JLBC - Monthly Fiscal Highlights

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

Summary
April General Fund revenues equaled $680.5
million, which marked the first positive gain in
collections since September 2007. Excluding
revenue sharing and fund transfers, base
revenues grew by 4.1% above the April 2009
level.

For example, the state is expected to receive
$750 million in proceeds from lottery bonds
and the second state asset/leaseback before
the end of the fiscal year. In addition, state
spending in the next several months will be
relatively low, due to the deferral of payments
until FY 2011.

As further evidence of the stabilization of the
economy, overall sales tax collections were
higher than in April 2009. The April increase
marks the end of 26 months of year-over-year
sales tax reductions.
www.azleg.gov/jlbc.htm

“Year-to-date,
revenues are
$(35.2) million
below forecast.”

May 2010

Budget News
Appropriations Report - The JLBC Staff has
issued its Appropriation Report for the FY 2011
budget. This 500-page document provides
agency by agency details on the most
recently enacted budget.

While overall revenues grew in April, they
were still below forecast by $(4.8) million. A
(7.2)% decline in corporate income tax
receipts offset gains in both sales and
individual income taxes. Year-to-date,
revenues are $(35.2) million below forecast.

Budget Projections - Last month, the JLBC
Staff released an update of its budget
estimates. The FY 2010 budget was estimated
to have a $(150) million shortfall, while the
FY 2011 shortfall ranged from $(368) million to
$(1.3) billion, depending on certain
assumptions.

April 2010 General Fund spending was $308.1
million. April expenditures were $(535) million
lower than 2009 in part due to the Arizona
Department of Education (ADE) making a
single payment to school districts in April 2010
compared to 2 payments in April 2009.
Additionally, ADE used $150 million of state
fiscal stabilization monies to make the single
payment to school districts.

The FY 2010 shortfall projection was primarily
due to lower-than-expected revenue
estimates. Since those estimates were
released, April revenues fell only $(5) million
below the forecast. In addition, preliminary
May revenues appear to be above forecast.
As a result, the FY 2010 shortfall may not be as
large as anticipated and could potentially be
eliminated.

Year-to-date spending is $(1.2) billion less than
the prior year. Fiscal year-to-date, General
Fund revenues are $6.12 billion compared to
spending of $7.42 billion for a shortfall of
$(1.30) billion. This shortfall is less than March’s
$(1.67) billion.

The low-end of the FY 2011 shortfall range was
based on the passage of the May and
November ballot propositions and the
extension of enhanced federal Medicaid
matching funds. The $(1.3) billion higher-end

The state will make further progress in
reducing the shortfall in the next 2 months.

Table of Contents
This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on May
27, 2010

Summary

Summary of Recent Agency Reports

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

•
•
•
•
•

April Revenues ........................................................ 4
Economic Indicators .............................................. 6
April Spending....................................................... 10

AHCCCS – Residency Positions ...................... 11
ADC/ADOA – Public and Private Beds ......... 11
DPS – GIITEM....................................................... 11
DPS - Photo Enforcement ................................ 11
ABOR – Paid Speakers ..................................... 11

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

Summary

(continued)

Table 1

April
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2010
Difference From
Difference
Collections
Budget Forecast
From FY 2009
$ 680.5
$ (4.8)
$ 59.2
$ 6,119.0
$ (35.2)
$ (261.7)

estimate was based on rejection of the ballot
propositions and no enhanced federal
assistance.

“As a ratings
agency,
Moody's
continues to
have concerns
about the state's
financial
condition. On
May 6th, they
issued a new
report and
continue to view
the ratings
outlook as
negative.”

With the passage of Proposition 100, the state
sales tax will increase from 5.6% to 6.6% on
June 1. The state will begin to feel the impact
of the increase in July, as sales tax revenues
are remitted to the state during the month
following collection by businesses.
Congress has not yet acted on the extension
of the enhanced federal Medicaid matching
funds for the last 6 months of FY 2011,
although the Majority Leadership hopes to
address this issue in the next several weeks as
part of a larger omnibus bill. These monies
would be used to pay for the retention of the
Proposition 204 program which the original
budget would have eliminated in January
2011. Arizona is one of 30 states predicating
its budget on the extra federal funding.
The $(368) million to $(1.3) billion FY 2011
shortfall range will be revised in the next 2
months once the final status of FY 2010
revenues and the federal match extension
become clear. If Congress enacts the
extended enhanced federal match rate, the
top end of the shortfall range will fall from
$(1.3) billion to $(900) million.
State Borrowing - The Treasurer’s daily
borrowing in May to date has averaged $606
million, reaching a high of $690 million. This
level continues to be near the borrowing cap
of $700 million with the servicing bank.
This level of borrowing allows the Treasurer to
retain as much as $400 million on deposit with
the bank to cover state obligations. Without
these funds on deposit, the state would have
borrowed an average of $252 million, with a
high of $378 million.
Debt Ratings - As a ratings agency, Moody's
continues to have concerns about the state's
financial condition. On May 6th, they issued a
new report and continue to view the state’s
ratings outlook as negative.

