JLBC - Monthly Fiscal Highlights

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

www.azleg.gov/jlbc.htm

“Year-to-date,
revenues are
$275.1 million
above the
budgeted
forecast. “

June 2011

Summary
May was the tenth consecutive month of
year-over-year growth in base General Fund
revenue collections. General Fund revenues
totaled $730.4 million. Excluding the
temporary 1-cent sales tax, these collections
were 28.6% above last year.

In comparison to May revenue of $730.4
million, May 2011 General Fund spending was
$522.2 million. May expenditures were $265.2
million higher than the prior year, primarily due
to differences in the timing of the K-12 and
Universities rollovers.

Year-to-date, FY 2011 General revenues are
$7.39 billion, or 11.9% above FY 2010 without
the 1-cent sales tax.

Fiscal year-to-date, General Fund revenues of
$7.39 billion have been offset by $7.84 billion
in spending.

May General Fund collections were $100.9
million above the enacted budget forecast.
Year-to-date, revenues are $275.1 million
above the budgeted forecast. Starting with
this Monthly Fiscal Highlights, revenues are
being measured against the enacted April
budgeted revenue level, as opposed to the
January estimate.

The state began FY 2011 with an operating
balance of $1.5 billion. The divergence of
revenues and spending year-to-date has
caused the operating fund balance to
decline to $1.25 billion at the end of May.

The May results are approximately $23 million
higher than the forecast overage reported in
the Preliminary May Revenue Update due to
the unexpected receipt of federal disproportionate share hospital revenue (see below).
Due to the volatile nature of quarterly
individual and corporate income tax
payments collected in June, there remains
the possibility that the year-to-date gains
could increase or decrease. However, given
current data patterns, it seems most of these
gains will be maintained through the end of
the fiscal year.
The FY 2011 enacted budget revisions
assumed a year-end shortfall of $(332) million.
If the year-to-date surplus is maintained
through June, the FY 2011 shortfall would
decline to $(57) million.

Growth in May Revenues
The $100 million in surplus May collections
were almost entirely driven by growth in 2
main areas. The first was an increase in
individual income tax (IIT) collections.
Taxpayers’ individual income tax liability
continues to be significantly higher than
expected and resulted in $77 million of the
May surplus. With the May results, year-todate individual income tax collections are
now 19% higher than a year ago.
Second, the state received $60.4 million in
disproportionate share funding which was $26
million higher than expected. The state
receives these funds from the federal
government as reimbursement for certain
hospitals serving a disproportionately high
share of low-income individuals.
While individual income tax collections
continued their strong growth trend, May
sales tax collections (excluding the temporary
1-cent) grew 2.8% compared to a year ago,
which was below forecasted projections.

Table of Contents
This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
June 24, 2011.

Summary .................................................................. 1
• Growth in May Revenues .................................. 1
• Economic Indicators .......................................... 2
May Revenues ........................................................ 2
Economic Indicators.............................................. 5
JLBC Meeting........................................................... 8

Summary of Recent Agency Reports
• DES – Workforce Investment Act...................... 8
• ADC – Transition Release Program .................. 9
• Economic Estimates Commission..................... 9
• ADEQ – Indirect Cost Recovery ....................... 9
• Commission of Indian Affairs – Town Hall........ 9
May Spending....................................................... 10

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

Summary

(Continued)

Economic Indicators
In broader economic news, housing data
showed mixed signals about the pace of the
recovery. Since the beginning of the housing
market decline in the 2008, foreclosure
notices have consistently outpaced the
number of foreclosures which were
completed, leading to an increasing number
of foreclosures in-progress. This large number
of pending foreclosures has significantly
depressed home prices.
In a positive sign for the housing market, the
number of new foreclosure notices has finally
declined to the point where notices are
approximately equal to completed

foreclosures. In the last 2 months alone, the
number of pending Maricopa County
foreclosures has fallen from 35,500 to 28,700.
In comparison, there were 45,000 pending
foreclosures in May 2010.
However, a significant portion of Arizona
mortgage borrowers are still substantially
“underwater” on their mortgage. The latest
quarterly data from CoreLogic, an investment
data firm, shows that 55% of Phoenix area
borrowers have negative equity in their
homes. This factor is likely to continue having
a dampening effect on the state’s recovery.

