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
3.4% higher than
last year and are
$(8.4) million
below the
budget
forecast.”

October 2012

Summary
September General Fund revenue collections
totaled $864.1 million. Excluding one-time
revenue adjustments, September collections
were 4.2% above the prior year.
The increase in September revenues was due to
increases in all of the “Big 3” revenue categories
of Sales, Individual Income and Corporate
Income taxes. Each of these main revenue
categories grew by over 4%.
September General Fund collections were $4.7
million above the enacted May budget
forecast. Year-to-date, revenues are 3.4%
higher than last year and are $(8.4) million
below the budget forecast.

Updated Budget Forecast
The JLBC's Finance Advisory Committee met on
Thursday, October 4, to discuss an updated
General Fund forecast through FY 2016. Here is
a summary of the key points of the JLBC Staff
presentation:
•

•

•

In comparison to revenue of $864.1 million,
September 2012 General Fund spending was
$746.7 million, or $(174.4) million below last year.
September expenditures were lower than last
year, primarily due to technical timing issues for
the second consecutive month related to
Medicaid spending in AHCCCS and the
Department of Health Services.
Fiscal year-to-date, General Fund revenues of
$2.3 billion have been offset by $3.8 billion in
spending.
The state’s fiscal health can also be measured
by the operating fund balance. The state pays
its bills out of the operating fund balance, which
consists of the General Fund and certain
dedicated funds. The mid-October 2012
balance is $1.3 billion, with an additional $451
million in Budget Stabilization Fund reserves.

•

•

While the state ended FY 2012 with $275
million more in the ending balance than
expected, FY 2013 growth since July has
been slower than forecast.
Using the 4-sector forecast, Baseline
revenues are projected to grow by 5.8% to
6.3% annually between FY 2014 and FY
2016.
JLBC Staff has developed 2 scenarios for its
budget forecast through FY 2016. Two
factors will especially influence these
estimates:
- The rate of recovery of the economy and
the potential impacts of efforts to reduce
the federal deficit.
- The future of the federal health care
legislation, including whether to restore
childless adult coverage.
In the Baseline scenario, revenues grow at
the 4-sector rate and the state continues its
current freeze on childless adult coverage.
- The state would accumulate large
balances (for example, $368 million in FY
2014) in the short run. By FY 2016, the
balances will have been depleted and
the projected shortfall is $(67) million. The
state, however, would still have a $451
million Rainy Day Fund.
In the Alternate scenario, revenue growth is
capped at 5% in light of general economic

Table of Contents

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
October 19, 2012.

Summary ..................................................................1

• DES – Developmental Disabilities ..................... 7

• Updated Budget Forecast ................................1

• ADE – AELAS Data System Report.................... 7

September Revenues.............................................2

• AZDHS – Homeland Security Funding.............. 7

Economic Indicators ..............................................4

• DOR – Report on Enforcement Goals ............. 8

Summary of Recent Agency Reports

• DPS – Quarterly GIITEM Report ......................... 8

• AHCCCS – Graduate Medical Education......7

September Spending ............................................. 9

• DES – Child Care Expenditure Report..............7

Tracking Arizona’s Recovery.............Appendix A

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012

Summary

(Continued)

•

uncertainty. Childless adult coverage is restored to
100% of poverty and several other expiring initiatives
are continued.
- The balances would be spent down more quickly
and there would be a projected shortfall of $(411)
million in FY 2015 and $(583) million in FY 2016.

•
•

As with any long-term forecast, there are certain
caveats:
•

Long term budget forecasts are subject to
considerable change -- a 1% error would change
available resources by over $500 million in the third
year.

The availability of short term balances may result in
the enactment of new permanent tax reduction
and spending initiatives, which would further
increase shortfalls in the out years.
The budget scenarios assume the continuation of
temporary statutory suspensions -- if funded, the
balance would decline by another $(632) million.
The proposed 1 cent initiative is essentially
designated for new spending and those monies
would not be available to offset any shortfall.

You will find more information on the updated forecast
in the October FAC Meeting Book.

September Revenues
Table 1

September
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2013
Collections
$ 864.1
$ 2,304.4

Difference From
Budget Forecast
$ 4.7
$ (8.4)

Sales Tax collections were $393.4 million, or 5.1% above
September 2011 and $7.8 million above the budget
forecast for the month.
Year-to-date, sales tax collections are 4.7% above the
prior year and are $15.5 million above forecast.
Table 2 displays the September growth rates for the largest
categories.
Table 2

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

September
3.1%
(3.7)%
2.6%
21.9%
14.2%

YTD
5.3%
2.8%
8.0%
(1.1)%
7.8%

Retail and contracting together account for almost 60%
of all sales tax revenues. September retail, which reflects
August sales, increased by a modest 3.1%. As we have
noted in prior reports, the retail category began to grow
in December 2010. Retail growth continued through the
first part of last fiscal year, but slowed during the last
quarter of FY 2012 due primarily to the exceptionally high
growth rates in the last quarter of FY 2011.