Moody's has restored the rating of state
General Fund appropriation-backed debt to
Aa3, after having downgraded it one level to
A1 in December. They warn investors,
however, that this shift should not be viewed
as a ratings upgrade. Moody's describes the
change as a more broad-based
"recalibration" to a different rating scale.
While acknowledging recent efforts at
reducing the budget shortfall, Moody's
summary statement for their negative outlook
notes that:
"The state is experiencing a serious
economic slowdown which, together with
tax reductions implemented in 2007 and
various spending mandates, has resulted in
ongoing, significant fiscal stress and
tightening liquidity. While Arizona is acting
to stabilize its fiscal situation, diminished
state resources, economic uncertainty,
uncertainty regarding proposed budget
measures, unknown cumulative effect on
revenues from the state boycott, and
inflexibility related to spending mandates
and revenue raising requirements pose
considerable challenges to a return to fiscal
stability."
Economic Indicators - Foreclosures and
Federal Assistance - In April, the state made
progress on reducing the number of pending
foreclosures. There are 46,800 pending
foreclosures in Maricopa County alone,
compared to 51,500 in December.
A recently announced federal assistance
program to states with high foreclosure rates
will help further shrink that number. Despite
$125 million in new federal aid, however, this
effort may reduce the problem by less than
10%.
The Arizona Department of Housing (DOH) has
been allocated $125.1 million in federal
monies as part of a $1.5 billion foreclosure
prevention initiative for the states hardest hit
by the recent downturn in the housing
market. DOH has submitted a plan for the
monies that must first be approved by the U.S.

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

Summary

(continued)

Treasury prior to any monies being released,
which may begin as soon as June of this year.
DOH plans to expend these monies over a 3year period and estimates that these
programs will help approximately 4,350
households statewide. As a result, the new
DOH programs will address only a small
portion of the state's foreclosure problem.
The DOH proposal would divide the monies
into three main programs:

•

$92.4 million for up to $50,000 (matched
with a like amount by the lender) to help
pay down the principal on home loans
that exceed the current value of the
home. The residence must be the
borrowers’ primary residence. These
funds are provided in the form of a loan,
which is forgiven after 10 years if the
borrower utilizes the home as their
permanent residence for that period of
time.

•

$7.5 million for assistance of up to $5,000
to help individuals settle second
mortgages with lenders that are hindering
the borrower's ability to pay the primary
mortgage on their residence.

•

$12 million for temporary assistance to
under-employed individuals to pre-pay
mortgage payments for a set amount of
time not to exceed 2 years or $12,000.
These monies can also be used to help
remove second mortgages that are
hindering an individual's ability to
refinance their primary loan.

“DOH plans to
expend these
monies over a 3year period and
estimates that
these programs
will help
approximately
4,350 households
statewide.”

In each program, the federal assistance is
only available if a) the loan currently exceeds
120% of the value of the home and b) the
adjustments bring the mortgage balance to
no more than 110% of the current market
value.
Additionally, DOH plans to expend $13.2
million over 3 years for administration of the
aforementioned programs including:

•

$5.8 M for staffing by DOH, one-time startup costs, and supporting costs that are to
be borne by the non-profit, Arizona Home
Foreclosure Prevention Funding
Corporation, which is being created for
this program and is to be staffed by DOH
employees.

•

$7.4 M for counseling agency partners
which will review applications for financial
feasibility and help with advising
individuals on how to cope with preforeclosure or foreclosure.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

April Revenues

“The April
increase [in sales
tax] marks the
end of 26
consecutive
months of yearover-year
reductions.”

Sales Tax collections were $319.3 million in
April. These revenues were up 6.5% compared
to last April, and were $15.0 million above the
forecast. The April increase marks the end of
26 consecutive months of year-over-year
reductions. However, the increase is at least
partially due to the collection of sales tax in
April which was due in prior months. Absent
this collection of prior months’ activity, April
collections would have been about equal to
April of last year.
Table 2 displays the April growth rates for the
largest categories.
Table 2