May Revenues
Table 1

General Fund Revenues ($ in Millions)

May
Year-to-Date

“[Individual
Income Tax]
withholding
grew by 21.3%
in May for a
year-to-date

Sales Tax collections were $357.5 million in
May. Excluding the $72.3 million from the
temporary 1-cent increase, collections were
$285.2 million, or 2.8% above May 2010. This
increase is smaller than expected due to a
large, one-time refund of taxes paid in May.
Excluding this refund, this May’s collection
would have been a 6.6% increase over the
prior year.
Table 2 displays the May growth rates for the
largest categories.
Table 2

Sales Tax Growth Rates
Compared to Prior Year

increase of
7.4%.”

FY 2011
Collections
$ 730.4
$ 7,387.0

Retail
Contracting
Utilities
Use
Restaurant & Bar

May
11.1%
4.7%
3.2%
0.4%
6.5%

YTD
6.4%
(5.6)%
0.8%
(9.2)%
3.5%

Retail and contracting together account for
about 60% of all sales tax revenues. Retail
posted a particularly strong gain of 11.1%.

Difference From
April Forecast
$ 100.9
$ 275.1

Difference
From FY 2010
$ 245.3
$ 782.9

Including the 1-cent increase, year-to-date
collections were within $(1.1) million of the
enacted April budget forecast.
Individual Income Tax net revenues were
$240.8 million in May. Collections were $77.5
million above the forecast. Year-to-date,
revenues have grown 18.9% and are $268.7
million above the enacted budget forecast
through May.
As indicated in Table 3 below, withholding
grew by 21.3% in May for a year-to-date
increase of 7.4%. This high level of growth was
aided by 1 extra processing day in May 2011
compared to May 2010.
As tax filing season is drawing to a close, the
trend toward higher tax liability continued in
May. Estimated and final payments grew by
49.5% compared to a year ago while refunds
declined by (25.0)%.
While the detailed data will not be available
for some time, this year’s individual income
tax increase appears to be related to lower
itemized deductions and significantly higher
capital gains (See April MFH for additional
detail).

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

May Revenues

(Continued)

Table 3

Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

May
21.3%
49.5%
(25.0)%

YTD
7.4%
13.4%
(8.6)%

Corporate Income Tax net collections were
$42.4 million in May, or $(9.0) million below the
prior year. Collections were $0.2 million above
the forecast. Year-to-date through May,
revenues are up 39.7%, but are $(16.9) million
below the enacted budget forecast.
The Lottery Commission reports that May
ticket sales were $51.4 million, which is $1.8
million, or 3.6%, above sales in the prior year.
Year-to-date, ticket sales are $537.3 million,
which is 5.9% above last year’s sales. The
General Fund share of sales has increased
significantly more than overall sales, however,
due to changes in the distribution formula.
Non-General Fund
Tobacco Tax revenues were $29.8 million in
May. Collections were down (0.1)%
compared to the prior year, but were $5.4
million above the budget estimate for the
month. Year-to-date collections are down
(1.1)% and are $7.8 million above the budget
estimate.
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.
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 $95.0
million in May were down $(4.1) million, or
(4.1)%, compared to May of last year. Yearto-date, revenues have grown 1.0%.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011
Table 4

General Fund Revenue:
Change from Previous Year and Enacted April Budget Forecast
May 2011
Current Month

FY 2011 YTD (Eleven Months)

Change From
May 2010

Actual
May 2011

Percent

Amount

Change from
Forecast
Percent

Amount

May 2010

Actual
May 2011

Amount

Forecast
Percent

Percent

Amount

Taxes
Sales and Use w/o 1¢ *
Income - Individual
- Corporate

$285,186,711

$7,837,207

240,755,062

80,778,266

2.8 %
50.5

($7,421,845)
77,453,033

$3,179,755,771

$44,942,258

($9,690,789)

(0.3) %

47.4

(2.5) %

2,551,147,515

405,396,672

18.9

1.4 %

268,691,049

11.8

128,187,926

39.7

(16,918,291)

(3.6)

42,408,114

(9,019,772)

(17.5)

232,933

0.6

450,831,482

Property

2,396,052

(348,122)

(12.7)

(103,948)

(4.2)

16,152,532

(574,160)

(3.4)

