JLBC - Monthly Fiscal Highlights

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

Summary
October General Fund revenue collections
totaled $662.7 million. Excluding one-time
revenue adjustments, October collections
were 2.6% above the prior year.
The growth in October revenues was largely
the result of the growth of Individual Income
Taxes. This category grew by 5% compared
to the prior year, due mostly to technical
timing issues related to withholding
collections.

www.azleg.gov/jlbc.htm

“Year-to-date,
revenues are
3.1% higher than
last year and are

November 2012

The number of work days in a given month
can have a significant impact on receipts. In
terms of the current month, October 2012 had
2 more of these processing days than in 2011,
which artificially increased collections.
October General Fund collections were $11.7
million above the enacted May budget
forecast. Year-to-date, revenues are 3.1%
higher than last year and are $2.3 million
above the budget forecast.
The two best "real-time" measures of Arizona
revenues are sales tax collections and income
tax withholding. They both reflect the current
sluggish, slow-growth nature of the Arizona
economy. For first one-third of the fiscal year,

$2.3 million
above the

sales tax collections are up 3.7% and
withholding has increased 4.0%.
In comparison to revenue of $662.7 million,
October 2012 General Fund spending was
$500.7 million, or $42 million above last year.
October expenditures were greater than last
year primarily due to Department of
Education spending and increased payroll
costs caused by: 1) An additional pay period
in the month and 2) The employee retention
payments which began in October 2012.
Fiscal year-to-date, General Fund revenues of
$3.0 billion have been offset by $4.3 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. As of midNovember 2012, the operating balance is $1.2
billion.
In addition, the state has $451.5 million in
Budget Stabilization Fund reserves, which
represents an original $450 million deposited
as part of the FY 2013 budget plus $1.5 million
of interest earned.

Table of Contents

budget
forecast.”

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
November 20, 2012.

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

• ADE – Budget Status Report ..............................7

October Revenues ................................................. 2

• ADE – K-12 Expenditure Limit Report ................7

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

• DHS – Arnold v. Sarn Report ..............................7

Summary of Recent Agency Reports

• JLBC – County Flexible Revenue Report .........8

• ADOA – Management Software Report ........ 7

• Supreme Court – Automation Projects............8

• AHCCCS – Immigration Status.......................... 7

October Spending ..................................................9

• ACA – Arizona Competes Fund Report.......... 7

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

• DES – TANF Diversion Report ............................. 7

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

October Revenues
Table 1

October
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2013
Collections
$ 662.7
$ 2,966.0

Sales Tax collections were $381.3 million, or 0.9%
above October 2011 and $(6.4) million below the
budget forecast for the month.
Year-to-date, sales tax collections are 3.7% above
the prior year and are $9.1 million above forecast.
Table 2 displays the October growth rates for the
largest categories.
“October
retail, which
reflects
September
sales,
increased by a
modest 2.6%.”

Table 2

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

October
2.6%
(4.6)%
(6.9)%
(9.6)%
7.0%

YTD
4.6%
0.9%
4.0%
(3.0)%
7.6%

Retail and contracting together account for
almost 60% of all sales tax revenues. October
retail, which reflects September sales, increased
by a modest 2.6%. 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 high growth rates in the last
quarter of FY 2011.
Overall, the retail category grew by 5.0% in FY
2012 compared to the prior year. Growth
through the first third of the current fiscal year is
slightly lower than that level, at 4.6%.
Contracting collections have been much more
volatile than retail and decreased by (4.6)% this
month. The October decrease is the second
consecutive month of decline in the contracting
category.
Individual Income Tax net revenues were $275.9
million in October, or 5.0% more than the prior
year. Collections were $25.3 million above the
budget forecast. Year-to-date, revenues have
grown 4.7% and are $29.0 million above forecast.
The October increase relative to the forecast
was primarily the result of greater than
anticipated withholding tax collections. Final
payments met the forecast estimate, and
refunds were slightly less than expected.