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

April
(16.8)%
(33.6)%
3.2%
113.3%
6.3%

YTD
(8.0)%
(39.6)%
0.6%
(10.7)%
(1.7)%

The (16.8)% decline in April retail collections
does not reflect economic activity. In April,
about $35 million collected throughout the
past year was reclassified to the
Communications category instead of Retail.
Without this reclassification, Retail would have
been slightly positive for the month. As noted
in previous months, retail and contracting
together account for about 30% of all sales tax
revenues. Contracting continued its poor
performance, with another (33.6)% decrease
compared to April of last year.
The April Use Tax growth rate is also
unrepresentative of economic conditions, as it
includes about $20 million of tax due in prior
months, as noted above.
Individual Income Tax net revenues were
$211.4 million in April. Collections were $19.1
million above the forecast. Year-to-date
collections are down by (9.3)%.
As indicated in Table 3 below, withholding tax
payments increased by 6.1% in April, the third
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

April
6.1%
(18.0)%

YTD
(3.0)%
(21.5)%

(21.7)%

(4.3)%

April is by far the largest month for payment
collections, with 60%-70% of final payments
traditionally collected during the month. Both
estimated and final April payments, were
down (18.0) % compared to last year, bringing
year-to-date total payments to (21.5)% below
the prior year.
April refunds totaled $(338.2) million, which was
(21.7)% below the prior year, and a $75.9
million gain relative to the forecast. The
monthly fluctuation in refunds compared to
the prior year for the past 3 months is in part
due to processing. The losses relative to the
forecast for February and March are more
than made up for by the April gain, leaving us
$20.5 million above the forecast year-to-date.
Corporate Income Tax net collections were
$61.5 million in April. This amount was $(30.6)
million below the forecast for the month. Some
of the collections normally received in April
appear to have been collected in March. As
we noted last month, March collections were
$26.0 million above forecast. Combined
March and April collections were $16.8 million
or 15.1% above the prior year, but were $(4.6)
million below the forecast. Year-to-date,
corporate collections are (39.3)% below last
year.
The Lottery Commission reports that April
ticket sales were $51.8 million, which is 15.0%
above sales last year. Year-to-date, ticket
sales are $57.6 million or 14.4% above last
year. While ticket sales have increased,
distributions to state beneficiaries are down
$(7.6) 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 $30.2 million in
April. Collections were down (2.4)% compared

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

April Revenues
to the prior year. Year-to-date collections are
down by (13.2)%.

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.

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.

HURF collections of $109.8 million in April were
down $(0.8) million or (0.7)% compared to April
of last year. Year-to-date, total HURF
collections of $992.7 million are down $(57.5)
million or (5.5)% compared to the prior year.
Table 4

State of Arizona
General Fund Revenue:

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

FY 2010 YTD (Ten Months)

Change From
April 2009

Actual
April 2010

Percent

Amount

Change from
Forecast
Percent

Amount

April 2009

Actual

Forecast
Percent

Percent

April 2010

Amount

Amount

$2,857,464,009

($364,321,646)

(11.3) %

($14,067,360)

1,985,774,047

(204,026,399)

(9.3)

(25,423,191)

(175,472,464)

(39.3)

7,073,408

2.7

616,292

4.6

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

$319,285,645

$19,421,371

211,434,444

38,191,575

22.0

19,126,826

9.9

61,529,296

(4,807,028)

(7.2)

(30,580,650)

(33.2)

271,215,670

918,486

6.5 %

$14,992,721

4.9 %

(0.5) %
(1.3)

114,066

14.2

273,486

42.4

13,982,519

1,578,904

12.7

2,030,034

(234,549)

(10.4)

(647,575)

(24.2)

21,310,484

(3,730,343)

(14.9)

(2,747,225)

(11.4)

2,129,072

(700,377)

(24.8)

(780,928)

(26.8)

23,881,968

(423,510)

(1.7)

(1,016,039)

(4.1)

40,872,325

(5,704,670)

(12.2)

(3,507,675)

(7.9)

307,205,546

6,853,459

2.3

6,109,253

2.0

(25,833)

(113,023)

--

(25,833)

--

358,995

148,623

70.6

25,611

7.7

88,723

(560,680)

(86.3)

1,394,807

316,019

29.3

821,898

143.5

$638,262,192

$45,606,685

Lottery

4,150,300

2,509,800

License, Fees and Permits

2,803,337

7.7 %

59,723
($1,089,905)

205.9
(0.2) %

$5,482,588,045

($739,077,357)

(11.9) %

($28,607,353)

(0.5) %

Other Revenue

Interest
Sales and Services
Other Miscellaneous
Disproportionate Share
Transfers and Reimbursements
Sub-Total Other Revenue
TOTAL BASE REVENUE

153.0

1,050,300

33.9

30,115,200

0.5

2,177,600

193,337

7.4

22,325,254

(5,887,482)

(20.9)

1,881,926

537,938

(9,732,882)

(94.8)

(56.3)

23,972,810

(12,602,016)

(34.5)