Luxury - Tobacco

2,133,695

(471,865)

(18.1)

(34,480)

(1.6)

22,894,111

(1,021,931)

(4.3)

- Liquor

118,465

0.7

(2,858,248)

(11.1)

2,587,154

244,655

10.4

214,964

9.1

27,471,537

1,247,070

4.8

3,312,959

13.7

27,363,519

1,415,610

5.5

1,063,519

4.0

341,679,194

8,525,740

2.6

2,247,338

0.7

0

0

--

437,372

78,377

21.8

0

0.0

32,008

11,018

(73.9)

2,095,158

679,361

48.0

717,685

52.1

$602,862,315

$80,446,997

$6,592,464,673

$587,461,313

Lottery

8,275,800

7,391,000

835.3

3,275,800

65.5

51,049,989

20,049,989

64.7

9,218,359

License, Fees and Permits

2,051,428

416,692

25.5

451,428

28.2

24,969,950

1,009,960

4.2

2,410,806

10.7

3,793

76,770

(286,207)

(98.7)

1,893,372

1,428,410

307.2

(1,816,629)

(49.0)

Sales and Services

2,493,619

2,253,834

256.2

25,759,204

1,546,608

6.4

5,139,537

24.9

Other Miscellaneous

2,788,397

(10.1)

21,521,404

(10,046,493)

(31.8)

(4,420,759)

(17.0)

25,986,291

75.4

87,578,591

87,578,591

(2,888,227)

(82.5)

15,831,412

(18,418,644)

Insurance Premium
Estate
Other Taxes
Sub-Total Taxes

-52.5
15.4 %

0
(90,492)
$71,313,684

13.4 %

9.8 %

$245,620,169

3.9 %

Other Revenue

Interest

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

(422,815)

60,432,285

60,432,285

611,773

442,060

--(13.2)
-260.5

1,793,619
(311,603)

-(53.8)

22.0

25,986,291

42.2

(15,648,661)

(49.7)

76,657,095

70,589,826

-- %

28,021,101

57.6 %

228,603,922

83,148,422

57.2 %

20,868,945

10.0 %

$679,519,411

$151,036,824

28.6 %

$99,334,786

17.1 %

$6,821,068,595

$670,609,735

10.9 %

$266,489,114

4.1 %

Other Adjustments
Urban Revenue Sharing

(39,500,543)

12,886,509

--

0

0.0

(434,505,974)

141,751,599

--

0

0.0

1¢ TPT Increase*

72,303,792

72,303,792

--

1,606,794

2.3

763,977,779

763,977,779

--

8,618,412

1.1

Budget Plan Transfers

18,100,776

9,113,540

0

0.0

236,436,585

(58,039,140)

(19.7)

0

0.0

Leaseback Proceeds

0

0

0

(735,419,300)

(100.0)

0

50,904,025

94,303,841

-- %

1,606,794

3.3 %

565,908,390

112,270,938

24.7 %

8,618,412

1.5 %

$730,423,436

$245,340,665

50.6 %

$100,941,580

16.0 %

$7,386,976,985

$782,880,673

11.9 %

$275,107,526

3.9 %

$11,063,000

1.0 %

($5,314,835)

(0.5) %

($3,337,294)

(1.1) %

$7,779,433

2.6 %

Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE

101.4
--

0

--

--

Non-General Funds
Highway User Revenue Fund

$95,047,000

($4,059,000)

(4.1) %

($5,545,822)

(5.5) %

$1,102,902,000

Tobacco Tax (All Funds Total)

$29,781,080

($23,727)

(0.1) %

$5,370,627

22.0 %

$301,363,982

__________
* Sales and Use line excludes revenue from the temporary 1¢ increase approved by the voters in May 2010. That revenue is shown under One-Time Revenues. Total May collections including the 1¢ increase were
$357.5 million. This amount is $80.1 million, or 28.9%, above May 2010 and $(5.8) million, or (1.6)%, below forecast. Year to date, total collections including the 1¢ increase were $3.94 billion. This amount is $808.9
million, or 25.8%, above May 2010 and $(1.1) million below forecast.

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

Economic Indicators
NATIONAL

“Twenty-three
months after the
last recession
officially ended,
the Arizona job
market remains
far from
recovering the
(302,800) jobs
lost since
employment
peaked in
December
2007.”

