JLBC - Monthly Fiscal Highlights

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

September 2010

Summary
August General Fund revenue collections
totaled $648.5 million. Due to the temporary
1 cent sales tax, total collections grew by
23.8% compared to August 2009. Without the
tax increase, base revenues would have
increased 5.8% compared to the prior year.
The growth of base revenues in August follows
2 consecutive months of revenue declines in
June and July.

Finance Advisory Committee
At its September 29, 2010 meeting, the FAC
heard presentations on the status of the
economy, including updated General Fund
revenue and shortfall estimates. 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.
The meeting highlighted the following points:

www.azleg.gov/jlbc.htm

“August results
were $(11.9)
million below
forecast. For the
2 months year to
date, revenues
are $(39.2)

Despite the growth in revenues, the August
results were $(11.9) million below forecast. For
the 2 months year to date, revenues are
$(39.2) million below forecast.
In comparison, August General Fund
spending was $1.1 billion, or $507 million
above last year. The increase was due to the
timing of K-12 school district payments.
Without the adjustments, spending would
have been lower than last year.
Fiscal year-to-date, General Fund revenues of
$1.3 billion were offset by $2.6 billion in
spending. This imbalance caused the state's
operating fund balance to decline to $487.3
million at the end of August. The state pays
its bills out of the operating fund balance,
which consists of General Fund monies and
certain dedicated funds.

• After an unprecedented third consecutive
year of revenue declines in FY 2010,
General Fund collections have begun to
grow again. After 2% growth in the 4th
quarter of FY 2010, preliminary FY 2011 1st
quarter growth is 3.3%. This growth includes
an early estimate of September revenues,
which will be reported in the October MFH.
• With over 300,000 lost jobs since December
2007 and over 40,000 pending foreclosures
in Maricopa County, the road to complete
recovery may well take to mid-decade.
• The projected FY 2011 budget shortfall is
now estimated at up to $(825) million. This
estimate grew from the prior estimate
of $(700) million due to lower than
expected revenues.

million below
forecast.”

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
September 30, 2010.

Table of Contents
Summary

Summary of Recent Agency Reports

• Finance Advisory Committee .......................... 1

• AHCCCS – SAVE Program ................................. 9

• State Fiscal Stabilization Fund Update ........... 2

• Corp. Comm. – Division Filings.......................... 9

• JLBC Tax Handbook ........................................... 2

• Corrections – Inmate Utility Fees ...................... 9

• Staff Retirements................................................. 2

• DEMA – Camp Navajo Fund ............................ 9

August Revenues.................................................... 3

• AZ Historical Society – Expenditures .............. 10

Economic Indicators.............................................. 5
FAC Meeting Summary ......................................... 9

• AZ Dept. of Homeland Security – Funding ... 10
• State Parks Board – Travel Report .................. 10
• SFB – Construction at ASDB ............................. 10

August Spending .................................................. 11

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

Summary

(Continued)

Table 1

August
Year-to-Date

“The FY 2012
budget shortfall
is projected to
grow to $(1.4)
billion if no
permanent
actions are
taken to resolve
the FY 2011
shortfall.”

General Fund Revenues ($ in Millions)
FY 2011
Difference From
Difference
Collections
Budget Forecast
From FY 2010
$ 648.5
$ (11.9)
$ 124.6
$ 1,308.4
$ (39.2)
$ 211.6

• The FY 2012 budget shortfall is projected to
grow to $(1.4) billion if no permanent
actions are taken to resolve the FY 2011
shortfall. This estimate assumes the
consensus revenue forecast of 4.8% along
with funding formula spending increases
and the backfill of one-time federal
assistance. The shortfall does not include
at least another $1 billion in suspended
funding formulas.
• Any sizeable permanent spending
reductions in FY 2011 will prove challenging
as over 75% of the General Fund budget is
governed by federal maintenance of effort
provisions as a condition of accepting
federal aid. The education restrictions end
in June but the Medicaid provisions will
remain in effect as part of the recent
federal health care legislation.
See the September 2010 FAC Meeting for
additional information.
State Fiscal Stabilization Fund Update
In other budget news this month, Governor
Brewer announced the release of funds from
the Government Services portion of the State
Fiscal Stabilization Fund for several awards:
• $4 million for economic aid to Arizona’s 13
rural counties.
• $2 million to support the Arizona Center for
Algae Technologies and Innovations, which
will be matched by industry investment.
• $100,000 to coordinate a statewide
approach for education in the areas of
Science, Technology, Engineering, and
Math.
The Government Services funds are
distributed at the discretion of the Governor
and are to be used for public safety and
“other government services”. Approximately
$30 million of these funds have yet to be
specifically allocated.

JLBC Tax Handbook
JLBC Staff published its annual report, the
2010 Tax Handbook this month. This report
provides a list of major state tax sources along
with historical collections, distribution formulas
and exemptions.
Staff Retirements
Two long-time JLBC Staff retired this summer.
Tim Everill was an Assistant Director and the
MFH editor. Tim's career spanned nearly 40
years with the City of Phoenix, the School
Facilities Board and the JLBC since 2001.
Sharon Savage also retired after 20 years as
an Administrative Assistant.
We wish both Tim and Sharon well after long
and distinguished careers in public service.