(1,310,080)

(5.2)

(68.9)

28,356,685

(7,139,927)

(20.1)

(4,317,980)

(13.2)

--

0

(18,727,942)

(100.0)

(78.6)

34,080,343

3,813,365

12.6

(447,256)

(13.8)

(372,036)

--

(43,828)

--

1,716,385

(1,174,241)

(40.6)

(2,213,615)

932,642

(2,108,974)

(69.3)

(2,067,358)

0

(18,727,942)

(100.0)

174,653

(467)

(0.3)

(43,828)

9,733,489
$647,995,681

(20,321,116)
$25,285,569

0
(640,347)

163,200

(636,599)

0
(4,426,295)

7.8
9.2
(54.2)

-(11.5)

(67.6) %

(3,721,511)

(27.7) %

139,388,230

(50,113,684)

(26.4) %

(6,631,428)

(4.5) %

4.1 %

($4,811,416)

(0.7) %

$5,621,976,275

($789,191,041)

(12.3) %

($35,238,781)

(0.6) %

Other Adjustments
Urban Revenue Sharing
Budget Plan Transfers
Leaseback Proceeds
Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE

(52,387,054)

8,252,729

84,901,781

25,702,933

-43.4

0

0.0

(523,870,525)

82,527,308

0

0.0

285,488,489

(290,441,594)

--

0

0.0

(50.4)

0

0.0

0

0

--

0

--

735,419,300

735,419,300

--

0

0.0

32,514,727

33,955,662

-- %

0

0.0 %

497,037,264

527,505,014

-- %

0

0.0 %

$680,510,408

$59,241,231

9.5 %

($4,811,416)

(0.7) %

$6,119,013,539

($261,686,027)

(4.1) %

($35,238,781)

(0.6) %

Non-General Funds
Highway User Revenue Fund

$109,845,000

($819,000)

(0.7) %

($1,957,000)

(1.8) %

$992,733,000

($57,542,000)

(5.5) %

($43,059,000)

(4.2) %

Tobacco Tax (All Funds Total)

$30,245,422

($729,512)

(2.4) %

$3,283,675

12.2 %

$274,896,470

($41,804,383)

(13.2) %

$5,161,022

1.9 %

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

Economic Indicators
According to the second 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 3.0%, a (0.2)% revision of from
the advance estimate released last month.
According to the federal Bureau of Economic
Analysis (BEA), the (0.2)% revision was primarily
reflecting an upward revision to imports and a
downward revision to personal consumption
expenditures.
“The state
coincident index
for Arizona
registered its
fourth
consecutive
increase in April
with a monthover-month gain
of 0.5%.”

In May, the Conference Board’s U.S. Consumer
Confidence Index increased to 63.3, up 5.5
points from a revised April level of 57.7. The
May reading registered the highest level of
consumer confidence since March 2008. The
latest survey result from the Conference Board
suggests that consumers are slowly gaining
confidence in the economic outlook despite
recent setbacks in the stock market and
ongoing concerns related to the Eurozone
debt crisis.
In April, the Conference Board’s U.S. Index of
Leading Economic Indicators ended its streak
of 12 consecutive gains. At a reading of 109.3,
the index declined by (0.1)% over the prior
month. Some analysts believe that the slight
drop in consumer confidence last month may
signal a possible slowdown of the economy’s
recovery in the coming 3 to 6 months. Six of
the index’s 10 components deteriorated in
April with the largest negative contribution
being attributed to single-family permitting
activity.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), declined by (0.1)%
in April, the first drop since March 2009.
Compared to the same month in the prior
year, the CPI was up by 2.2%. The slight monthover-month decrease of the CPI was primarily
due to falling gasoline and vehicle prices. The
core CPI, which excludes food and energy
prices, remained unchanged in April and was
1.0% above last year’s level, the lowest rate of
core inflation since the mid-1960s.
The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings (3-month
moving average) in the U.S. reached $3.82
billion in March, a 5.6% improvement from the
prior month and a 48.2% increase over March
2009 levels. Semiconductor billings have

advanced by close to 60% since sales levels
bottomed out in February 2009.
ARIZONA
The Federal Reserve Bank of Philadelphia’s
coincident index gauges current economic
activity in each state. The index combines 4
indicators: employment, average hours
worked in manufacturing, unemployment rate,
and inflation-adjusted wages.
The state coincident index for Arizona
registered its fourth consecutive increase in
April with a month-over-month gain of 0.5%.
The April reading was down by (1.5)%
compared to last year. As seen in the graph
below, the Arizona coincident index reached
a trough in December 2009. See Tracking
Arizona’s Recovery, for additional historical
information.
Arizona Coincident Economic Activity Index
230

220
(July 1992 = 100)