The Conference Board’s U.S. Index of Leading
Economic Indicators increased by 0.8% in
May, after declining in April for the first time in
a year. An increase in building permits and
consumer expectations along with favorable
financial indicators pushed the May reading
to 114.7, or 5.2% above last year’s level. Eight
of the 10 components that make up the
leading index contributed to the increase in
May. The measure, which is designed to
indicate the state of the economy in 3 to 6
months’ time, suggests the economy may
improve in the coming months, maybe in part
due to the easing of supply bottlenecks
stemming from the earthquake in Japan
earlier this year.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), rose by 0.2% in
May, the slowest increase since last November.
The relatively moderate price increase in May
was primarily due to falling commodity and oil
prices in the early part of the same month.
Higher food, vehicle, and clothing prices
explained much of May’s CPI increase. Core
inflation, which excludes volatile food and
energy prices, rose by 0.3% in May, the largest
such increase since July 2008. The rate of
inflation in the near term will largely depend on
commodity and energy prices.
The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings (3-month
moving average) in the U.S. were $4.50 billion
in April, a (3.7)% decline from the prior month.
Year over year, chip sales were up by 9.5% in
April, the smallest increase since September
2009. The SIA attributes the slowdown in
semiconductor billings to a combination of
factors, including the adverse effect of supply
disruptions following the earthquake in Japan,
as well as higher fuel and food costs, which
have decreased consumers’ discretionary
funds.
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 was 1 of 35 states for which the
coincident index advanced in May. From
April to May, Arizona’s index increased by 0.3%

compared to 0.1% for the nation as a whole.
May’s Arizona index was 1.2% above last year,
the largest year-over-year increase since
September 2007. However, in spite of this
improvement, the index remains (13.0)% below
its peak reading in August 2007. The
comparable decline of the national
coincident index is (4.9)%. See Tracking
Arizona’s Recovery for additional historical
information.
The release of new economic data for May
indicates that the pace of the state’s
economic recovery remains slow. Twentythree months after the national recession
officially ended, the Arizona economy is still not
creating the number of jobs typically seen
during this phase of the business cycle. The
state’s year-over-year job growth rate for the
first 5 months of 2011 is 0.2%, a sub-par
performance by historical standards. While
the state’s jobless rate is declining, it still
remains above 9%. The housing market
continues to weigh on the overall state
economy with high (albeit declining)
foreclosure rates, and falling home prices. A
full economic recovery is difficult to envision as
long as conditions in the housing market
remain at current levels.
Employment
According to most recent Arizona Workforce
Employment Report, the state added 2,200
nonfarm jobs in May over April. The average
April to May net gain in the pre-recession
years between 2003 and 2007 was 3,900.
May had 4,000, or 0.2%, more individuals on
the payrolls than a year ago.
While May marked the 5th consecutive month
with year-over-year net job gains, it should be
noted that these increases were very modest
by historical standards. Between January and
May of this year, the state experienced an
average net monthly gain of 4,800 jobs, or
0.2%. By way of comparison, the state has
only seen lower year-over-year growth for the
same 5-month period a total of 4 times (1954,
1975, 1982, and 2002) between 1947 and
2007. Moreover, in each of these years, the
economy was either in a recession or the
early phase (6 months or less) of a recovery.
Twenty-three months after the last recession
officially ended, the Arizona job market
remains far from recovering the (302,800) jobs
lost since employment peaked in December
2007. Since the slow pace of current job
growth appears to be without a historical

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

Economic Indicators
precedent, it is difficult to predict when
Arizona will return to pre-recession
employment levels.

“While
foreclosure
notices and
pending
foreclosures
continue their
decline from
recent highs,
they continue to
be a major
influence on
existing home
sales and the
respective
prices.”