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

August Revenues
Sales Tax collections were $341.9 million in
August. Excluding the $64.2 million from the
temporary 1-cent increase, collections were
$277.7 million, or (3.4)% below August 2009.
Including the 1-cent increase, collections were
$(22.7) million below the forecast. The year-todate loss is $(47.6) million.
“Excluding…the
temporary 1cent increase,

Table 2 displays the August growth rates for the
largest categories

$277.7 million, or
(3.4)% below
August 2009.”

It is still unclear how this change is affecting
state withholding revenue. In the coming
months, DOR will be surveying a sample of
Arizona’s largest employers in order to
determine the impact of the new withholding
table.
Table 3

Individual Income Tax Growth Rates
Compared to Prior Year

Table 2

Sales Tax Growth Rates
Compared to Prior Year

[sales tax]
collections were

employee state withholding amounts are
calculated as a percentage of their gross
taxable wages.

Retail
Contracting
Utilities
Use
Restaurant & Bar

August
(2.8)%
(24.5)%
(0.4)%
1.3%
1.7%

YTD
(1.8)%
(25.9)%
(4.4)%
8.3%
1.1%

Retail and contracting together account for
about 60% of all sales tax revenues.
Contracting continued its poor performance,
with a (24.5)% decrease compared to August
of last year, while the retail category fell by
(2.8)%.
The temporary 1-cent increase generated
$64.2 million for August, or $(7.4) million below
forecast. Collections of the temporary tax are
expected to increase over the next several
months as the impact of exemptions to the
rate decreases.
As discussed in the August MFH, any contract
signed prior to the effective date of the
increase is exempt from the tax increase for
the duration of the contract. In August, more
than half of the contracting collections were
exempt from the new rate.
Individual Income Tax net revenues were
$257.2 million in August, or 11.3% above the
prior year. Collections were $17.7 million
above the forecast. Year-to-date, revenues
have grown 6.2% and are $18.1 million above
forecast through August.
As indicated in Table 3 below, withholding tax
payments increased by 7.0% in August, making
5 of the past 7 months positive. This increase
continues to be difficult to interpret due to
changes in the state withholding system.
As discussed in the August MFH, the
Department of Revenue (DOR) established a
new state withholding table. As of July 2010,

Withholding
Estimated +
Final Payments
Refunds

July
7.0%
24.8%
(24.0)%

YTD
2.5%
6.9%
(25.6)%

Corporate Income Tax net collections were
$18.2 million in August, or 211.1% above the
prior year. Collections were $4.9 million above
the forecast.
Year-to-date through August, revenues are up
5.5% and are $5.9 million above forecast. In
September, corporate collections have grown
substantially with increased business
profitability.
The Lottery Commission reports that August
ticket sales were $42.3 million, which is $(4.2)
million, or (9)%, below sales in the prior year.
Year-to-date, ticket sales are $84.8 million, or
0.2%, above last year. Although ticket sales
decreased slightly, distributions to state
beneficiaries are up $0.3 million, or 1.7%.
In August, the General Fund received $4.3
million in lottery distributions, an increase of
57.3% over the prior year. This large increase is
due to statutory distribution changes that
redirected monies previously designated for
the Local Transit Assistance Fund (LTAF and
LTAF II), County Assistance Fund (CAF) and
the State Parks Heritage Fund.
Non-General Fund
Tobacco Tax revenues were $26.8 million in
August. Collections were down (3.1)%
compared to the prior year, and were $(0.9)
million below the budget estimate for the
month. Year-to-date collections are down by
(3.8)% and are $(1.8) million below the budget
estimate.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

August Revenues

(Continued)

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 $99.0 million in August were up $7.8
million or 8.5% compared to August of last year. Year-todate, revenues have grown 5.5%.

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, along with funding the Early Childhood
Development and Health Board.

General Fund Revenue:
Change from Previous Year and Enacted Budget Forecast
August 2010
Current Month

FY 2011 YTD (Two Months)

Change From
August 2009

Actual
August 2010

Percent

Amount

Change from
Forecast
Percent

Amount

August 2009

Actual
August 2010

Forecast
Percent

Amount

Percent

Amount

Taxes
Sales and Use w/o 1¢ *
Income - Individual
- Corporate
Property
Luxury - Tobacco
- Liquor
Insurance Premium
Estate

$277,734,908

($9,869,169)

$559,449,639

($18,783,072)

257,155,321

26,040,185

11.3

(3.4) %

17,652,302

7.4

494,922,164

29,027,744

6.2

18,127,748

3.8

18,218,380

12,362,106

211.1

4,876,480

36.6

41,665,049

2,168,064

5.5

5,948,749

16.7

22,862

10.0

(409,605)

(9.3)

52,426

(6,630)

(11.2)

1,700,881

(468,867)

(21.6)

848,440

67.3

2,108,405
40,413,079

(1,952,431)