Difference From
Budget Forecast
$ 11.7
$ 2.3

Difference
From FY 2012
$ (5.0)
$ (49.6)

As indicated in Table 3, withholding was up
significantly in October. The October increase
brings withholding tax collections for the first third
of the fiscal year up to 4.0%. This amount is $6.1
million above the budget forecast.
Total estimated and final payments of $46.5
million were 5.9% above last year, and were
slightly above forecast. For the first third of the
fiscal year, payments are $(5.4) million below the
forecast.
Refunds of $(78.9) million were $(14.9) million
greater than last year’s amount. Year-to-date,
refunds are $28.2 million below forecast.
Table 3

Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

October
`9.0%

YTD
4.0%

5.9%
23.2%

9.6%
5.3%

Corporate Income Tax net collections were $27.4
million in October, which is 14.4% above the prior
year. Collections for the month were $0.7 million
above the forecast. Year- to-date, collections are
up 2.7% and are $(10.9) million below forecast.
The Lottery Commission reports that October
ticket sales were $47.3 million, which is $(1.1)
million, or (2.3)%, below sales in the prior year.
Year-to-date ticket sales are $198.8 million, which
is 6.0% above last year’s sales. While sales
increased, net General Fund revenues actually
declined due to an increase in the payment of
debt service for the Lottery Revenue Bonds
issued in FY 2010.
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 $94.6 million in
October were down $(2.4) million, or (2.4)%,
compared to October of last year. Year-to-date
revenues are (0.4)% less than the prior year.

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

Table 4

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

FY 2013 YTD (Four Months)

Change From
October 2011

Actual
October 2012

Percent

Amount

Change from
Budget Forecast
Percent

Amount

October 2011

Actual
October 2012

Budget Forecast
Percent

Amount

Percent

Amount

Taxes
Sales and Use - Base*
- 1¢ Increase*
Income - Individual
- Corporate

$304,390,327

$1,340,823

$1,243,734,627

$40,625,647

76,905,196

2,222,715

3.0

1,585,066

2.1

311,636,611

15,265,913

5.2

12,293,566

4.1

275,896,569

13,179,904

5.0

25,263,633

10.1

1,169,139,902

52,067,963

4.7

28,952,437

2.5

27,359,524

3,452,940

203,476,419

5,393,690

2.7

Property

1,897,338

Luxury - Tobacco

2,046,811

- Liquor
Insurance Premium
Estate
Other Taxes
Sub-Total Taxes

(281,965)

($7,990,504)

(2.6) %

3.4 %

($3,212,248)

14.4

693,183

2.6

(10,881,885)

(5.1)

(602,662)

(24.1)

2,211,513

(313,694)

(12.4)

(663,487)

(23.1)
(6.9)

--

0

0.0

8,415,890

908,773

12.1

(626,660)

(757,807)

(24.5)

0

0.0

9,447,918

417,365

4.6

420,024

1,298,932

(191,210)

(12.8)

(173)

(100.0)

56,092

4,963

$692,189,258

$21,714,523

(0.3) %

(12.9)

2,338,469
0

2,744,333

0.4 %

9.7
3.2 %

(701,068)
0
(3,908)
$18,243,740

(35.1)

115,292,328

(7,948,806)

(6.4)

--

0

(200,825)

(100.0)

(6.5)

170,017

(19,198)

(10.1)

2.7 %

$3,063,525,225

$106,196,828

3.6 %

(6,707,672)
0
(69,983)
$19,504,092

4.7
(5.5)
-(29.2)
0.6 %

Other Revenue
Lottery

2,640,740

License, Fees and Permits

2,646,632

Interest

3,771

(1,410,500)

(34.8)

(1,359,260)

(34.0)

8,700,120

(353,368)

(11.8)

10,066,412

(78.5)

(6,229)

(62.3)

8,332

373,019

16.4

(13,785)

Sales and Services

1,356,670

(11,623)

(0.8)

(1,143,330)

(45.7)

5,633,284

Other Miscellaneous

2,653,578

(4,065,444)

(60.5)

(3,846,422)

(59.2)

8,027,043

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

0

0

--

0

658,931

961,726

--

158,931

$9,960,322
$702,149,580

($4,166,607)
$17,547,916

(29.5) %
2.6 %

($6,549,678)
$11,694,062

-31.8

0

(5,815,100)

(40.1)

(5,299,880)

(37.9)

914,341

10.0

(433,588)

(4.1)

(14,848)

(64.1)

(31,668)

(79.2)

201,751
(5,435,046)
0

385,436

(1,761,067)