Although overall job growth remains muted, it
is worth noting that some sectors of the
economy are performing better than others.
For example, while employment in the
financial activities and professional and
business services sectors are still down, year
over year, the manufacturing industry has
been adding jobs at an increasing rate since
the beginning of 2011. It is this improvement
in the manufacturing industry that explains
the goods-producing sector’s (which also
includes construction and mining) first yearover-year net job gain in May since
December 2006. See Tracking Arizona’s
Recovery for additional historical information.
May was the third consecutive month with a
decline in the state’s seasonally adjusted
unemployment rate. The jobless rate fell by
(0.2)% to 9.1%, and was (0.9)% less than a year
ago. May’s unemployment rate was the
lowest since March 2009. The state’s
unemployment rate matched the national
unemployment rate. Arizona’s jobless rate has
been above the national average in 34 of the
last 36 months.
The federal Bureau of Labor Statistics (BLS)
reported that 26,805 Arizona residents filed
initial claims for unemployment insurance in
May, a (10.2)% decline from the prior month.
The average decline for the month of May in
the 10-year period prior to the recession was
(16.6)%. This suggests that May’s decline in
first-time jobless claims was due to seasonal
factors as opposed to an improving job
market. Initial claims in May were (2.7)% below
last year’s level. 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.
Housing
In May, the number of new Maricopa County
foreclosure notices increased 0.3% from April
levels to 4,430. The number of Maricopa
County pending foreclosures decreased from
32,200 in April to 28,700 in May. The May total
is (44.3)% below the peak in December 2009
(51,466). See Tracking Arizona’s Recovery for
additional historical information.
While foreclosure notices and pending
foreclosures continue their decline from
recent highs, they continue to be a major

(Continued)

influence on existing home sales and the
respective prices. In the Metropolitan Phoenix
area in May, there were a total of 10,085
existing single-family home sales that resulted
in a median resale home price of $125,000.
Relative to the prior year, the number of sales
is up 4.4%, while prices are (13.8)% lower. Of
the existing sales, 34.8%, or 3,505 were
foreclosures.
State Agency Data
In June AHCCCS caseloads equaled 1.36
million members, a 1.0% increase over the prior
month. AHCCCS caseloads are currently
(0.1)% below June 2010 levels. Total enrollment
reached its peak in June 2010.
There were 41,687 TANF recipients in the state
in May, a monthly caseload decrease of
(0.2)%. Year-over-year, the number of TANF
recipients has declined by (44.0)%. This
decline is the result of changes to the
statutory lifetime limit a person may receive
cash assistance. The FY 2011 budget reduced
the lifetime limit to 36 months. The FY 2012
budget further reduces this limit to 24 months.
Previously, the maximum had been 60
months. 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 May, there
were a total of 1.1 million food stamp
recipients in the state, a 1.6% increase over
the prior month. Compared to the same
month last year, food stamp participation was
up by 3.1%. 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
increased to 40,194 inmates between April
and June 2011. Relative to the prior 3-month
period, the population has increased by 63
inmates. Compared to a year ago, however,
the population has declined by (391) inmates.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

Economic Indicators

(Continued)

Table 5

ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate (SA)
- 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-family
Multi-unit
- Greater Phoenix Existing Home Sales
Single-Family
Townhouse/Condominium
- Greater Phoenix Median Resale Home 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 Total Housing Inventory, (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)
*Adjusted for 1¢ sales tax

Time Period

Current Value

Change From
Prior Period

Change From
Prior Year

May
May
April
May
May
May
May
Mar-May
Mar-May

9.1%
26,805
65,434
2.41 million
151,100
108,600
40.4
$31.9 million
$149.4 million

(0.2)%
(10.2)%
4.3%
0.1%
0.9%
0.0%
(0.7)%
6.0%
4.2%

(0.9)%
(2.7)%
(25.1)%
0.2%
2.0%
(2.5)%
1.0%
9.3%*
18.0%*

Feb-Apr
Feb-Apr

915
186

14.3%
(5.6)%

(24.0)%
69.4%

May
May

10,085
1,570

(1.8)%
(6.3)%

4.4%
4.0%

May
May

$125,000
$81,900

0.0%
(3.6)%

(13.8)%
(20.5)%

May
May
March

4,430
28,670
100.27

0.3%
(11.0)%
(0.5)%

(31.5)%
(36.3)%
(8.4)%

May
April
February

31,661
3.44 million
$6.23

(8.3)%
(6.4)%
(3.3)%

(23.4)%
4.2%
(14.0)%

2nd Quarter 2011
May
1st Quarter 2011
April 1, 2010
June
May
May
Apr-June

51.9
177.18
$229.9 billion
6.39 million
1,361,172
41,687
1,090,942
40,194

(17.4)%
0.3%
1.8%
N/A
1.0%
(0.2)%
1.6%
63 inmates

4.6%
1.2%
4.3%
N/A
(0.1)%
(44.0)%
3.1%
(391) inmates

April
April

19,436
26,366

171
47

(514)
(1,722)