Difference
From FY 2012
$ 13.4
$ (43.6)

Overall, the retail category grew by 5.0% in FY 2012
compared to the prior year. Growth through the first
quarter of the current fiscal year is about equal to that
level, at 5.3%. Contracting collections have been
much more volatile than retail and decreased by
(3.7)% this month.
Individual Income Tax net revenues were $330.5 million
in September, or 4.4% more than the prior year.
Collections were $(3.4) million below the budget
forecast. Year-to-date, revenues have grown 4.6% and
are $3.7 million above forecast. The September decline
relative to the forecast was the result of less than
expected withholding tax collections and final
payments, partially offset by lower than anticipated
refunds.
As indicated in Table 3, withholding was relatively flat in
September. For the first quarter of the fiscal year,
withholding is up a modest 2.2%. This amount is $(15.5)
million below the budget forecast.
Total estimated and final payments of $96.0 million
were 13.2% above last year, but slightly below forecast.
For the first quarter of the fiscal year, payments are
$(5.6) million below the forecast.

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012

September Revenues

(Continued)

first of 4 larger collection months for Corporate Income tax.

Refunds of $(13.9) million were $2.2 million less than last
year’s amount. For the first quarter, refunds are $24.7
million below forecast.

The Lottery Commission reports that September ticket
sales were $48.4 million, which is $3.4 million, or 7.5%,
above sales in the prior year. Year-to-date ticket sales are
$151.5 million, which is 8.9% above last year’s sales. While
sales increased, net General Fund revenues actually
declined due to the payment of debt service for the
Lottery Revenue Bonds issued in FY 2010.

Table 3

Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

September
`0.2%

YTD
2.2%

13.2%
(13.9)%

Non-General Fund
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 $100.3
million in September were up $0.5 million, or 0.5%,
compared to September of last year. Year-to-date
revenues are 0.2% greater than the prior year.

11.0%
(18.5)%

Corporate Income Tax net collections were $132.9 million in
September, which is 14.4% above the prior year.
Collections for the month were $10.2 million above the
forecast. Year-to-date, collections are up 1.1% and are
$(11.6) million below forecast. September represents the
Table 4

General Fund Revenue:
Change from Previous Year and Enacted May Budget Forecast
September 2012
Current Month

FY 2013 YTD (Three Months)

Change From
September 2011

Actual
September 2012

Percent

Amount

Change from
Budget Forecast
Percent

Amount

September 2011

Actual
September 2012

Budget Forecast

Percent

Amount

Percent

Amount

Taxes
Sales and Use - Base*
- 1¢ Increase*
Income - Individual
- Corporate
Property
Luxury - Tobacco
- Liquor
Insurance Premium
Estate
Other Taxes
Sub-Total Taxes

$314,805,532

$15,157,859

$939,344,300

$39,284,824

4.4 %

$4,778,256

0.5 %

78,565,390

4,088,402

5.5

3,426,236

4.6

234,731,415

13,043,198

5.9

10,708,500

4.8

330,473,378

13,813,997

4.4

(3,441,842)

(1.0)

893,243,333

38,888,059

4.6

3,688,804

0.4

132,923,917

16,761,714

14.4

10,205,668

8.3

176,116,895

1,940,750

1.1

(11,575,068)

(6.2)

13.5

(16.2)

56,155

6,686

2,597,878

(1,221,421)

2,137,242

2,137,242

34,681,755

(11,694,444)

0
25,803
$896,267,050

0
(7,205)
$39,042,830

5.1 %

$4,366,899

1.4 %

6,155

12.3

314,175

(31,729)

(9.2)

(60,825)

(32.0)

0

0.0

6,896,610

(1,308,029)

(15.9)

(99,129)

(1.4)

--

0

0.0

7,608,448

1,674,171

28.2

919,023

13.7

(25.2)
-(21.8)
4.6 %

(5,318,245)
0
(34,197)
$9,210,674

(13.3)

113,993,396

(7,757,596)

(6.4)

--

0

(200,652)

(100.0)

(57.0)

113,925

(24,161)

(17.5)

1.0 %

$2,372,362,497

$85,508,835

3.7 %

(6,006,604)

(5.0)

0
(66,075)
$2,286,882

-(36.7)
0.1 %

Other Revenue
Lottery

3,149,440

(2,308,500)

(42.3)

(1,850,560)

(37.0)

6,059,380

License, Fees and Permits

1,913,863

(276,725)

(12.6)

(586,137)

(23.4)

7,419,780

1,798

(507)

(22.0)

(8,202)

(82.0)

4,561

(1,200,711)

(34.3)

4,276,614

(992,336)

(33.1)

5,373,465

--

0

Interest
Sales and Services

2,299,289

84,603

3.8

Other Miscellaneous

2,007,664

(722,615)

(26.5)

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

0

0

675,497

563,413

$10,047,551
$906,314,601

($2,660,331)
$36,382,499

-502.7
(20.9) %
4.2 %

0
175,497
($4,462,449)
$4,748,225

35.1

(273,495)

(30.8) %

$22,860,305

0.5 %

$2,395,222,802

(4,404,600)
541,322
(1,063)
213,374
(1,369,602)
0
(2,722,793)
($7,743,362)
$77,765,473

(42.1)

(3,940,620)

(39.4)

7.9

(80,220)

(1.1)

(18.9)

(25,439)

(84.8)

5.3

(3,223,386)

(43.0)

(20.3)