(4.6)

($15,291,137)

2,426
(812,119)
324,405
(5,286,921)

(5.2) %

4.9
(32.3)

251,120
3,988,256

(3.2) %

($32,629,026)

41,120
(1,092,744)

(5.5) %

19.6
(21.5)

18.2

3,869,130

(92,788)

(2.3)

(414,870)

(9.7)

(11.6)

81,411,780

(2,833,918)

(3.4)

(5,288,220)

(6.1)

--

437,176

143,070

48.6

437,176

131,812

41,262

45.6

26,812

$1,186,126,126

$9,283,619

1,580,655

437,176

143,070

48.6

437,176

79,793

49,124

160.2

27,293

$597,900,369

$27,145,828

Lottery

4,339,855

1,580,655

57.3

(860,145)

(16.5)

4,339,855

57.3

(860,145)

(16.5)

License, Fees and Permits

2,841,706

344,277

13.8

341,706

13.7

4,823,341

(182,692)

(3.6)

723,341

17.6

646,983

(519,460)

(44.5)

646,983

--

647,897

(518,091)

(44.4)

647,897

Sales and Services

1,428,795

(1,188,832)

(45.4)

(1,171,205)

(45.0)

2,604,443

(1,759,407)

(40.3)

(1,395,557)

(34.9)

Other Miscellaneous

2,110,810

(698,030)

(24.9)

(3,189,190)

(60.2)

4,090,753

(2,384,798)

(36.8)

(6,509,247)

(61.4)

--

0

(2,141,688)

(89.2)

2,844,055

Other Taxes
Sub-Total Taxes

4.8 %

$1,929,905

52.0
0.3 %

0.8 %

($14,843,255)

-25.5
(1.2) %

Other Revenue

Interest

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

0

0

--

258,312

6,615,146

--

0

11,626,461

6,133,756

111.7 %

(6,373,539)

(35.4) %

19,350,345

$609,526,830

$33,279,584

5.8 %

($4,443,634)

(0.7) %

$1,205,476,471

0

--

(2,114,550)

(42.6)

(5,378,882)
$3,904,737

0

--

--

(1,955,945)

(40.7)

(21.8) %

(9,349,655)

(32.6) %

0.3 %

($24,192,910)

(2.0) %

Other Adjustments
Urban Revenue Sharing
1¢ TPT Increase*
Sub-Total Other Adjustments

(39,500,543)

12,886,509

--

(0)

0.0

(79,001,087)

25,773,017

--

(1)

64,211,200

64,211,200

--

(7,412,329)

(10.3)

128,821,154

128,821,154

--

(14,960,663)

(10.4)

0.0

38,969,738

91,356,790

-- %

(7,412,329)

(16.0) %

102,916,762

207,690,866

-- %

(14,960,664)

(12.7) %

$648,496,568

$124,636,374

23.8 %

($11,855,963)

(1.8) %

$1,308,393,233

$211,595,603

19.3 %

($39,153,574)

(2.9) %

Highway User Revenue Fund

$99,049,000

$7,764,000

8.5 %

1.2 %

$199,395,000

$10,346,000

5.5 %

$3,150,000

1.6 %

Tobacco Tax (All Funds Total)

$26,773,222

(3.1) %

$54,126,448

($2,113,302)

(3.8) %

($1,835,287)

(3.3) %

TOTAL GENERAL FUND REVENUE
Non-General Funds

($869,557)

(3.1) %

$1,209,000
($869,557)

__________
* Sales and Use line excludes revenue from the temporary 1¢ increase approved by the voter in May 2010. That revenue is shown under One-Time Revenues. Total collections including the 1¢ increase were $341.9
million. This amount is $54.3 million, or 18.9%, above August 2009 and $(22.7) million, or (6.2)%, below forecast. Year to date, total collections including the 1¢ increase were $688.3 million. This amount is $110.0 million,
or 19.0%, above August 2009 and $(47.6) million, or (6.5)%, below forecast

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

Economic Indicators
In September, the Conference Board’s U.S.
Consumer Confidence Index declined to 48.5,
down (4.7) points from a revised August level of
53.2. Most of the decline in consumer
sentiments in September was driven by
deteriorating expectations about the coming 6
months as opposed to current conditions. The
latest reading indicates that consumers’
economic outlook has declined markedly
since the end of the second quarter.

“Arizona
personal income
was an estimated
$223.6 billion…in
the second
quarter of 2010, a
1.3% increase
over the prior
quarter.”

The Conference Board’s U.S. Index of Leading
Economic Indicators rose 0.3% in August,
following a 0.1% gain in July. Increasing
building permits, expanding money supply,
and a favorable interest-rate spread
outweighed the negative contributions from
greater jobless claims and slower delivery times
in the month of August. The forward-looking
measure has only declined once since it
began its turnaround in April 2009. However,
the index has grown more tepidly in recent
months, which lends further support that the
pace of the economic recovery has slowed.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), rose by 0.3% in
August, the same increase as in the prior
month. Year over year, the index is up by 1.2%.
The August increase in consumer prices was
due to higher energy prices. The core CPI,
which excludes food and energy prices,
remained unchanged in August. The slowgrowing economy appears to be placing
more downward than upward pressure on
consumer prices.
The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings (3-month
moving average) in the U.S. were $4.75 billion
in July, a 3.6% improvement over June and a
52.7% increase over the same month in the
prior year. Semiconductor sales have almost
doubled since bottoming 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.