1st Quarter 2011
(Preliminary Estimate)
May
May
Feb-Apr
May

$13.4 trillion

2.3%

1.8%

60.8
114.7
$4.50 billion
224.80

(7.9)%
0.8%
(3.7)%
0.2%

(3.0)%
5.2%
9.5%
3.4%

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

JLBC Meeting
At its June 9, 2011 meeting, the Joint
Legislative Budget Committee considered the
following issues:
Review of Requested Exchanges of Fund
Transfers – The Committee favorably reviewed
the request of 5 agencies to replace the fund
source for 9 of their enacted budget fund
transfers. The Committee’s review had the
following conditions: 1) the Department of
Environmental Quality transfer into the Solid
Waste Fee Fund be limited to $369,500; and 2)
the State Parks Board submit their internal and
external State Lake Improvement Fund
capital projects for JCCR review.

AHCCCS – Review of Revised Acute Care
Capitation Rate Changes – The Committee
favorably reviewed AHCCCS’ proposed
Acute Care, Long Term Care, and Children’s
Rehabilitative Services capitation rate
changes effective April 1, 2011. The proposal
is projected to achieve the rate savings
included in the FY 2012 budget.
Attorney General – Review of Allocation of
Settlement Monies – The Committee gave a
favorable review of a $2,093,300 settlement
resulting from an agreement with
AstraZeneca Pharmaceuticals as a result of
the company allegedly marketing the drug
Seroquel for uses that were not FDA
approved.

Summary of Recent Agency Reports
Department of Economic Security – Workforce
Investment Act Report – Pursuant to a FY 2011
General Appropriation Act footnote, the
Arizona Department of Economic Security
recently reported on its intended use of
additional Workforce Investment Act monies
received from the federal government as part
of the American Recovery and Reinvestment
Act. DES received an appropriation of
$3,614,000 for the Workforce Investment Act –
Discretionary line item and $48,040,600 for the

Workforce Investment Act – Local
Government line item as part of the FY 2011
budget. In addition to these appropriations,
DES plans to expend an additional $3,000,000
from the Workforce Investment Act –
Discretionary line item and $5,000,000 from
the Workforce Investment Act – Local
Government line item as listed in Table 6. The
additional $5,000,000 is appropriated
according to the same formula as the original
appropriation. (Aaron Galeener)

Table 6

Distribution of Additional WIA Funding in FY 2011
Local Workforce Investment Board
Cochise County
Coconino County
Gila and Pinal Counties
Graham County
Greenlee County
Maricopa County
Mohave and La Paz Counties
Navajo Nation
Navajo and Apache Counties
City of Phoenix
Pima County
Santa Cruz County
Yavapai County
Yuma County
Tribes
Arizona Department of Education
Total

WIA –Discretionary
$ 317,170
224,992
198,231
192,412
133,885
795,217
696,838
441,255
$3,000,000

WIA-Local
$ 118,287
80,919
189,578
26,692
8,099
1,086,192
221,129
274,883
55,548
1,102,320
779,105
73,007
150,717
625,711
207,811
$5,000,000

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

Summary of Recent Agency Reports
Department of Corrections – Report on
Transition Release Program – Pursuant to A.R.S.
§ 31-285, the State Department of Corrections
(ADC) is required to submit a quarterly report
that details the cost reductions to the
department from an inmate early release
Transition Program and the number of
participants who did not receive an early
release under the Transition Program. Statute
requires ADC to contract with a private or
nonprofit entity to provide eligible drug
offenders with transition services. The ADC
Transition Release Program began in March
2004 and allows eligible inmates in the
Transition Program to be released 3 months
earlier than the inmate's earliest release date.
Through the third quarter of FY 2011, the
department reports that 714 participants
successfully completed the Transition Program
and their term of community supervision while
an additional 819 participants completed the
Transition Program and are continuing their
term of community supervision. A total of 78
participants failed to complete the early
transition release by violating their conditions
of supervision. In total, the program is
responsible for 62,767 bed days saved which
translates to a savings of $1,067,062.
(James Alcantar)
Economic Estimates Commission – Budget
Stabilization Fund Report – Pursuant to A.R.S. §
35-144F, the Economic Estimates Commission
(EEC) is annually required to calculate the
amount of monies that may be deposited to
or withdrawn from the Budget Stabilization
Fund (BSF). The EEC estimate is calculated
based on a formula that compares the
growth rate of real adjusted Arizona personal
income in the most recent calendar year to
the average in the last 7 calendar years
(hereafter referred to as the “trend” growth
rate).
The formula recommends a BSF withdrawal
whenever the annual adjusted personal
income growth rate is both less than the trend
growth rate and 2%. According to a EEC
report issued May 31, 2011, the calendar year
2010 growth rate was (0.42)% compared to
the trend growth rate of 1.98%. Since both
requirements for a fund withdrawal were met,
the BSF formula recommends that $136.9
million be transferred to the General Fund in

