members.
There were 78,282 TANF recipients in the
state in February, a monthly caseload
decrease of (3.7)%. Year-over-year, the
number of TANF recipients has declined by
(9.2)%. The FY 2010 budget assumed that
the June 2010 TANF caseload would be
84,287.
The Supplemental Nutrition Assistance
Program (SNAP), formerly known as Food
Stamps, provides assistance to low-income

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Economic Indicators

(Continued)

The Department of Correction’s (ADC) inmate
population 3-month average count totaled
40,464 inmates between January and March
2010. During the period, the department has
an average monthly decrease of (12) inmates
and a year-over-year increase of 596 inmates.
The department was funded for growth of 151
inmates per month in FY 2010, fiscal year-todate, however, population growth has
increased by an average of 11 inmates per
month.

households to purchase food. In February,
there were a total 1.03 million food stamp
recipients in the state, an increase of 0.9%
over the prior month. Compared to the
same month last year, food stamp
participation was up by 29.0%. The number
of food stamp recipients began increasing
steadily in July 2007, after several years in the
550,000 to 575,000 range.

Table 5

ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate
- Initial Unemployment Insurance Claims
- Unemployment Insurance Claimants
- Non-Farm Employment – Total
Manufacturing
Construction
- Average Weekly Hours, Manufacturing
- 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
- Foreclosure Activity, Maricopa County
Foreclosure Notices (Notice of Trustee’s Sales Recorded)
Pending Foreclosures (Active Notices)
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)
- Arizona Consumer Confidence Index (1985 = 100)
- Arizona Coincident Index (July 1992 = 100)
- Arizona Personal Income
- Arizona Population
- AHCCCS Recipients
- TANF Recipients
- SNAP (Food Stamps) Recipients
- ADC Inmate Growth (3-month average)
- Probation Caseload (Adult/Juvenile)
Non-Maricopa
Maricopa County
United States
- Gross Domestic Product
(Chained 2005 dollars, SAAR)
- 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

March
March
February
March
March
March
March
Jan-Mar
Jan-Mar

9.6%
27,064
92,691
2.40 million
146,800
109,900
39.0
$28.6 million
$141.1 million

0.1%
15.6%
(5.6)%
0.2%
(0.3)%
(2.0)%
0.3%
(8.1)%
(1.4)%

0.9%
(30.9)%
18.9%
(3.2)%
(6.6)%
(20.0)%
(0.3)%
(39.1)%
(1.8)%

Jan-Mar
Jan-Mar

1,170
183

8.9%
(6.0)%

87.2%
(10.3)%

March
March

10,860
1,300

37.0%
35.4%

26.1%
95.6%

March
March

$148,000
$103,500

2.1%
(3.4)%

10.7%
(10.7)%

March
March
February
March
February
January

8,045
49,102
110.11
6.5 months
2.90 million
$7.81

5.8%
(2.6)%
(1.5)%
0.0 months
(6.1)%
12.3%

(24.7)%
23.5%
(1.6)%
(1.3) months
2.8%
(13.8)%

4th Quarter 2009
March
4th Quarter 2009
July 1, 2009
April
February
February
Jan-Mar

50.2
197.26
$218.1 billion
6.60 million
1,356,447
78,282
1,033,542
40,464

(16.6)%
0.1%
1.1%
N/A
(0.1)%
(3.7)%
0.9%
(12) inmates

NA
(3.4)%
(1.8)%
1.5%
13.3%
(9.2)%
29.0%
596 inmates

Dec/Feb
Dec/Feb

19,736
29,265

(107)
(254)

(553)
(354)

1st Quarter 2010
(Advance Estimate)
April
March
Dec-Feb
March

$13.3 trillion

3.2%

2.5%

57.9
109.6
$3.61 billion
217.7

10.7%
1.4%
(3.7)%
0.1%

41.9%
12.0%
47.8%
2.4%

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

FAC Meeting
At its April 13, 2010 meeting, the Finance
Advisory Committee (FAC) heard
presentations on General Fund Revenue
collections, the U.S. economy, and state
cash flows. The FAC is a 15-member panel
comprised of leading economists in the
state. The panel meets 3 times a year and
advises the Legislature on the state
economy.