Arizona’s coincident index decreased by
(0.1)% in August, the second decline in the last
3 months. Arizona was 1 of 16 states
nationwide for which the measure fell last
month. As seen in the graph below, after the
Arizona coincident index reached its trough in
December 2009, the measure increased for 5
consecutive months only to retreat slightly in
June. However, since June, the index has
been essentially flat, suggesting that the
economic recovery has lost some of its
momentum. See Tracking Arizona’s Recovery,
for additional historical information.
Arizona Coincident Economic Activity Index
230

220
(July 1992 = 100)

NATIONAL

210

200

190
Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

The Bureau of Economic Analysis (BEA)
released new state personal income figures
earlier this month. According to BEA, Arizona
personal income was an estimated $223.6
billion (seasonally adjusted at annual rate) in
the second quarter of 2010, a 1.3% increase
over the prior quarter. However, half of this
growth in personal income was attributable to
current transfer receipts, such as retirement,
medical and income maintenance benefits
and unemployment insurance compensation.
In the absence of transfer payments, Arizona
personal income would have been roughly at
the same level as in the third quarter of 2006.
Since this measure without transfer payments
better captures underlying economic activity
in the state than the total personal income
figure, it provides further evidence that the
state has much ground to make up in the
recovery phase of the business cycle.
Employment
According to the latest release of employment
data by Arizona Department of Commerce,
the state added 28,200 nonfarm payroll jobs in
August over the prior month. While this
represented a month-over-month increase of

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

Economic Indicators
1.2%, it was nonetheless below the 10-year
average of 1.4%. Compared to 12 months
ago, payroll employment is down by (0.1)%, or
(2,000) jobs, the smallest year-over-year
decline since February 2008.

“The Department
of Commerce
reported that
27,473 initial
claims for
unemployment
insurance were
filed in August…
(16.1)% fewer
claims than in
August 2009."

The construction sector added 1,900 jobs to its
payrolls in August, the largest monthly increase
since April this year. Construction jobs
represented 4.9% of total nonfarm
employment in August, or slightly less than half
of what it was during the peak of the housing
boom in the summer of 2006.
August marked the 31st consecutive month
with a year-over-year loss in total nonfarm
employment, the longest streak in recorded
history (data available from 1939). Year-overyear job losses peaked in June 2009 when
there were reportedly (217,200), or (8.4)%,
fewer people on the payrolls than in the
previous year. Since the onset of the recession
in December 2007, the state has lost (335,000)
jobs, or (12.3)% of its workforce. Almost onethird of these jobs losses occurred in the
construction industry. See Tracking Arizona’s
Recovery, for additional historical information.
The state’s unemployment rate inched up
0.1% in August to 9.7%, the highest reading in
27 years. According to the Bureau of Labor
Statistics, Arizona was one of 27 states
nationwide that saw its jobless rate rise in
August. The national unemployment rate rose
from 9.5% to 9.6%.
The Department of Commerce reported that
27,473 initial claims for unemployment
insurance were filed in August. At this level,
there were (16.1)% fewer claims than in
August 2009. Last month also marked the
10th consecutive month with year-over-year
declines in first-time claims. Claims peaked in
April 2009 when more than 41,000 individuals
filed for initial jobless benefits. See Tracking
Arizona’s Recovery, for additional historical
information.
The average weekly hours of production
workers in manufacturing industries is a leading
indicator since “factory hours” tend to lead
the business cycle as employers usually adjust
work hours before increasing or decreasing
the size of their workforce. According to the
Arizona Department of Commerce,
preliminary data indicates that the average
work week in August was 39.4 hours, a (1.3)%
decrease from the prior month. Some of the
alternating monthly increases and decreases

(Continued)

reported in the last few months can be
attributed to seasonal variations. When
compared to the same month in the prior
year, the measure has advanced in each of
the previous 7 months. However, it will likely
take some time before the average
workweek returns to the pre-recession level of
40.5 hours.
Housing
In August, the number of new Maricopa
County foreclosure notices, which is the initial
step in the foreclosure process, declined 7.1%
from July levels to 7,559. The measure is down
(14.2)% relative to the August 2009 peak.
The number of Maricopa County pending
foreclosures, or homes at risk of being sold by
the trustee at some point in the future,
declined for the 6th straight month to 41,318.
Pending foreclosures are currently (16.4)%
below last year’s levels and are (19.7)% below
the December 2009 peak of 51,466. See
Tracking Arizona’s Recovery, for additional
historical information.
The single-family median resale home price in
Metropolitan Phoenix totaled $139,585 with a
total of 8,790 existing home sales. Relative to
July levels, the median resale price declined
by (3.1)%. Compared to a year ago the
median resale price decreased slightly by
(0.4%). The sale of foreclosed homes
accounted for 45.4% of total single-family
transactions , the highest level since February
2009.
Based on MLS data released in September,
the month’s supply of housing indicator
decreased to 7.4 months in August, (0.4)
months below the prior month. Relative to
last August, the measure is up 1.5 months.
Based on data released by the U.S. Census
Bureau, an average of 998 building permits
were authorized per month in Arizona
between June and August 2010. This is
comprised of 915 single-family residential
building permits and 82 Multi-family permits.
In percentage terms, single-family permitting
activity is down (38.7)% from a year ago while
multi-family permits are up 690% as a year
ago an average of only 10 permits were
authorized.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