(1,626,535)

(23.2)

---

0

--

(1,773,495)

--

(25.3) %

($10,669,695)

(31.8) %

3.4 %

($8,382,813)

(0.3) %

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

(42,798,670)
579,291
(42,219,379)

(7,430,050)

21.0

0

0.0

(128,396,010)

(22,290,150)

21.0

0

(6,961,486)

(92.3)

0

0.0

37,534,004

(90,449,674)

(70.7)

0

0.0

119.3 %

0

0.0 %

(90,862,006)

(121,318,110)

-- %

0

0.0 %

$4,748,225

0.6 %

$2,304,360,796

($43,552,637)

(1.9) %

($8,382,813)

(0.4) %

(0.7) %

$299,041,289

0.2 %

($2,941,339)

(1.0) %

(22,969,822)

$864,095,222

$13,412,677

1.6 %

$100,314,080

$513,546

0.5 %

0.0

Non-General Funds
Highway User Revenue Fund

($684,061)

$639,484

__________
* Total September collections including the temporary 1¢ increase approved by the voters in May 2010 were $393.4 million. This amount is $19.2 million, or 5.1%, above September 2011 and $7.8 million, or 2.0%, above
forecast.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012

Economic Indicators
NATIONAL
The U.S. Department of Commerce revised down their
second quarter growth estimate of U.S. Real Gross
Domestic Product (GDP), from 1.7% to 1.3%. This growth
represents a further slowdown of the economy, from the
2.2% rate estimated for the first quarter of 2012 and the
3.0% for the fourth quarter of 2011. The slowdown was
mainly caused by a deceleration of personal
consumption and fixed investment.
The negative trend for the Conference Board’s U.S.
Consumer Confidence Index potentially reversed in
September, as the index rose 14.7% to 70.3. This reading
was the highest in 7 months and resulted in the index’s
largest year-over-year growth (51.5%) in over a year and
a half. Cause for the rise in optimism was widespread,
including improvements in stock prices, a deceleration in
gas price hikes, better perceived job prospects, and an
improved economic outlook.
The Conference Board’s U.S. Leading Economic Index
decreased by (0.1)% in August to a reading of 95.7. The
latest reading is 2.1% above that in August 2011, but the
annual increase predominately came from gains towards
the end of 2011. The index has remained nearly flat this
year, as growth fluctuated from positive to negative each
month since March. Though 4 of the index’s 10
components decreased in August, the primary cause for
the overall drop was a decrease in manufacturing new
orders.
Consumer prices, as measured by the U.S. Consumer
Price Index (CPI), grew by 0.6% in September and by 2.0%
above the prior year. This sharp monthly increase follows
on another 0.6% increase in August. The majority of the
growth was caused by a 7.0% rise in gasoline prices. Core
inflation, which measures price changes of all items
except energy and food, only increased 0.1% during the
month.
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.
In August, 25 out of 50 states had increases in their
coincident indexes. Arizona’s coincident index increased
by 0.3% compared to the prior month. Year-over-year,
the Arizona index is 2.9% above last year, which is the 6th
highest growth rate in the country. While this is a
significant improvement, Arizona’s index is still (11.2)%
below its peak, which occurred in August 2007. See

Appendix A – Tracking Arizona’s Recovery for additional
historical information.
The Federal Reserve Bank of Philadelphia also publishes a
leading index for each state that forecasts economic
conditions for the next 6 months. In addition to the
coincident index, Arizona’s leading index is based on
Arizona housing permits, Arizona initial unemployment
insurance claims, national delivery times from a
manufacturing survey, and the interest rate spread
between the 3-month and 10-year Treasury instruments.
Using a 3-month average, Arizona’s leading index
projects that state GDP will grow at an annualized rate of
3.5% over the next 6 months. This is higher than the
revised 3.0% growth projection in July and higher than the
2.0% projection in August 2011.
Housing
The number of Maricopa County pending foreclosures
decreased from 16,370 in August to 14,584 in
September. This represents the fourth consecutive
monthly decrease in this measure. The September total
is substantially below the peak in December 2009
(51,466). See Appendix A – Tracking Arizona’s Recovery.
The total housing inventory in the Greater Phoenix area
decreased from 26,950 in September 2011 to 22,862 in
September 2012, a (15.2)% decrease. As the supply of
housing has declined, the price has increased. In the
Metropolitan Phoenix area, the median price of a single
family home was $150,000 in August. This represents an
increase of 0.7% from July, and a 22.5% increase from
August of last year.
Another measure of the health of the Arizona real estate
market is permitting activity. For the 3-month period
through August, a total of 1,548 single-family building
permits had been issued statewide, a 54.2% increase
from last year. Permitting activity in recent months has
been the highest since August 2008 when there were
1,740 permits issued. Even so, this is far below a more
normal 3-month average of 3,000 to 4,000 permits. See
Appendix A – Tracking Arizona’s Recovery.
The performance of the multi-family housing sector also
continues to improve. For the 3-month period ending in
August, a total of 412 multi-family building permits had
been issued in the state. This figure represents a large
increase from the prior month and is 11.9% above the
prior year. Multi-family permitting activity still remains
(68.5)% below the peak of activity in April 2007.