For FY 2011, each component of the 4-sector
consensus showed improvement from
FY 2010, with positive growth rates that
equated to a total estimated growth rate of
3.4%. The state budget assumes a 4.2%
growth rate.

JLBC Staff provided members with the latest
4-sector consensus estimates for the “Big 3”
revenue collections. The 4-sector consensus
estimate is a composite of equally weighted
estimates from:

In addition to the JLBC Staff presentation,
panel members heard formal presentations
from economist Elliot Pollack and the State
Treasurer, Dean Martin. The presenters
generally believed that the recession is over
but recovery is likely to be gradual and take
place over the course of several years.

•
•
•
•

The University of Arizona Economic
and Business Research (EBR) General
Fund baseline model;
The EBR conservative forecast
model;
The FAC panel; and
JLBC Staff.

Beyond FY 2011, the 4-sector consensus
projects 7% to 9% growth until FY 2015.

Some of the panel members expressed
concern that, due to an expansion of the
monetary base, increased economic activity
may lead to future inflation.

Based on the 4-sector consensus, revenues
are projected to decline by (10.7)% in
FY 2010, prior to any tax law changes. Yearto-date collections through March are down
(14.1)% compared to the same period last
year. The enacted budget was based on a
(9.4)% decrease for FY 2010.

JLBC Meeting
At its April 20, 2010 meeting, the Joint
Legislative Budget Committee considered the
following issues:
Review of Fund Transfers – The Committee
gave a favorable review of the Parks Board,
Arizona Criminal Justice Commission and
Department of Housing proposals to shift
funds to meet the fund transfer requirements
in the budget.
Department of Health Services – Review of
Capitation Rate Changes – The Committee
gave a favorable review to the Department
of Health Services proposed capitation rate
changes for Title XIX programs as these
adjustments will be covered by the existing
appropriations.

Government Information Technology Agency
– Quarterly Review of the Arizona Public
Safety Communication Advisory Commission –
The Committee gave a favorable review of
the Arizona Public Safety Communication
Advisory Commission’s FY 2010 second
quarter progress and expenditures.

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

JCCR Meeting
At its April 27, 2010 meeting, the Joint
Committee on Capital Review considered the
following issues:
Arizona Department of Administration –
Review of FY 2010 Emergency Building
Renewal Project – The Committee favorably
reviewed the department’s proposal to spend
$160,000 of its $1,000,000 FY 2010 building
renewal appropriation for the repair of the
water well system at Safford’s Fort Grant
prison.
Arizona Department of Administration –
FY 2010 Rent Exemptions and FY 2011
Quarterly Rent Payments – The Committee
recommended FY 2011 quarterly rent
payments for the Corporation Commission
and FY 2010 partial rent exemptions for 8
agencies.

School Facilities Board – Review of $100 Million
Lease-Purchase Issuance – The Committee
tabled this item until the next meeting, which
would have allowed the School Facilities
Board to issue a $100.0 million federal bond
for FY 2011 new construction projects.
School Facilities Board – Review of LeasePurchase Refinancing – The Committee
favorably reviewed the School Facilities Board
to enter into a refinancing agreement that
reduces the board’s lease-purchase
obligation by $60.0 million in FY 2011 with the
provision that the board submit a final debt
service schedule associated with the
refinancing agreement.

March Spending
March 2010 spending of $362 million was
$(349) million below March 2009. For the
year-to-date, spending of $7.1 billion is ($668)
million below 2009 (See Table 6).

•

The Arizona Department of Education
(ADE) has spent $3.1 billion year-to-date
in 2010, or $44.6 million more than 2009. In
March, ADE spending was ($304.5) million
lower than the prior year. March
expenditures were lower than the prior
year due to an Arizona Department of
Education (ADE) payment to school
districts being deferred. As part of the 7th
Special Session, the K-12 rollover was
increased from $602 million to $952 million.
A portion of this $350 million increase was
implemented by withholding the April 1st
payment, which is recorded at the end of
March.

•

Spending in AHCCCS and DES is a
combined ($99.3) million less in March
than in 2009. This is generally consistent
with the FY 2010 budget assumption that
caseload growth in Medicaid spending in
those agencies would be offset by
varying degrees by enhanced federal
match from the federal stimulus
legislation.