Economic Indicators
State Agency Data
Participation in income driven programs has
either moderated or declined in the last few
months, as evidenced by the data presented
below.

“There were
55,337 TANF
recipients in
the state in
July...yearover-year, the
number of
TANF
recipients has
declined by
(34.8)%.”

In September, AHCCCS caseloads equaled
1.35 million members, a (0.1)% decrease over
the prior month. AHCCCS caseloads are
currently 1.8% above September 2009 levels.
Total enrollment has stayed essentially
unchanged since December 2009. The
FY 2011 budget funded a projected
September 2010 caseload growth of 5.2%
above September 2009 levels, for a total of
1.40 million members.
There were 55,337 TANF recipients in the
state in July, a monthly caseload decrease
of (24.2)%. Year-over-year, the number of
TANF recipients has declined by (34.8)%.
This decline is the result of changes to the
statutory lifetime limit a person may receive
cash assistance. Beginning in July, recipients
can only receive benefits for a maximum of
36 months in a lifetime. Previously, the
maximum had been 60 months. This change
resulted in a caseload decline of
approximately (16,000) recipients. The
FY 2011 budget assumed caseloads of
approximately 70,000 in FY 2011.
The Supplemental Nutrition Assistance
Program (SNAP), formerly known as Food
Stamps, provides assistance to low-income
households to purchase food. In July, there
were a total 1.08 million food stamp
recipients in the state, an increase of 3.0%
over the prior month. Compared to the
same month last year, food stamp
participation was up by 13.5%. The number
of food stamp recipients began increasing
steadily in July 2007, after several years in the
550,000 to 575,000 range.
The 3-month average count of the Department
of Correction’s (ADC) inmate population
decreased to 40,377 inmates between June
and August 2010. Relative to a year ago, the
population has declined by 140 inmates.

(Continued)

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 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)
Greater Phoenix S&P/Case-Shiller Home Price Index
(Jan. 2000 = 100)
- Arizona 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

August
August
August
August
August
August
August
Jun-Aug
Jun-Aug

9.7%
27,473
86,789
2.38 million
148,300
116,300
39.4
$31.0 million
$129.6 million

0.1%
(11.0)%
0.2%
1.2%
(0.9)%
1.7%
(0.5)%
(1.6)%
(3.1)%

0.2%
(16.1)%
(26.0)%
(0.1)%
(1.5)%
(7.2)%
3.7%
(26.4)%
(2.3)%

Jun-Aug
Jun-Aug

931
73

(7.1)%
6.3%

(37.3)%
(38.7)%

August
August

8,790
1,470

(1.7)%
(14.8)%

(3.2)%
(0.3)%

August
August

$139,585
$94,500

(3.1)%
(5.4)%

0.4%
(12.1)%

August
August
July

7,559
41,318
110.3

(7.1)%
(2.0)%
(0.6)%

(14.2)%
(16.4)%
3.4%

August
July
June

7.4 months
3.32 million
$5.94

3rd Quarter 2010
August
2nd Quarter 2010
July 1, 2009
September
July
July
Jun-Aug

49.1
198.48
$223.6 billion
6.60 million
1,351,146
55,337
1,078,387
40,377

(1.0)%
(0.1)%
1.3%
N/A
(0.1)%
(24.2)%
3.0%
(136) inmates

(18.4)%
0.3%
1.7%
1.5%
1.8%
(34.8)%
13.5%
(140) inmates

May/June
May/June

19,939
27,771

(29)
(198)

(208)
576

2nd Quarter 2010
(Second Estimate)
September
August
May-Jul
August

$13.2 trillion

1.6%

3.0%

48.5
110.2
$4.75 billion
218.2

(8.8)%
0.3%
3.6%
0.3%

(9.2)%
6.9%
52.7%
1.2%

(0.4) months
(0.9)%
(3.1)%

1.5 months
(0.7)%
5.9%

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

FAC Meeting
At its recent meeting, the Finance Advisory
Committee (FAC) heard presentations on
General Fund Revenue collections, the U.S.
economy, and state cash flows.
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:
• The University of Arizona Economic and
Business Research (EBR) General Fund
baseline model;
• The EBR conservative forecast model;
• The FAC panel; and
• JLBC Staff.