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012

Economic Indicators

(continued)

State Agency Data
At the beginning of October, total AHCCCS caseloads
equaled 1.29 million members, a (0.7%) decrease from the
prior month. Overall AHCCCS caseloads are currently
(6.0)% below October 2011 levels. The traditional AHCCCS
population, which consists primarily of lower-income
children and their parents, decreased (0.4)% from last
month as well as a year ago. The total population in this
program is almost 900,000.
The childless adult program has not allowed new
participants since July 2011. This population has declined
(128,167) since then to 96,325. Of the decline, (11,591) is
attributed to members who were transferred to the SSI
program.
KidsCare provides coverage for children with incomes
above those in the traditional population. Its enrollment
has declined since a freeze was implemented in January
2010. Enrollment declined (2.4)% compared to the prior
month and (40.4)% from the prior year. Beginning on May
1, 2012, AHCCCS began a new program, entitled
KidsCare II, which provides coverage for children up to
175% of the Federal Poverty Level. The state match is
provided by voluntary payments from political
subdivisions. As of the beginning of October, 19,642
children were enrolled in KidsCare II.
There were 41,118 TANF recipients in the state in
September, a monthly caseload decline of (2.6)%. Yearover-year, the number of TANF recipients has increased by
8.8%. This marks the first month of year-over-year growth in
the TANF program since November 2009. Since that time,
the State reduced the lifetime limit a person may receive
cash assistance, first to 36 months and then further to 24
months. Previously, the maximum had been 60 months.
The appropriation for TANF cash assistance in the FY 2013
budget funds a caseload of approximately 36,200
recipients in FY 2013.
The Supplemental Nutrition Assistance Program (SNAP),
formerly known as Food Stamps, provides assistance to
low-income households to purchase food. In September,
there were a total 1.1 million food stamp recipients in the
state, a (0.6)% decline over the prior month. Compared to
the same month last year, food stamp participation was
down by (0.9)%. The number of SNAP 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 39,852
inmates in September 2012. Relative to the prior 3-month

period, the population has increased by 2 inmates.
Compared to a year ago, the population has declined
by (243) inmates.
Employment
According to the Arizona Department of
Administration’s employment report for September,
the state gained a total of 30,000 nonfarm jobs
between August and September, of which 24,800
were attributable to the government sector and 5,200
to the private sector. Job gains are typical in
September primarily due to the seasonal hiring that
occur in local and state public education at this time
of the year. Almost 70% of the jobs added to private
sector payrolls in September, or 3,500 positions, came
from the health care industry.
Compared to September 2011, nonfarm employment
was up by 2.4%, or 57,100 jobs. More than 93% of these
job gains were created in the private sector.
September also marked the fourth consecutive month
with over-the-year job growth in excess of 2%. The
average monthly net gain for the first 9 months of 2012
is 48,500 jobs. If this trend continues for the remainder
of the year, Arizona is slated to the largest annual job
increase in 6 years.
The largest contributors to September’s year-over-year
job gain were the professional and business services
sector (+16,200 jobs), followed by the trade,
transportation and utilities sector (+10,900 jobs), and the
education and health services sector (+10,200 jobs). It
is noteworthy that one relatively small sub-sector,
employment services (essentially temporary staffing
services), can be credited with creating almost 18% of
September’s total statewide year-over-year job gains.
The temporary staffing industry had 91,700 persons on
the payrolls in September 2012, or 12.4% more than 1
year earlier.
The state’s unemployment rate fell by (0.1)% in
September, going from 8.3% to 8.2%. Although the
jobless rate declined somewhat in September, it has
essentially stayed the same over the last 6 months. By
contrast, the U.S. unemployment rate has declined for
3 consecutive moths and reached a 43-month low
rate of 7.8% in September. See Appendix A – Tracking
Arizona’s Recovery.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012

Economic Indicators

(Continued)

Table 5

ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate (SA)
- Initial Unemployment Insurance Claims
- Unemployment Insurance Recipients
- 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 Home Sales
Single-Family
Townhouse/Condominium
- Greater Phoenix Median Home Price
Single-Family
Townhouse/Condominium
- Greater Phoenix S&P/Case-Shiller Home Price Index
(Jan. 2000 = 100)
- Foreclosure Activity, Maricopa County
Pending Foreclosures (Active Notices)
- Greater Phoenix Total Housing Inventory, (ARMLS)
- Phoenix Sky Harbor Air Passengers
- Revenue Per Available Hotel Room
- Arizona Average Natural Gas Price
($ per thousand cubic feet)
- Arizona Consumer Confidence Index (1985 = 100)
- Arizona Coincident Index (July 1992 = 100)
- Arizona Leading Index -- 6 month projected growth rate
- Arizona Personal Income
- Arizona Population
- AHCCCS Recipients
Acute Care Traditional
Spend Down
Prop 204 Childless Adults
Other Prop 204
Kids Care
Kids Care II
Long-Term Care – Elderly & DD
Emergency Services
- TANF Recipients
- SNAP (Food Stamps) Recipients
- ADC Inmate Growth (3-month average)
- Probation Caseload
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

September
September
September
September
September
September
August
Jul-Sep
Jul-Sep