•

The Department of Health Services (DHS)
spending in March was $41.6 million

higher than March of 2009. This increase
is the result of a Title XIX transfer to
AHCCCS being made in March of 2010
compared to January in the prior fiscal
year. Year-to-date spending is ($87.8)
million below FY 2009 due to the
enhanced federal match in the federal
stimulus legislation.

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Summary of Recent Agency Reports
AHCCCS – Report on Preliminary
Actuarial Estimates of the
Capitation Rate Increases for the
Following Fiscal Year – Pursuant to a
FY 2010 General Appropriation Act
footnote, AHCCCS has submitted
preliminary actuarial estimates of
the capitation rate increases for
FY 2011.
AHCCCS has indicated that, due to
the enacted budget and in
recognition of the state’s fiscal
challenges, they are working
toward a goal of 0% growth in
capitation rates while maintaining
actuarial soundness. The preliminary review of the capitation rates
for contract year 2011 estimates a
4.5% - 6.5% average cost increase
for utilization increases in the Acute
Care program and 2 -4% in the
ALTCS program. AHCCCS intends
to offset the utilization increases by
holding provider rates flat with
possible reductions in some service
categories. The FY 2011 enacted
budget assumes capitation rate
growth of 0% for both the Acute
Care program and ALTCS program.
(Amy Upston)
Arizona Department of Agriculture –
Report on FY 2011 Fee Authority
Plan – The FY 2011 Environment
Budget Reconciliation Bill (BRB)
(Laws 2010, 7th Special Session,
Chapter 7) allows the Department
of Agriculture to raise its fees in
FY 2011 with the intent that the fee
increases not exceed $561,000 and
that a specific fee plan be
developed for legislative consideration by April 1, 2010. According to
the department, they plan on
raising fees by $389,000 in FY 2011,
which includes $172,000 in FY 2009
continued fee authority. The
$172,000 in continued fee authority
will be raised from meat, poultry,
and dairy inspection fees, livestock
farm service calls, and pesticide
registration fees. The remaining
$217,000 will be raised from meat,
dairy, and poultry inspections;
certified veterinarian inspection and

health certificates; state and
federal phytosanitary certificates;
and certified nursery fees. (Leatta
McLaughlin)
Arizona Community Colleges –
Report on Workforce Development
Expenditures – The Arizona
Community Colleges are reporting
on their previous year’s workforce
development plan activities and
expenditures. A.R.S. § 15-1472
requires each community college
district to establish a workforce
development account. Monies in
the account are derived from
Proposition 301 sales tax revenues
and shall be used for workforce
development and job training.
Total revenues in FY 2009 were
$15,030,500 and total expenditures
in the same year were $18,134,500.
(Marge Zylla)
Department of Education – Budget
Status Report – Pursuant to A.R.S. §
35-131D, the Arizona Department of
Education (ADE) recently provided
an update regarding its budget
status for FY 2010. In that report,
ADE estimates that it will experience
a $(47.4) million net funding shortfall
for formula programs for FY 2010.
Since issuing the report, however,
ADE has separately increased its
shortfall estimate to $80 million
primarily because state land trust
revenues that help fund K-12
formula programs are providing $29
million less than expected for FY
2010. The revised $80 million
shortfall figure reflects 100th Day
Average Daily Membership (ADM)
counts from public schools for the
current school year, but is not yet
final due to ongoing data
adjustments and corrections.
(Steve Schimpp)
Department of Environmental
Quality – Report on FY 2011 Fee
Authority Plan – The FY 2011
Environment Budget Reconciliation
Bill (BRB) (Laws 2010, 7th Special
Session, Chapter 7) allows the
Department of Environmental