Given the 4-sector consensus forecast, JLBC
Staff outlined the latest budget shortfall
estimates for FY 2011 and FY 2012. In
addition, JLBC Staff outlined budget solutions
used to address past budget shortfalls, along
with the challenges of addressing future
shortfalls due to federal restrictions.
In addition to the JLBC Staff presentation,
panel members heard formal presentations
from economist Jim Rounds and the State
Treasurer, Dean Martin.
The presenters and FAC panelists generally
believed that the recession has technically
ended in Arizona, but that the recovery is
likely to be very gradual and would depend
on positive changes in the real estate market,
along with an improved employment outlook.

Summary of Recent Agency Reports
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 2 latest quarterly
reports 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 25,821 individuals
between January 1, 2010 and June 30, 2010.
During this period, AHCCCS and DES did not
identify any fraudulent documents using the
SAVE program. (Amy Upston)
Corporation Commission – Report on
Corporations Division Filings – Pursuant to a
General Appropriation Act footnote, the
Corporation Commission submitted an annual
report on the total number of filings received
and processed by the Corporations Division
and the amount of time, in business days, to
process each type of service.
For expedited filings, the amount of time
required to process corporate filings
increased from an average of 4 business days
in FY 2009 to 5 business days in FY 2010. The
commission’s goal for processing expedited
filings is 5 business days or less.

For regular filings, the amount of time required
to process corporate filings increased from an
average of 22 business days in FY 2009 to 30
business days in FY 2010. The commission’s
goal for processing regular filings is 30 business
days or less.
The commission also reported that in FY 2010
all of the 81,242 corporate filings received
were processed and all of the 120,614 annual
report filings received were processed. As
compared to FY 2009, the corporate filings
increased from the 78,589 corporate filings
received, whereas the annual reports
declined from the 136,485 annual reports
received. (Juan Beltran)
Department of Corrections - Report on Inmate
Utility Fees - Pursuant to A.R.S. § 31-239, the
Department of Corrections (ADC) shall
annually report on monies collected from
inmates who use electrical appliances. The
report shall also include information on the
expenditure of any monies collected. Statute
requires the department to charge a fee, not
to exceed $2.00 per month, to inmates
possessing at least one electrical appliance.
For FY 2010, the department assessed a
monthly utility fee of $2.00 and collected
$448,186.74. (Martin Lorenzo)
DEMA – Report on Camp Navajo Fund –
Pursuant to A.R.S. § 26-152, the Department of

10 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

Summary of Recent Agency Reports
Emergency and Military Affairs
(DEMA) is required to submit an
annual report by August 31 of each
year describing the activity in the
Camp Navajo Fund. The Camp
Navajo Fund pays for the National
Guard to operate a regional
training site and storage facility
located at Bellemont. The fund’s
revenues consist of monies received
from federal and other government
sources for storage of government
commodities and services provided
by the camp. DEMA reports that
the Camp Navajo Fund received
revenues of $9.3 million and had
expenditures of $10.9 million in FY
2010. The fund had a beginning
balance of $1.9 million, leaving a
fund balance of $304,000 at the
end of the fiscal year. (Eric Billings)
Arizona Historical Society – Report
on Non-Appropriated Expenditures
– Pursuant to A.R.S. § 41-821E, the
Arizona Historical Society is required
to report on non-appropriated fund
expenditures for the society. Nonappropriated expenditures for FY
2010 were $855,400, a decrease of
$(146,900) below the FY 2009 total
of $1,002,300. (Bob Hull)
Arizona Department of Homeland
Security – Report on Homeland
Security Funding – Pursuant to A.R.S.
§ 41-4255, the Arizona Department
of Homeland Security has submitted
an annual report detailing grant
allocations and expenditures for
Homeland Security Grants from

Federal Fiscal Year (FFY) 2006
through FFY 2009. The report
indicates that $30.5 million of the
$30.7 million FFY 2006 allocation has
been expended. Information for
FFY 2007 - FFY 2009 is included in
Table 1 below.
The state was allocated and the
Arizona Department of Homeland
Security awarded $57.8 million in
homeland security grants for FFY
2009. The department reported
total expenditures of $8.0 million,
leaving $49.8 million unexpended.
State agencies were awarded $11.0
million, of which no money has
been expended. Local
governments were awarded $46.8
million, of which $8.0 million has
been expended. The largest local
grantee was the City of Phoenix
($6.2 million). The largest state
grantee was the Department of
Emergency and Military Affairs
(DEMA) ($6.2 million). The largest
individual grant of $6.1 million went
to DEMA to help structure individual
emergency management
programs, strengthen emergency
management capabilities, and
develop systems that encourage
the building of partnerships with the
public and private sector.
FFY 2009 represented an increase
from the amount received in FFY
2008 and FFY 2007. While Arizona
received $57.8 million in FFY 2009,
the state received $50.5 million and
$40.8 million in FFY 2008 and FFY

(Continued)