NATIONAL

210

200

190
Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

While general economic conditions are
improving, the Arizona Consumer Confidence
Index retreated in April from the last reading
in January. The index in April registered a
reading of 49.6 compared to 50.2 in January
2010 and 60.2 in September 2009. The April
reading was the second lowest on record
(data available from 1985).
Employment
According to latest release of employment
data by Arizona Department of Commerce,
the state added 19,500 nonfarm payroll jobs in
April. This was a significant improvement over
the average April increase of 2,900 jobs since
2000. Most of the new jobs added to payrolls
in April were in employment services and
accommodation and food services. Yearover-year, total nonfarm employment was
down by (1.6)%, or (38,200) jobs. This was the

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

Economic Indicators
slowest rate of decline since May 2008.
Another positive sign for the state’s economy
is that the private service-providing sector,
which represents 70% of the state’s total
workforce, increased in April (on a year-overyear basis) for the first time since March 2008.
Even more strikingly, employment services
(primarily jobs provided by temporary
employment agencies) grew, year over year,
in April, for the first time since January 2007.
Temporary employment tends to lead the
overall labor market by several months.
“…the private
serviceproviding sector,
which represents
70% of the
state’s total
workforce,
increased in
April (on a yearover-year basis)
for the first time
since March
2008.”

While the goods-producing sector
(manufacturing, construction, and mining) of
the Arizona economy is still experiencing a
year-over-year job decline of close to (10)%,
there have been some positive developments
in recent months. For example, the
construction sector added jobs in both
February and April for the first time in more
than 2 years. The 2,200 additional
construction jobs reported for April represented
the largest month-over-month increase since
June 2007. Year over year, construction
employment is down by (14.9)%, or (19,800)
jobs. The construction industry has shed close
to (55)% of its workforce since the height of the
housing boom in the summer of 2006.
In April, average weekly hours for production
workers in Arizona’s manufacturing industry
increased by 0.8%. The April average work
week of 39.5 hours was a 3.1% improvement
over last year. The measure has been
improving (year-over-year) in each of the last
3 months. This increase comes after 19
straight months with year-over-year declines.
While still significantly below pre-recession
levels, a continued increase of the average
work week for manufacturing workers may
result in companies adding people to their
payrolls in the coming months.
The Department of Commerce reported that
31,806 initial claims for unemployment
insurance were filed in April. The month-overmonth increase of 15.6% and 17.5% in March
and April, respectively, was mainly
attributable to seasonal factors. April marked
the sixth consecutive month with a year-overyear decline in claims. Initial jobless claims
peaked in April 2009 when more than 41,000
individuals filed for benefits. See Tracking
Arizona’s Recovery, for historical information.
While most employment news was positive, the
recovery is only in its initial stages. Arizona

(Continued)

economy has lost a total of (293,800) jobs since
the recession started in December 2007. This
figure represents a (10.8)% reduction in total
nonfarm employment in the state. See
Tracking Arizona’s Recovery, for historical
information.
Housing
Some of the good news related to the labor
market must also be weighed against the
more mixed news from the housing market.
ASU’s Realty Studies Group reported earlier
this month that short sales and foreclosures
continue to drive the housing market in the
Greater Phoenix area. Foreclosures
combined with the resales of previously
foreclosed properties accounted for 60% of all
existing single-family home sales in April.
Additionally, sales of new homes fell to a new
record low in the first quarter of 2010 (data
available from first quarter of 1995).
The silver lining in ASU’s realty data is that the
median price for existing single-family homes
appears to have bottomed out in the second
quarter of 2009 and that the affordability
index for such properties continues to remain
at a near-record high level. The May 2010
S&P/Case-Shiller Home Price Index, however,
suggests that while housing prices have
rebounded from recent lows, there does
appear to be renewed weakness in prices
due to the expiration of tax credits and the
number of foreclosures.
In Phoenix, the S&P/Case-Shiller Home Price
Index declined for the third straight month in
April to 109.52 but remains above the recent
low of 103.56 seen in May 2009. On the
positive side, however, April was the first
month there has been a year-over-year
increase in the measure since the index
peaked in December 2009.
In terms of foreclosures, the news in April was
improved from the prior month. Initial
Maricopa County foreclosure notices - the
initial step in the foreclosure process - were
7,064, (981) less than in March. In total, there
were 46,834 pending foreclosures in Maricopa
County during April. While this level is still
higher than a year ago, the April numbers are
down from the highpoint of 51,466 in
December. See Tracking Arizona’s Recovery,
for additional historical information.
Given the weakness in the economy, decline