Quality (DEQ) to raise its fees in
FY 2011 with the intent that the fee
increases not exceed $5,779,100
and that a specific fee plan be
developed for legislative consideration by April 1, 2010. The fee
increases would offset a General
Fund reduction in DEQ’s budget.
The department provided 2
alternatives for raising fees by
$5,779,100 in FY 2011. Under the
department’s preferred scenario,
DEQ would raise Air Quality Fees on
vehicle registrations from its current
$1.50 to $2.60. Alternatively, DEQ
could raise multiple fees including
vehicle registration fees, permitting
fees, hazardous waste fees, landfill
registration fees, waste management fees, and aquifer protection
permit fees. (Aaron Galeener)
School Facilities Board – Report on
FY 2009 District Building Renewal
Spending – Pursuant to A.R.S. § 152031H, the School Facilities Board
(SFB) is submitting its annual report
on district building renewal fund
spending from the prior fiscal year.
SFB reports that in FY 2009, 161
school districts reported spending a
total of $34,813,400 from their
respective building renewal funds
on 1,483 projects. Of this amount,
$25,675,900 was spent on primary
projects, while $9,118,000 was spent
on secondary projects, and $19,500
of the spending was uncategorized.
Primary projects are defined by
statute as those which are
necessary to meet the minimum
adequacy guidelines adopted by
SFB for academic space. All other
projects are considered to be
secondary projects. (Jack Brown)
Department of Water Resources –
Report on FY 2011 Fee Authority
Plan – The FY 2011 Environment
Budget Reconciliation Bill (BRB)
(Laws 2010, 7th Special Session,
Chapter 7) allows the Department
of Water Resources (DWR) to raise
its fees in FY 2011 with the intent that
the fee increases not exceed
$5,662,900 and that a specific fee

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Summary of Recent Agency Reports
plan be developed for legislative
consideration by April 1, 2010. The
fee increases would offset a
General Fund reduction in DWR’s
budget. The plan submitted by the
department only raises fees by $2
million in FY 2011. The $2 million in
fee authority will be raised from a
variety of fee increases including
assured and adequate water
supply fees, well fees, dam safety
fees, groundwater fees, and surface
water fees. (Aaron Galeener)

(Continued)

12

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Table 6

Agency
Department of Administration
Office of Administrative Hearings
Department of Agriculture
AHCCCS
Arizona Commission on the Arts
Arizona Exposition and State Fair
Board
Attorney General
AZ Capital Post Conviction Public
Defender
State Board of Charter Schools
State Bd. of Chiropractic Exam.
Department of Commerce
Community Colleges
Corporation Commission
Department of Corrections
AZ Criminal Justice Commission
AZ State Board of Cosmetology
AZ St. Schools for the Deaf & Blind
Dept. of Economic Security
Department of Education
DEMA
Dept. of Environmental Quality
DEQ-WQARF
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Dept. of Financial Institutions
Department of Fire, Life, Bldg Safety
State Board of Funeral Directors
Arizona Geological Survey
Government Information Tech.
Governor
Gov. - OSPB
Department of Health Services
Arizona Historical Society
Prescott Historical Society of AZ
Independent Redistricting Comm.
AZ Commission of Indian Affairs
Department of Insurance
Judiciary
Supreme Court
Superior Court
Court of Appeals
Dept. of Juvenile Corrections
State Land Department
Law Enforcement Merit System

General Fund Spending
($ in Thousands)
Change from
March 10
March 09
943.1
856.2
1.6
(10.9)
505.6
(5.8)
109,332.0
(66,830.0)
92.7
(35.0)
736.9
16.0

(304.4)
(35.0)

40.4
48.7
35.4
70,153.9
244.6
(28,351.0)
58,933.8
897.4
330.2
0.1
20.3
43.6
119.4
77.4
10.1
34.1
465.4
121.7
52,892.2
76.7
35.3
5.8
305.5

5.0
(166.5)
(42.2)
(4,952.8)
(375.5)
(32,534.2)
(304,460.5)
575.5
882.9
(10.9)
7.8
(13.3)
(39.9)
(108.4)
(20.6)
(75.0)
93.1
(22.7)
41,618.4
(65.4)
8.6
(15.1)
(32.0)
4.0

606.4
1,860.6
377.8
2,901.4
(1,167.2)
0.1

(215.2)
(7,719.6)
(547.3)
(1,036.3)
(1,997.8)
(3.8)