2007, respectively. Of the funds
received, 66.6% have been
expended for FFY 2008, and 94.8%
have been expended for FFY 2007.
(Eric Billings)
State Parks Board – Annual Report
on Out-of-State Travel – Pursuant to
a FY 2010 General Appropriation
Act footnote, the State Parks Board
is submitting a report on out-of-state
travel expenses in FY 2010. The
footnote stipulates that during FY
2010, out-of-state travel expenses
by State Parks Board staff shall not
exceed $5,000 each year from
appropriated or non-appropriated
monies. The Parks Board spent $150
for out-of-state travel expenses in FY
2010. (Art Smith)
School Facilities Board - Report on
Costs for Building Renewal and New
Construction at the Arizona State
Schools for the Deaf and the Blind The School Facilities Board (SFB) is
required to biennially report on the
resources needed to fulfill the
building renewal and new
construction requirements for the
Arizona State Schools for the Deaf
and the Blind (ASDB). ASDB
operates 2 campuses, a campus in
Phoenix and a campus in Tucson.
According to SFB, the total cost for
building renewal for ASDB is
projected to be $636,500 in FY 2012
and $689,100 in FY 2013. SFB also
estimates new construction costs
totaling $21,052,900 for ASDB to
meet minimum space requirements
through FY 2013. (Jack Brown)

Table 1

Awards and Expenditures by Homeland Security Grant Recipients
State Awards
Local Government Awards
Total Awards

FFY 2007
$13,868,000
26,974,200
$40,842,200

FFY 2008
$14,304,200
36,232,100
$50,536,300

State Expenditures
Local Government Expenditures
Total Expenditures

$12,685,500
26,017,900
$38,703,400

$8,681,900
24,951,100
$33,633,000

Percentage of Total Awards Currently Expended

94.8%

66.6%

FFY 2009
$10,987,100
46,790,500
$57,777,600
$

0
7,990,800
$ 7,990,800
13.8%

11 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

August Spending
FY 2011 Spending
August 2010 General Fund spending of $1.1
billion was $506.7 million higher than August
2009. Year-to-date, spending is $2.6 billion
through August, or $252.2 million above last
year. (See Table 6).

•

In August, Department of Education
spending was $604.9 million higher than
the prior year. August expenditures were
higher than the prior year due to rollover
payments being made to school districts
later in the year compared to in FY 2010.

•

The Department of Economic Security
(DES) had expenditures of $(7.8) million in
August. The negative expenditures are
the result of technical transfers between
the agency’s funds and does not reflect
actual DES spending.

•

Spending by the Department of Public
Safety (DPS) decreased by $(18.3) million
compared to last year. DPS spending in
August 2009 reflected the front loading of
the agencies’ General Fund
appropriation due to the delayed
enactment of the FY 2010 Revenue BRB,
which postponed the use of State
Highway Fund monies for agency
operations.

•

General Fund spending increased by
$52.1 million compared to last year due to
debt service payment associated with
the sale/leaseback of state assets.

“August 2010
spending of $1.1
billion was $506.7
million greater
than August
2009.”

•

Spending by the School Facilities Board
was $(49.6) million lower than the prior
year due to the refinancing of the
agencies’ August debt service payment.

•

University spending was $60.2 million in
August, or ($26.6) million lower than the
prior year due to the Universities’
payment deferral being spread
throughout the fiscal year. Currently, a
portion of each month’s payment is
deferred to the next year, while in FY 2010
the Universities entire June payment was
deferred.

•

Spending by individual agencies
compared to the prior year was higher
than it otherwise would have been due to
employer health insurance contributions.
These contributions were made in August
this year, compared to September in the
prior year.

Table 6
General Fund Spending ($ in Millions)

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

August 11

Change
from
August 10

Year to
Date

YTD Change
from FY 10

106.6
98.5
(7.8)
670.8
15.6
1.5
24.2

(28.2)
5.8
(8.4)
604.9
1.8
(18.3)
(49.6)

308.8
154.9
318.3
1,292.5
117.5
22.0
32.8

27.2
(1.2)
7.2
305.9
(19.2)
(18.2)
(49.1)

60.2
52.1
57.5
1,079.2

(26.6)
52.1
(26.8)
506.7

115.3
52.1
169.9
2,584.1

(58.7)
52.1
6.2
252.2

12 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010
Table 8

Agency
Department of Administration
Dept of Admin – Sale/Leaseback D/S
Office of Administrative Hearings
Department of Agriculture
AHCCCS
Arizona Commission on the Arts
Attorney General
AZ Capital Post Conviction Public
Defender
State Board of Charter Schools
Board of Chiropractic Examiners
Department of Commerce
Community Colleges
Corporation Commission
Department of Corrections
AZ Criminal Justice Commission
AZ St. Schools for the Deaf & Blind
Dept. of Economic Security
Department of Education
DEMA
Dept. of Environmental Quality
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Dept. of Financial Institutions
Department of Fire, Life, Bldg Safety
Office of the State Forrester
Arizona Geological Survey
Government Information Tech.
Governor
Gov. - OSPB
Department of Health Services
Arizona Historical Society
Prescott Historical Society of AZ
Independent Redistricting Comm.
Commission on Indian Affairs
Department of Insurance
Judiciary
Supreme Court
Superior Court
Court of Appeals
Dept. of Juvenile Corrections
State Land Department
Law Enforcement Merit System
Legislature
Auditor General
House of Representatives