8.2%
18,024
47,243
2.47 million
152,000
120,900
40.6
$37.0 million
$144.4 million

(0.1) %
(17.3)%
(19.5)%
1.2%
0.3%
(1.0)%
(1.5)%
0.4%
(1.5)%

(1.2)%
(16.2)%
(27.0)%
2.4%
1.4%
3.9%
0.5%
2.8%*
5.3%*

Jun-Aug
Jun-Aug

1,548
412

(5.6)%
74.4%

54.2%
11.9%

August
August

9,220
1,259

5.3%
(7.8)%

(0.3)%
(1.3)%

August
August
July

$150,000
$90,000
117.22

0.7%
9.8%
2.2%

22.5%
14.2%
16.6%

September
September
July
August
July

14,584
22,862
3.58 million
$42.68
$4.14

(10.9)%
9.2%
0.9%
(1.9)%
4.3%

(37.4)%
(15.2)%
(1.4)%
3.5%
(29.8)%

2nd Quarter 2012
August
Jun-Aug
2nd Quarter 2012
July 1, 2011
October

September
September
July - Sept

68.6
180.41
3.5%
$235.1 billion
6.48 million
1,285,972
893,840
96,325
150,220
8,916
19,642
52,998
64,031
41,118
1,136,321
39,852

(1.3)%
0.3%
0.5%
1.3%
N/A
(0.7)%
(0.4)%
(3.9)%
(1.0)%
(2.4)%
3.2%
0.3%
(0.3)%
(2.6)%
(0.6)%
2 inmates

32.2%
2.9%
1.5%
3.6%
1.1%
(6.0)%
(0.4)%
(100.0)%
(49.8)%
(5.4)%
(40.4)%
2.8%
21.0%
8.8%
(0.9)%
(243) inmates

May
May

18,183
25,581

2nd Quarter 2012
(3rd Estimate)
September
August
June-August
September

$13.6 trillion

1.3%

2.2%

70.3
95.7
$4.19 billion
231.4

14.7%
(0.1)%
1.0%
0.6%

51.5%
2.1%
(8.6)%
2.0%

19
(48)

(807)
(603)

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012

Summary of Recent Agency Reports
AHCCCS – Report on Graduate Medical Education
Distributions – Pursuant to an FY 2013 General
Appropriation Act footnote, the Arizona Health Care Cost
Containment System (AHCCCS) is required to notify the
JLBC before expending any Graduate Medical Education
(GME) monies in excess of $91.0 million in FY 2013. The
GME program reimburses hospitals with GME programs for
the additional costs of treating AHCCCS members with
graduate medical students. Statute allows local, county,
and tribal governments, along with public universities, to
provide the state match for GME, and entities may
designate the recipients of such funds. The voluntary
contributions receive an approximate 2:1 match from the
Federal government.
AHCCCS reports that they are distributing $167.6 million in
total funds. The state match has been provided by
Mohave County Hospital District #1, Maricopa Integrated
Health System, Pima County, and the University of Arizona.
Contributions are being made to the following hospitals:
Banner Good Samaritan, Kingman Regional Medical
Center, Maricopa Medical Center, Phoenix Children’s
Hospital, Scottsdale Healthcare, St. Joseph’s Hospital,
Tucson Medical Center, and University Medical Center.
(Amy Upston)
Department of Economic Security - Report on Annual Child
Care Expenditures - A.R.S. § 46-810 requires the
Department of Economic Security (DES) to provide an
annual child care report to the Committee. The FY 2012
report shows that the average number of children served
decreased to 27,852, or (5.8)% below FY 2011; the number
of families served decreased by (5.5)%. Across categories,
the number of children served in the Low Income Working
category decreased (18.9)%, CPS-related placements
increased by 13.6%, and the number of Temporary
Assistance for Needy Families-related children decreased
by (13.4)%, while the number of children receiving
transitional child care increased by 4.8%.
The amount spent by DES on child care subsidies
decreased to $155.6 million, or (5.7)% below FY 2011. The
average monthly subsidy paid per child increased 0.1% to
$345.84. The total amount of co-payments decreased
(15.4)% from FY 2011 to $7.0 million. (Ben Beutler)
Department of Economic Security - Report on
Reimbursement Rates for Developmental Disabilities
Programs - Pursuant to A.R.S. § 36-2959, the Department of
Economic Security (DES) has provided its annual study of
Medicaid reimbursement rates to service providers in the
Developmental Disabilities program. The study states that
despite the previous provider rate reductions, the provider
network appears to have a sufficient number and mix of
providers. The study further states that the FY 2013 rates