Year-to-Date
13,528.1
671.6
6,838.3
1,056,838.1
656.2
400.0
14,301.5
473.7
561.6
148.0
2,416.6
99,319.8
413.8
636,923.3
(4.6)
252.0
15,307.2
478,727.0
3,059,626.5
6,944.6
4,127.4
7,000.0
157.1
477.2
759.7
2,479.8
1,828.1
100.0
606.8
351.4
5,916.7
1,547.0
455,573.7
3,198.0
542.7
26.1
76.9
4,495.7
13,528.2
63,547.1
10,543.2
50,763.9
10,640.2
54.3

YTD Change from
FY ‘09
(9,466.6)
(224.7)
(1,557.2)
(203,936.5)
(571.7)
400.0
(2,352.2)
(137.0)
(127.3)
148.0
(23,377.9)
(9,357.2)
(3,248.0)
(38,191.4)
(1,014.4)
252.0
(4,552.7)
(185,066.8)
44,599.1
(1,897.5)
(315.6)
(6,000.0)
(7.8)
(59.6)
(90.9)
(319.6)
(589.2)
100.0
(83.6)
(817.1)
428.4
(75.3)
(87,780.2)
(402.9)
(29.8)
(174.6)
(111.5)
(1,179.5)
969.7
(4,966.0)
(109.0)
(5,861.6)
(2,662.0)
(4.8)

13

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2010

Agency
Legislature
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
AZ Library and Archives
Senate
Dpt. of Liquor Licenses
Board of Medical Student Loans
Mine Inspector
Dpt. of Mines & Mineral Resources
Nav. Streams & Adjudication
State Board of Nursing
OSHA
Arizona State Parks Board
Personnel Board
Arizona Pioneers Home
Comm. for Postsecondary Ed.
State Board of Psychologist Exam.
Department of Public Safety
Arizona Department of Racing
Radiation Regulatory Agency
Arizona Rangers Pension
Real Estate Department
Department of Revenue
School Facilities Board
Secretary of State
Tax Appeals Board
Office of Tourism
Department of Transportation
State Treasurer
Universities
Board of Regents
Arizona State University
Northern Arizona University
University of Arizona
Department of Veteran Services
AZ State Veterinary Medical
Examining Board
Department of Water Resources
Dept. of Weights & Measures
Other
Grand Total

March 10

Change from
March 09

Year-to-Date

YTD Change from
FY ‘09

1,155.2
868.1
140.7
294.6
338.7
599.0
7.1
78.3
154.7
6.2
176.0
2,026.4
32.2
1.0
134.2
4,256.2
25.3
3,419.8
10.4
2.8
136.8

716.5
(33.1)
(40.2)
(637.2)
(37.0)
(21.1)
(149.9)
(35.2)
(1.6)
(18.6)
(0.8)
1,181.1
(3.9)
5.3
(204.2)
190.7
(105.3)
(0.1)
(5.5)
617.7
41.6
2,323.4
(5.4)
(1.1)
(23.7)

11,423.3
9,646.1
1,804.1
3,211.9
5,152.2
6,831.4
747.7
801.9
1,015.3
607.1
106.0
14.4
21,900.3
2,428.0
300.0
42,110.5
4,066.6
1,071.3
10.3
2,544.1
26,545.8
103,984.7
5,515.7
198.3
200.0
42.8
2,044.8

(1,739.6)
(280.1)
(115.9)
(6,360.5)
(585.8)
2.7
(2,427.0)
(199.1)
(184.0)
(167.9)
(118.6)
(93.5)
14.4
(2,857.6)
(260.4)
(5.3)
(116.5)
300.0
(1,161.4)
2,107.7
(296.3)
0.1
(575.3)
(27,788.3)
(83,762.4)
(213.3)
(14.0)
(112.2)
(6.2)
68.1

106.2
33,435.2
11,220.2
29,041.4
740.7
-

358.6
9,073.6
3,078.8
7,961.8
391.9
-

19,921.5
345,234.6
116,222.9
300,833.4
6,930.7
250.0

4,049.4
904.9
374.7
878.3
1,285.1
250.0

800.9
11.1
(65.5)
361,815.0

2,826.4
(70.1)
1099.2
(349,065.1)

12,966.2
878.7
20,836.7
7,111,083.8

5,914.2
(240.2)
(4,730.0)
(668,084.3)