General Fund Spending
($ in Thousands)
Change from
August 10
August 09
6,573.9
2,736.2

Year-to-Date
8,460.3

YTD Change from
FY 10
3,241.2

52,066.9
40.5
501.3
106,648.8
36.6
1,228.1
44.8

52,066.9
(18.9)
(25.1)
(28,151.0)
8.2
(107.1)
(20.7)

52,066.9
272.1
3,266.7
308,770.2
88.1
2,526.1
117.5

52,066.9
115.7
2,011.2
27,161.5
(13.9)
(363.3)
(26.2)

49.7
69.1
96.9
98,467.8
1,481.9
(7,757.4)
670,083.2
1,130.6
1.1
33.7
38.3
292.9
150.6
96.6
321.6
31.0
46.9
1,365.2
120.3
15,648.9
2,836.9
35.1
10.5
340.1

8.3
(148.0)
(25.0)
(63.5)
5,829.2
2.1
(421.9)
(8,418.3)
604,890.5
866.6
(364.8)
17.9
(7.9)
240.6
(53.7)
(48.1)
321.6
(25.0)
.8
773.9
(3.5)
1,820.2
2,580.0
(18.8)
.2
10.0
(483.3)

179.4
250.7
33,106.6
143.1
154,919.5
3,538.4
318,327.0
1,292,521.6
2,149.1
1.2
50.3
87.5
346.0
604.4
223.6
644.6
79.8
121.5
1926.0
312.4
117,486.4
3,123.4
86.9
10.5
2,027.2

90.0
(148.0)
13.7
(30.4)
(1,158.6)
4.6
(840.6)
7,208.7
305,861.7
879.9
(894.0)
14.9
(8.0)
195.7
80.3
(136.5)
644.6
(24.0)
19.7
712.9
(12.6)
(19,249.7)
2,615.1
(36.3)
(24.8)
10.0
733.3

10,314.4
1,685.4
2,089.8
2,734.0
139.6
2.9

5,604.5
(455.0)
1,126.8
(2,744.8)
(1,061.0)
(2.8)

11,322.0
17,015.9
4,923.7
17,498.9
765.7
17.8

5,132.7
(1,570.0)
2,586.9
5,536.3
(3,001.7)
2.6

1,204.6
705.2

(409.3)
(68.0)

5,031.0
1,812.2

1,803.5
(277.9)

13 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2010

Agency
Joint Legislative Budget Comm.
Legislative Council
Senate
Dpt. of Liquor Licenses
Board of Medical Student Loans
Mine Inspector
Dpt. of Mines & Mineral Resources
Nav. Streams & Adjudication
Arizona State Parks Board
Pioneers’ Home
Comm. for Postsecondary Ed.
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
AZ Library and Archives
Tax Appeals Board
Department of Transportation
State Treasurer
Universities
Board of Regents
Arizona State University
Northern Arizona University
University of Arizona
Veterinary Medical Examiners Board
Department of Veteran Services
Department of Water Resources
Dept. of Weights & Measures
Other
Grand Total

August 10
443.6
510.5
480.5
128.0
190.1
73.7
4.8
75.5
1,509.8
231.8
7.4
1.1
667.9
5,474.5
31,994.7
3,869.5
65.6
10.8
2.8
-

Change from
August 09
291.6
128.5
(59.9)
(158.4)
(69.4)
15.4
43.2
(35.4)
(21,900.0)
75.7
(208.2)
(18,263.7)
(2,004.7)
(232.3)
0.1
423.4
379.0
(49,610.6)
3,668.6
(318.8)
(8.3)
(1.9)
(15,191.1)

Year-to-Date
641.9
1,601.7
2,437.2
128.0
370.4
111.1
12.9
20,000.0
206.3
21,976.0
679.3
396.8
2.3
1,172.2
10,215.3
32,760.8
4,728.9
96.0
77.8
11.5
-

YTD Change from
FY 10
257.7
654.8
966.0
(372.4)
(69.4)
104.1
34.5
(35.1)
(1,900.6)
206.3
(250.1)
(18,231.6)
(1,750.8)
38.5
0.1
665.8
462.4
(49,057.7)
4,247.7
(862.4)
35.0
4.1
(15,346.3)

5,313.1
24,194.8
8,551.9
22,135.0
2,373.4
444.3
68.3
(678.3)
1,079,153.4

5,091.9
(14,615.5)
(4,419.8)
(12,724.3)
(250.0)
1,792.4
(911.1)
(20.3)
(0.4)
506,664.7

5,489.0
48,389.7
17,103.8
44,270.0
3,597.0
1,234.0
148.5
54.5
2,584,134.9

4,805.4
(29,231.0)
(8,839.6)
(25,448.7)
(250.0)
2,161.2
(1,684.9)
(60.3)
0.2
252,179.9