are adequate and appropriate, or consistent with
Medicaid principles. (Amy Upston)
Department of Education - Report on the Arizona
Education Learning and Accountability System (AELAS) –
Laws 2012, Chapter 294, Section 29 requires the Arizona
Department of Education (ADE) to report quarterly on its
progress in implementing its new “AELAS” data system,
including “an assessment of progress from an
independent third party not affiliated with state
government.” The new system is intended to replace the
current “SAIS” system for counting and funding students,
replace other currently-separate ADE data systems, and
provide statewide access to data on student
achievement and teacher effectiveness for individual
courses.
The current ADE report indicates that much of FY 2012
was spent “shoring up critical systems” and laying the
technical groundwork for building AELAS. ADE, for
example, has “mapped” critical SAIS functions, pilot
tested “dashboards” for external display of ADE
information, and begun work with districts on cross
walking local course codes to the state level course
catalog.
Feedback from 2 private sector professionals who serve
on the Arizona Reach Council’s IT task force is included in
the report. They indicate that the program “is heading in
the right direction,” and has developed “a good blueprint on how to build an effective system,” while
recommending, for example, that ADE establish a
broader steering committee and develop a long-term
strategy for program support. (Steve Schimpp)
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) 2008 through FFY 2011. The
report indicates that $49.1 million of the $50.5 million FFY
2008 allocation has been expended. Information for FFY
2009 - FFY 2011 is included in Table 1 below.
The state was allocated and the Arizona Department of
Homeland Security awarded $29.0 million in Homeland
Security grants for FFY 2011. The department reported
total expenditures of $1.7 million, leaving $27.3 million
unexpended. State agencies were awarded $4.4 million,
of which $563,300 has been expended. Local
governments were awarded $24.6 million, of which $1.1
million has been expended. The largest local grantee
was the city of Yuma ($4.3 million). The largest state
grantee was the Department of Public Safety (DPS) ($2.2

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012

Summary of Recent Agency Reports

(Continued)

Table 6

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

FFY 2009
$13,974,300
43,044,100
$57,018,400

FFY 2010
$7,257,400
45,956,200
$53,213,600

FFY 2011
$4,408,300
24,587,800
$28,996,100

State Expenditures
Local Government Expenditures
Total Expenditures

$12,801,300
38,802,500
$51,603,800

$2,075,200
23,832,000
$25,907,200

$563,300
1,109,100
$ 1,672,400

Percentage of Total Awards Currently Expended
million). The largest individual grant of $3.9 million went to
the city of Yuma for the acquisition of a voice and data
integration system.
FFY 2011 represented a decrease from the amount
received in both FFY 2009 and FFY 2010. While Arizona
received $29.0 million in FFY 2011, the state received $57.0
million in FFY 2009 and $53.2 million in FFY 2010,
respectively. Of the funds received, 90.5% have been
expended for FFY 2009, and 48.7% have been expended
for FFY 2010. (Eric Billings)
Department of Revenue – Annual Enforcement Goals
Report – Pursuant to a General Appropriation Act
footnote, the Department of Revenue (DOR) is required to
report on their FY 2013 revenue enforcement goals, and to
provide an annual progress report to the Committee as to
the effectiveness of the department’s overall
enforcement and collections program for FY 2012.
In FY 2012, DOR’s enforcement goal was $500.5 million, but
they actually collected $483.9 million. DOR’s FY 2013 goal
is enforcement collections totaling $488.5 million.
DOR’s General Fund FY 2013 revenue enforcement goal is
$356.4 million, which is $15.1 million, or 4.4%, above FY 2012
actual collections. According to DOR, these targets are
based on the assumption that they will not experience
further budget reductions.
Compared to actual FY 2012 General Fund enforcement
revenue, DOR’s FY 2013 goals consist of:
•
•
•

An increase in audit revenue of $9.7 million, or 10.0%.
An increase in collections revenue of $13.5 million, or
8.8%.
A decrease in accounts receivables revenues of $(8.0)
million, or (8.8)%.

Audit enforcement revenue includes revenue due to

90.5%

48.7%

5.8%

DOR’s auditing of taxpayer returns, and finding and
licensing unlicensed businesses. Accounts receivable
revenue includes taxpayer accounts paid before they
would have been moved to collections, which allows
DOR’s collectors to work on other accounts. After certain
periods of time, unpaid taxpayer accounts are moved
from accounts receivable to DOR’s Collections Section.
(Eric Billings)
Department of Public Safety – Quarterly Report on the
GIITEM Fund – Pursuant to A.R.S. § 41-1724, the
Department of Public Safety (DPS) is required to report
quarterly on Gang and Immigration Intelligence Team
Enforcement Mission (GIITEM) Fund expenditures. During
the fourth quarter of FY 2012, DPS expended $486,500 in
GIITEM Immigration Enforcement Grant monies. Year-todate, DPS has expended $2.4 million of the FY 2012 nonlapsing $2.6 million appropriation for local law
enforcement grants. Of this amount, $1.6 million was
provided to the Maricopa County Sheriff’s Office, $500,000
was granted to the Pinal County Sheriff’s Office per
statute, and the remaining $313,000 was retained by DPS
to support local agencies receiving grant monies.
Additionally, to date, DPS spent or encumbered $2.3
million of the FY 2011 non-lapsing $2.6 million
appropriation, including $267,100 in the fourth quarter.
The remaining $295,700 in the FY 2011 and $190,400 in the
FY 2012 appropriations will be available for use through FY
2012 and FY 2013, respectively.
Additionally, the GIITEM Border Security and Law
Enforcement Subaccount received $1,222,500 in criminal
fine and fee revenues in the fourth quarter of FY 2012, for a
total of $1,693,800 year-to-date. These monies are being
used to reimburse the General Fund for a $1.0 million
appropriation made to the Pinal County Sheriff pursuant to
Laws 2011, Chapter 308 and $353,000 to fund DPS’ efforts
in support of local grants. The GIITEM Border Security and
Law Enforcement Subaccount also received $61,100 in

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012

Summary of Recent Agency Reports

(Continued)

Indigent Defense Fund revenue in the fourth quarter and
$659,300 year-to-date, of which $500,000 was used for a
grant to the Pima County Sheriff’s Office. (Eric Billings)

September Spending
September 2012 General Fund spending of $746.7 million
was $(174.4) million lower than September 2011. Year-todate, spending is $3.8 billion through September, or $100.4
million above last year.