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

Economic Indicators
in housing prices, and excess supply,
permitting activity remains relatively low. In
Arizona, an average of 1,204 single-family
residential building permits and 110 multifamily residential building permits were issued
per month between February and April 2010.
Over the last year, a total of 14,514 singlefamily permits have been issued.
State Agency Data
Participation in income driven programs did
not change much over the prior month, and
continues to remain significantly above last
year.
In May, AHCCCS caseloads equaled 1.36
million members, a 0.2% increase over the prior
month. AHCCCS caseloads are currently
11.1% above May 2009 levels. Total enrollment
has stayed essentially unchanged since
December 2009. The FY 2010 budget funded a
projected June caseload growth of 14.4%, for
a total of 1,435,445 members.
There were 76,404 TANF recipients in the
state in March, a monthly caseload
decrease of (2.5)%. Year-over-year, the
number of TANF recipients has declined by
(10.8)%. 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
households to purchase food. In March,
there were a total 1.04 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 28.6%. The number
of food stamp recipients began increasing
steadily in July 2007, after several years in the
550,000 to 575,000 range.
The Department of Correction’s (ADC) inmate
population 3-month average count totaled
40,507 inmates between February and April
2010. While population growth averaged 44
inmates per month during the period, fiscal
year-to-date population growth is half that
amount, or an increase of 22 inmates per
month.

(Continued)

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

Economic Indicators

(Continued)

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

April
April
April
April
April
April
April
Feb-Apr
Feb-Apr

9.5%
31,806
87,347
2.42 million
147,100
112,800
39.5
$27.1 million
$121.4 million

(0.1)%
17.5%
(3.8)%
0.8%
(0.1)%
2.0%
0.8%
(5.2)%
(14.0)%

0.9%
(22.6)%
(14.3)%
(1.6)%
(5.0)%
(14.9)%
3.1%
(35.6)%
(7.6)%

Feb-Apr
Feb-Apr

1,204
110

2.9%
(39.8)%

52.7%
(25.0)%

April
April

10,255
1,670

(5.6)%
(5.1)%

12.7%
74.9%

April
April

$148,000
$102,000

0.0%
2.0%

12.4%
(11.3)%

April
April
March
April
March
February

7,064
46,834
109.52
6.6 months
3.58 million
$7.24

2nd Quarter 2010
April
4th Quarter 2009
July 1, 2009
May
March
March
Feb-Apr

49.6
199.38
$218.1 billion
6.60 million
1,359,534
76,404
1,042,748
40,507

(1.2)%
0.5%
1.1%
N/A
0.2%
(2.5)%
0.9%
44 inmates

NA
(1.5)%
(1.8)%
1.5%
11.1%
(10.8)%
27.6%
499 inmates

Jan/Mar
Jan/Mar

19,738
28,932

2
(333)

(459)
(955)

1st Quarter 2010
(Second Estimate)
May
April
Jan-Mar
April

$13.2 trillion

3.0%

2.5%

63.3
109.3
$3.82 billion
217.6

9.7%
(0.1)%
5.6%
(0.1)%

15.5%
10.5%
48.2%
2.2%

(12.2)%
(4.6)%
(0.5)%
0.2 months
23.2%
(3.8)%

(22.3)%
8.5%
2.5%
(0.2) months
2.5%
(12.7)%

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

April Spending
FY 2010 Spending
April 2010 General Fund spending of $308
million was $(535) million below April 2009. For
the year-to-date, spending of $7.4 billion is
($1.2) billion below 2009 Table 6 below
provides a summary of April spending, and
Table 7 at the end of this document provides
detailed spending by agency.

•

•

The Arizona Department of Education
(ADE) has spent $3.1 billion year-to-date
in 2010, or $(0.4) million less than 2009. In
April, ADE spending was ($465.6) million
lower than the prior year. April
expenditures were lower than the prior
year due to a single payment to school
districts, compared to double payments
in FY 2009. Additionally, the state used
$150 million of state fiscal stabilization
monies to pay school districts.
The Arizona Health Care Cost
Containment System (AHCCCS) spent
$19.4 million in April. This low expenditure
amount is due to the use of tobacco
settlement monies instead of General

•

Fund for capitation payments in April.
Spending in AHCCCS, DHS, and DES is a
combined ($22.0) million less in April 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.

•

University spending was ($55.8) million less
than in April of the prior year. This
decrease was due to a rollover of the
monthly payment. Year to date University
spending is $783 million, or $(49.6) million
below FY 2009.

•

The Department of Public Safety (DPS)
spending was $(3.4) million in April. The
negative monthly expenditure amount
reflects a technical adjustment to shift
funds throughout the year.