(Continued)

FY 2011. This transfer cannot be
implemented, however, since the BSF
balance is $0. (Hans Olofsson)
Arizona Department of Environmental Quality Indirect Cost Recovery Report for FY 2011 –
The General Appropriation Act requires the
Arizona Department of Environmental Quality
to report the intended use of any FY 2011
revenues in the Indirect Cost Recovery Fund,
in excess of $10,417,500, to the Joint
Legislative Budget Committee. Total FY 2011
expenditures from the Indirect Cost Recovery
Fund are expected to be $12,733,700.
(James Alcantar)
Arizona Commission of Indian Affairs – Report
on Uses of Monies in the Arizona Indian Town
Hall Fund – Pursuant to A.R.S. § 41-545, the
Arizona Commission of Indian Affairs is
providing the annual Indian Town Hall Fund
expenditure report for FY 2011. New fund
revenues totaled $10,150. For FY 2011, the
commission had $10,150 in disbursements.
(Bob Hull)

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

May Spending
“May 2011

May 2011 General Fund spending was $522.2
million. May expenditures were higher than
the prior year in part due to differences in the
timing of the K-12 and Universities rollovers.

spending of

FY 2011 Spending

$522.2 million
was $265.2

May 2011 spending of $522.2 million was
$265.2 million higher than May 2010 (See
Table 7).

million higher

•

than May 2010.”

•

May, or $54.4 million higher than the prior
year. The increased expenditure amount
reflects the rollover being spread out over
the course of the fiscal year.

In May, the Arizona Department of
Education spending was $208.3 million
higher than the prior year. May
expenditures were higher compared to
the prior year due to differences in the
timing of the K-12 rollover.
University spending was $56.5 million in

Table 7
General Fund Spending ($ in Millions)

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

May 11

Change
from
May 10

Year to
Date

104.1
72.8
20.2

(10.1)
13.2
2.8

1,276.1
808.6
537.2

85.6
29.0
9.7

230.2
6.4
1.8
0.1

208.3
(2.1)
0.1
0.1

3,250.4
418.6
39.1
67.4

80.3
(58.5)
(1.3)
(37.3)

56.5
-

54.4
-

30.1
522.2

(1.5)
265.2

834.0
52.1
554.6
7,838.1

YTD Change
from FY 10

48.9
52.1
(46.6)
161.9

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

Table 8

Agency
Department of Administration
Department of Admin Sale/Leaseback D/S
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
Board of Chiropractic Examiners
Department of Commerce
Community Colleges
Corporation Commission
Department of Corrections
Board of Cosmetology
AZ Criminal Justice Commission
AZ State Schools for the Deaf & Blind
Department of Economic Security
Department of Education
DEMA
Department. of Environmental Quality
DEQ – WQARF
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Department of Financial Institutions
Department of Fire, Life, Bldg Safety
Office of the State Forrester
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.
Commission on Indian Affairs
Department of Insurance
Judiciary
Supreme Court
Superior Court
Court of Appeals
Department of Juvenile Corrections

General Fund Spending
($ in Thousands)
Change from
May 11
May 10
140.0
(1,769.2)
53.6
(8.8)
549.0
106.5
104,145.7
(10,097.5)
71.1
44.3
1,589.5
792.1
37.6
9.3