•

FY 2013 Spending

•

September 2012 spending of $746.7 million was $(174.4)
million lower than September 2011 (See Tables 7 and 8).

Table 6

Agency
AHCCCS
Corrections
Economic Security
Education
Health Services
Public Safety
School Facilities
Board
Universities
Leaseback Debt
Service
Other
Total
Budget Stabilization
Fund Deposit
Grand Total

The Medicaid agencies of AHCCCS and the
Department of Health Services spent $(10.7) million
and $(145.7) million less than September 2011,
respectively due to technical timing issues related to
Medicaid spending.
Department of Economic Security spending in
September was $(16.0) million less than the prior year.
The lower expenditure amount reflects operating
transfers among agency funds and does not reflect
actual expenditures.

General Fund Spending ($ in Millions)

Sept 12

Change
from
Sept 11

Year to
Date

YTD
Change
from FY 12

121.8
71.7
(8.0)
267.0
13.3
1.8
0.8

(10.7)
2.5
(16.0)
(6.3)
(145.7)
0.0
0.7

337.9
216.1
382.9
1,556.7
450.9
10.7
141.6

(102.5)
(33.4)
18.6
(47.6)
55.5
(13.9)
9.0

322.8
84.1

(9.0)
35.1

134.5
3,638.2

(11.4)
(99.6)

248.8
0.0
29.5
746.7
0.0
746.7

3.4
0.0
(2.3)
(174.4)
0.0
(174.4)

200.0

200.0

3,838.2

100.4

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012
…

Table 8

Agency
Department of Administration
Department of Admin Sale/Leaseback D/S
Office of Administrative Hearings
Department of Agriculture
AHCCCS
Arts, AZ Commission on the
Attorney General
AZ Capital Post Conviction Public
Defender
State Board of Charter Schools
AZ Commerce Authority
Community Colleges
Corporation Commission
Department of Corrections
AZ State Schools for the Deaf & Blind
Department of Economic Security
Department of Education
DEMA
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 Forester
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
State Land Department
Law Enforcement Merit System
Legislature
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
Senate

General Fund Spending
($ in Thousands)
Change from
September 12
September 11

Year-to-Date

YTD Change
from FY 12

616.7
81.8
608.3
121,751.7
1,456.9
0.0

(1,930.2)
9.7
55.1
(10,690.2)
0.1
779.6
(37.3)

6,792.8
84,119.8
219.0
2,078.0
337,946.4
5,613.9
4.1

(906.3)
35,069.1
5.4
(326.0)
(102,475.5)
(10.4)
188.7
(132.3)

51.1
2,625.0
41.7
71,680.5
1,921.0
(7,992.6)
269,990.4
391.9
10.9
49.7
36.8
199.9
20.6
215.8
68.6
441.7
127.8
13,362.7
199.4
94.8
186.3
(1.1)
320.0

(2.1)
(5.0)
2,545.0
428.5
(16,007.7)
(6,274.2)
(179.2)
0.1
8.7
(94.8)
6.3
4.6
33.8
25.0
3.1
(48.8)
(23.9)
(145,647.6)
(368.8)
51.1
(125.5)
(4.1)
(8.5)

208.1
7,875.0
16,048.2
121.5
216,130.9
6,463.0
382,882.3
1,556,686.9
1,177.3
7,000.0
48.7
201.6
210.9
653.9
509.7
996.2
179.4
1,333.6
463.3
450,904.5
1,018.8
181.5
348.5
14.2
1,285.3

(20.7)
(1,329.1)
(14.1)
(33,385.2)
(4.6)
18,617.8
(47,598.5)
(1,902.5)
9.7
8.9
(51.1)
(151.9)
(13.9)
193.0
27.3
3.1
(267.0)
(27.1)
55,529.7
(123.7)
28.1
(579.4)
2.5
(215.7)

730.3
1,049.6
994.4
3,369.0
77.1
5.1

(147.0)
274.3
134.9
295.7
48.9
0.7

5,386.1
16,874.1
3,330.0
10,512.9
137.2
15.1

1,269.2
(1,363.7)
(424.6)
(2,565.7)
(48.9)
3.1

1,246.1
954.4
134.5
394.0
546.9

(46.7)
126.3
(0.7)
82.3
(48.9)

3,942.3
2,437.1
420.5
1,431.7
1,597.7

(683.9)
(522.6)
(109.4)
(449.7)
(425.9)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2012
….