Table 6
General Fund Spending ($ in Millions)

Agency
AHCCCS
Corrections
Economic Security
Education
Health Services
Public Safety
School Facilities Board
Universities
Other
Total

Apr 10
19.4
83.2
31.4
88.6
13.0
(3.4)
0.6
0.8
74.5
308.1

Change from
Apr 09
(0.8)
10.6
(22.3)
(465.6)
1.1
(12.1)
0.5
(55.8)
9.8
(534.6)

Year to
Date
1,076.2
720.1
510.1
3,148.2
468.6
38.7
104.6
783.0
569.7
7,419.2

YTD Change
from FY 09
(204.8)
(27.6)
(207.4)
(0.4)
(86.6)
(13.3)
(83.2)
(49.6)
(529.8)
(1,202.7)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

Summary of Recent Agency Reports
AHCCCS – Report on Graduate
Medical Education Residency
Positions – Pursuant to A.R.S. § 362903.01, the Arizona Health Care
Cost Containment System has
submitted its annual report on the
number of new residency positions
funded by local, county, or tribal
governments. The agency
indicates that these contributions in
FY 2009 provided partial funding for
an additional 458 residency
positions. The positions were funded
by local contributions of $14,516,300
and a federal match of $27,991,200,
resulting in $42,507,500 total new
funding. (Aaron Galeener)
State Department of Corrections/
Arizona Department of
Administration – Report on the
Status of Public and Private Beds –
Laws 2007, Chapter 261 authorized
the Arizona Department of
Administration to contract for 2,000
new private prison beds, as well as
the construction of 4,000 new public
beds, to be funded via a 20-year,
$200 million lease-purchase
agreement. Highlights of this report
for the 3-month period ending
March 31, 2010 are as follows:
2,000 Private Beds
•
Construction of the 2,000
private bed expansions in
Kingman, which results in a total
of 3,400 beds, has been
completed and the beds are
currently operational. The per
diem rate is approximately $59.
4,000 State Beds
•
Construction of the additional
beds at the Yuma (2,000 beds)
and Tucson (1,000 beds) prisons
is 100% complete, while
construction of the beds at the
Perryville (1,000 beds) prison is
99% complete.
•
During the remodel to address
code violations in the existing
kitchen at the Perryville prison,
the contractor encountered
unforeseen mold and corrosion.
While demolition and

abatement has been
completed, project completion
will be delayed by 1 month, or
until August 2010.
•
Previous concerns regarding
reduced water quality from the
expansion of the wastewater
treatment plant at the Yuma
facility were unfounded and
ADC received a permit by the
Department of Environmental
Quality to operate the plant.
(Martin Lorenzo)
Department of Public Safety –
Quarterly Report on GIITEM –
Pursuant to Laws 2009, 1st Regular
Session, Chapter 12 (General
Appropriation Act), the Department
of Public Safety (DPS) is required to
report quarterly on the Gang and
Immigration Intelligence Team
Enforcement Mission (GIITEM). As of
the third quarter of FY 2010, DPS had
spent or encumbered $6.1 million of
the $9.4 million appropriation for the
direct DPS immigration staff. In
terms of local law enforcement
grants, DPS has not spent any of the
FY 2010 $2.6 million appropriation
but has spent $3.4 million of an
available $3.5 million in non-lapsing
FY 2009 monies. (Eric Billings)
Department of Public Safety –
Quarterly Report on Photo
Enforcement – Pursuant to a
footnote in Laws 2009, 1st Regular
Session, Chapter 12 (General
Appropriation Act), the Department
of Public Safety (DPS) is required to
report quarterly on the Photo
Enforcement program in FY 2010.
During the third quarter of FY 2010,
the Photo Enforcement Program
issued 93,138 Notices of Violation
(NOVs) and 80,901 citations from 40
mobile units and 36 stationary units.
Of these NOVs, 48,528 became
either civil or criminal citations. A
total of 22,447 NOVs were paid
within 40 days of issuance with an
additional 42,694 citations also
receiving payment.

Since the inception of the program
in September 2008, a total of
1,011,174 NOVs and citations have
been issued and 368,122, or 36%,
have been paid.
The NOVs and citations issued by
the Photo Enforcement Program
generated $8.9 million in revenue
for the third quarter of FY 2010 and
have generated $56 million since
the program’s inception. The
General Fund share was $4.8 million
in the third quarter and $34.7 million
since the program’s start.
DPS has announced that it intends
to end the current photo radar
program on July 15. (Eric Billings)
Arizona Board of Regents – Report
on Paid Speakers – Pursuant to Laws
2009, 3rd Special Session, Chapter 9,
Section 19 (FY 2010 Higher
Education Budget Reconciliation
Bill), the Arizona Board of Regents is
required to submit a report that lists
invited paid speakers and the
associated costs for those speakers
to state universities in FY 2009.
Arizona State University reported 545
different paid speakers with
associated costs of $1,197,800,
Northern Arizona University reported
376 paid speakers with costs of
$364,400, and University of Arizona
listed 584 paid speakers and costs
of $495,900. The report noted that
some speakers had presented more
than once. (Marge Zylla)