Year-to-Date
17,928.4
52,066.9
855.3
7,661.2
1,276,138.3
617.6
15,471.9
636.2

42.1
90.6
36.4
72,761.6
879.1
20,183.2
230,214.2
942.8
9.3
17.4
55.1
177.8
108.6
153.9
40.1
37.0
491.9
136.3
6,442.7
165.1
33.7
32.1
2.7
329.1

639.3
3,108.5
132,426.3
547.7
808,634.5
20,661.4
537,228.8
3,250,393.1
9,932.2
0.6
7,000.0
156.5
507.3
785.4
2,430.6
1,857.6
3,700.6
609.7
444.3
5,749.3
1,703.2
418,624.9
5,105.0
649.0
36.5
53.0
5,092.2

(2.9)
(148.0)
(112.8)
25.0
28,971.8
(252.0)
4.6
452.5
9,742.6
80,291.1
1,176.8
(5,069.0)
(24.1)
(96.6)
(48.3)
(350.1)
(166.6)
3,700.6
(100.0)
(89.5)
30.7
(770.3)
(94.3)
(58,473.1)
1,425.6
38.5
10.4
(29.9)
(140.8)

18,735.4
76,568.4
13,511.0
47,291.0

(4,833.1)
(7,770.5)
554.2
(10,819.6)

1,468.4
10,996.8
953.5
3,875.4

(0.7)
(662.6)
(0.9)
13,219.9
(1,144.3)
2,777.9
208,330.5
429.2
(328.9)
(1.1)
(4.9)
19.2
39.5
(8.0)
153.9
6.8
12.0
75.8
23.5
(2,104.3)
6.1
(2.0)
32.1
(0.1)
18.3
269.2
717.2
26.7
537.9

YTD Change from
FY 10
81.5
52,066.9
(22.1)
(115.7)
85,657.5
(203.3)
(400.0)
(844.7)
29.4

12

JLBC – MONTHLY FISCAL HIGHLIGHTS – JUNE 2011

Agency
State Land Department
Law Enforcement Merit System
Legislature
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
Senate
Department of Liquor Licenses
Board of Medical Student Loans
Mine Inspector
Department of Mines & Mineral Resources
Nav. Streams & Adjudication
OSHA
Arizona State Parks Board
Pioneers’ Home
Board of Psychologist Examiners
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
Tax Appeals Board
Office of Tourism
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
Department of Weights & Measures
Other
Grand Total

May 11
148.8
5.0

Change from
May 10
1,712.4
1.4

Year-to-Date
3,125.4
65.2

YTD Change from
FY 10
(7,036.8)
(5.8)

1,255.3
756.7
122.1
279.4
528.5
19.5
4.9
292.8
1,793.1
108.8
63.3
135.9
456.8
91.1
536.6
16.2
(0.9)
-

109.7
(52.9)
(13.2)
5.9
(66.1)
64.9
(154.2)
(1.9)
1,900.0
292.8
(86.7)
55.5
(54.9)
(3.5)
(1.2)
(5.5)
(1,657.1)
20.6
(461.8)
0.4
(0.9)
(153.4)

15,686.2
10,911.8
1,840.3
4,218.0
7,730.3
3.3
360.7
964.5
815.8
117.5
20,000.0
1,560.3
25.0
1,220.8
39,126.6
3,794.1
1,377.8
8.3
2,475.6
38,575.0
67,405.6
14,396.7
231.6
50.5
-

2,069.8
(402.8)
(242.0)
(316.0)
(295.1)
(744.4)
(441.2)
(58.1)
30.7
(1.3)
(14.4)
(214.2)
1,560.3
(275.0)
(2,197.0)
(1,311.6)
(874.8)
21.5
(4.6)
(352.5)
6,061.8
(37,295.6)
1,965.6
(5.0)
(200.0)
(2.3)
(2,390.3)

442.8
25,400.9
8,551.9
22,135.0
1,245.3
401.4
79.5
94.7
522,228.4

121.6
25,400.9
8,060.3
20,807.2
155.2
(379.0)
11.2
(1,976.3)
265,166.1

17,079.4
369,987.4
124,564.8
322,414.5
11,705.9
5,953.3
986.9
3,806.6
7,838,144.6

(3,334.2)
24,752.7
7,191.9
20,253.3
(250.0)
2,916.7
(8,846.5)
(126.8)
(18,719.7)
161,919.4