Agency
Mine Inspector
Nav. Streams & Adjudication
Pioneers’ Home
Comm. for Postsecondary Ed.
Department of Public Safety
Arizona Department of Racing
Radiation Regulatory Agency
Real Estate Department
Department of Revenue
School Facilities Board
Secretary of State
Tax Appeals Board
OOffice of Tourism
Department of Transportation
Universities
Board of Regents
Arizona State University
Northern Arizona University
University of Arizona
Department of Veteran Services
Department of Water Resources
Department of Weights & Measures
Other
Total
Budget Stabilization Fund Deposit
Grand Total

September 12

Change from
September 11

Year-to-Date

YTD Change
from FY 12

70.1
9.6
(1.0)
1,806.8
51.5
142.9
2,253.6
767.7
2,904.4
15.9
678.0
3.6

(0.3)
(0.7)
(1.0)
(610.4)
(32.2)
(1,873.9)
35.2
(5.3)
(2,336.0)
695.4
2,244.3
10.2
678.0
0.3

323.8
35.0
481.7
88.0
10,660.8
1,779.5
339.2
453.0
12,213.5
141,591.2
6,595.1
81.1
1,307.7
12.9

(34.6)
(24.1)
(174.2)
(522.4)
(13,874.2)
(513.5)
(68.1)
(352.7)
(4,321.3)
8,967.5
3,759.8
2.7
1,307.7
2.3

4,798.6
110,368.6
36,420.6
97,176.0
311.7
689.7
122.6
746,651.1
746,651.1

3,848.4
(1,788.2)
(21.4)
1,373.7
(28.0)
223.0
49.8
(62.4)
(174,379.0)
(174,379.0)

5,307.5
142,719.0
48,272.3
126,542.0
1,191.5
2,056.9
291.1
108.2
3,638,252.8
200,000.0
3,838,252.8

(544.9)
(5,364.5)
(64.3)
(3,005.5)
(158.0)
444.6
26.9
126.2
(99,558.0)
200,000.0
100,442.0

Tracking Arizona’
Arizona’s Recovery

Total NonNon-Farm Employment

Appendix A

2,800

Slide:
Thousands of Jobs

2,700

2……Total Non-Farm Employment
3……Initial Claims for Unemployment Insurance
4……State Sales Tax Collections – Retail Category
5……State Sales Tax Collections – Contracting
Category
6……Single Family Building Permits
7……Maricopa County Pending Foreclosures
8……Coincident Index

2,600

2,500

2,400

2,300

2,200

2001

1

JLBC

Initial Claims for Unemployment Insurance

2004

2005

2008

2009

2010

JULY

JUL

JAN

JUL

JAN

JUL

JAN

JUL

2007

JAN

JUL

2006

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

JAN

2003

2011

2

Not seasonally adjusted

State Sales Tax Collections – Retail Category
$225

40,000
$200
35,000

$ in Millions

30,000
25,000
20,000
15,000

$175

$150

$125

2002

2003

2004

2005

Not seasonally adjusted

2010

Jul-12

Jan 12

Apr 12

Oct 11

July 11

Jan 11

Apr 11

Oct 10

July 10

Jan 10

Apr 10

Oct 09

July 09

Jan 09

Apr 09

Oct 08

Apr 08

July 08

Jan 08

Oct 07

Apr 07

July 07

JULY

JUL

JAN

JUL

2009

JAN

JUL

2008

JAN

JUL

2007

JAN

JUL

2006

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JAN

2001

Jan 07

$100

5,000

Oct 06

10,000
July 06

Total Monthly Claims for UI Benefits

2002

JLBC

45,000

JLBC

JAN

JUL

JAN

JAN

2,100

2011

3

JLBC

Excludes temporary 1 ¢ sales tax

4

State Sales Tax Collections – Contracting Category

Single Family Building Permits
100,000

$100

Single Family Building Permits

90,000

$ in Millions

$75

$50

$25

80,000
70,000
60,000
50,000
40,000
30,000
20,000

Jul-12

2001
Excludes temporary 1 ¢ sales tax

JLBC

5

2003

2005

2006

2007

2008

2009

2010

JULY

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

2004

JAN

JUL

JAN

JUL

JAN

JUL

2002

JLBC

2011

6

12-Month Moving Sum

Maricopa County Pending Foreclosures

Economic Activity Index
210

60,000

200

Coincident Index Value

50,000

40,000

30,000

20,000

10,000

190
180
170
160
150

2003

2004

2005

2006

2007

2008

2009

2010

An initial notice of trustee sale has been recorded but final sale has not yet occurred

2011

JLBC

2002

2003

2004

2005

2006

2007

2008

JULY

JUL

2010

Source: Coincident Index – Federal Reserve Bank of Philadelphia. Combines four state-level
indicators (employment, average hours worked in manufacturing, the unemployment rate, and wage
and salary disbursements) to summarize current economic conditions.

JAN

JUL

2009

JAN

JAN

JUL

JUL

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

2001

7

JAN

JAN

JULY

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

2002

JAN

140
JAN

0

JLBC

JAN

JUL

JAN

0
JAN

Jan 12

Apr 12

Oct 11

July 11

Jan 11

Apr 11

Oct 10

July 10

Jan 10

Apr 10

Oct 09

July 09

Jan 09

Apr 09

Oct 08

July 08

Jan 08

Apr 08

Oct 07

July 07

Jan 07

Apr 07

Oct 06

July 06

10,000

$0

2011

8