12

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2010

Table 7

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
April 10
April 09
1,888.2
2,409.6
143.3
44.1
496.2
(133.9)
19,399.5
(818.1)
137.9
(31.7)
1,217.7
104.9

(188.3)
55.6

37.7
51.5
33,016.6
71.6
83,197.7
2,878.4
31,353.9
88,591.8
1,297.3
613.4
13.1
104.4
38.2
162.7
79.6
59.2
37.2
186.8
137.7
12,977.4
322.4
32.1
3.3
426.5

(20.8)
(203.9)
5,957.7
(327.9)
10,558.0
(175.8)
1,993.8
(22,345.1)
(465,593.1)
680.4
283.7
2.2
89.2
(22.6)
1.5
(118.4)
28.0
(134.1)
(160.3)
(18.5)
1,132.7
182.7
5.1
(18.9)
169.3

1,050.0
10,532.8
1,486.7
4,009.2
1,085.6
13.0

492.3
1,879.7
514.6
(1,035.8)
(224.1)
6.0

Year-to-Date
15,937.7
815.0
7,334.5
1,076,237.5
794.1
400.0
15,519.2
578.5
599.3
148.0
2,468.2
132,426.3
485.4
720,121.0
(4.6)
252.0
18,185.6
510,080.9
3,148,218.3
8,241.8
4,740.8
7,000.0
170.2
581.5
797.9
2,642.5
1,907.7
100.0
666.0
388.6
5,794.7
1,993.5
468,551.1
3,520.4
574.8
26.1
80.3
4,922.3
14,595.5
74,062.6
12,030.0
54,773.1
11,725.8
67.3

YTD Change from
FY ‘09
(7,578.4)
(180.6)
(1,691.1)
(204,754.5)
(540.0)
400.0
(2,540.4)
(81.4)
(148.0)
148.0
(23,581.7)
(3,309.5)
(3,575.8)
(27,633.4)
(1,190.2)
252.0
(2,558.9)
(207,411.9)
(420,994.0)
(1,217.1)
(31.9)
(6,000.0)
(5.6)
29.6
(113.5)
(318.1)
(707.6)
100.0
(55.6)
(951.2)
(40.8)
215.1
(86,647.5)
(220.2)
(24.7)
(193.6)
(111.5)
(1,010.2)
1,086.0
(2,710.2)
405.6
(6,897.3)
(2,886.1)
1.2

13

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 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
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

Change from
April 09

Year-to-Date

YTD Change from
FY ‘09

1,047.5
858.9
142.9
293.6
301.6
599.4
52.8
23.7
6.0
213.9
903.1
(3,410.0)
438.6
218.2
1.3
132.7
3,853.4
646.0
463.3
22.5
10.0
192.1

(351.1)
(22.1)
(0.2)
(116.7)
125.6
(22.2)
(247.9)
(45.7)
(6.6)
(14.4)
(0.8)
77.5
(27.7)
(546.2)
(12,145.1)
328.0
(19.2)
0.2
(21.3)
604.8
546.9
282.1
6.2
5.1
(39.1)

12,470.8
10,505.0
1,947.0
4,260.6
5,453.7
7,430.8
747.7
801.9
1,068.1
630.8
112.0
14.4
22,114.2
3,331.0
300.0
38,700.6
4,505.2
1,289.4
11.7
2,686.8
30,399.2
104,630.7
5,979.0
220.8
200.0
52.8
2,236.9

(2,090.7)
(302.2)
(156.2)
(7,438.0)
(460.2)
(19.5)
(2,674.9)
(199.1)
(229.7)
(174.5)
(133.0)
(94.4)
14.4
(2,780.1)
(288.1)
(662.7)
300.0
(13,306.5)
2,435.7
(315.5)
0.3
(596.6)
(27,183.5)
(83,215.6)
68.8
(7.8)
(112.2)
(1.1)
29.1

170.8
658.3
768.3
-

(3,083.9)
(24,198.0)
(7,483.1)
(21,079.6)
141.8
-

20,092.3
345,234.6
116,881.2
300,833.4
7,699.0
250.0

965.4
(23,293.1)
(7,108.5)
(20,201.2)
1,426.9
250.0

1,053.2
166.8
473.4
308,079.2

(66.4)
77.4
(1,669.7)
(534,617.9)

14,019.4
1,045.5
20,455.1
7,419,163.0

5,847.8
(162.8)
(5,498.7)
(1,202,702.2)

April 10