(39.7) %

$32,820,627

($11,909,969)

1.7 %

$3,096,345,852

$94,286,859

3.7

(4,366,716)

(43.7)

(40.4)

(5,472,957)

(40.5)

-(82.0)
(26.6) %
3.1 %

0
(1,614,564)
($17,219,373)
$2,284,719

-(80.7)
(34.4) %
0.1 %

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

(42,798,670)

(7,430,050)

21.0

0

0.0

(171,194,680)

(29,720,200)

21.0

0

0.0

3,352,311

(10,862,995)

(76.4)

0

0.0

40,886,315

(101,312,669)

(71.2)

0

0.0

(39,446,359)

(22,582,187)

133.9 %

0

0.0 %

(130,308,365)

(143,900,297)

-- %

0

0.0 %

$662,703,221

($5,034,271)

(0.8) %

$11,694,062

1.8 %

$2,966,037,487

($49,613,438)

(1.6) %

$2,284,719

0.1 %

$94,631,590

($2,367,943)

(2.4) %

(3.6) %

$393,672,879

($1,728,459)

(0.4) %

($6,473,276)

(1.6) %

Non-General Funds
Highway User Revenue Fund

($3,531,937)

__________
* Total October collections including the temporary 1¢ increase approved by the voters in May 2010 were $381.3 million. This amount is $3.6 million, or 0.9%, above October 2011 and $(6.4) million, or (1.7)%, below
forecast.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

Recent Economic Indicators
NATIONAL

“Consumer
prices, as
measured by the
U.S. Consumer
Price Index (CPI),
grew by 0.1% in
October and by
2.2% above the
prior year.”

According to the U.S. Department of Commerce
Bureau of Economic Analysis, the U.S. Real Gross
Domestic Product (GDP) for the third quarter of
calendar 2012 increased at an annual rate of 2%.
This growth represents a modest acceleration
from the 1.3% rate estimated for the second
quarter of 2012. Improvement in the rate was
mainly caused by an upturn in Federal spending
and acceleration of growth in personal
consumption and residential fixed investment.
The Conference Board’s U.S. Consumer
Confidence Index rose 5.6% in October to 72.2,
reaching its highest mark since February of 2008.
The index’s strong improvement in the last two
months represents a reversal of the growing
pessimism evident in the year’s earlier readings.
The rise in optimism was largely due to perceived
improvements in the job and housing markets.
Furthermore, consumers became less concerned
about the looming fiscal cliff and the European
debt crisis. Recent readings, however, do not
include effects of Hurricane Sandy.
The Conference Board’s U.S. Leading Economic
Index increased by 0.6% in September to a
reading of 95.9. The latest reading is 2.9% above
that in September 2011, but the annual increase
predominately came from gains achieved in last
few months of 2011. Monthly growth in 2012 has
fluctuated from positive to negative each month
since March. Six of the index’s 10 components
increased in September, though the primary
drivers of the overall increase were a rising
number of building permits and improved stock
performance.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), grew by 0.1% in
October and by 2.2% above the prior year. This
muted increase follows on the high monthly
growth of 0.6% witnessed in August and
September. October increases in food prices
were partly offset by decreases in energy prices.
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 inflationadjusted wages.

In September, 39 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 3.2%
above last year, which is the 13th highest growth
rate in the country. While this is a significant
improvement, Arizona’s index is still (11.0)%
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 manufacturing
delivery times, 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 4.5% over the next 6 months.
This is higher than the revised 3.8% growth
projection in August and higher than the 2.4%
projection in September 2011.
Housing
The number of Maricopa County pending
foreclosures decreased from 14,584 in
September to 13,458 in October. This represents
the fifth consecutive monthly decrease in this
measure. The October total is significantly
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 27,266 in
October 2011 to 22,702 in October 2012, a
(16.7)% decrease. This continues the decline in
inventory that has occurred in every month
since January 2011.
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 September. This represents no
change from August, but a 20.0% increase from
September of last year.
Another measure of the health of the Arizona
real estate market is permitting activity. For the
3-month period through September, a total of
1,455 single-family building permits had been

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

Recent Economic Indicators

“Compared to
October 2011,
nonfarm
employment was
up by 1.9%, or
46,600 jobs.”

(Continued)

issued statewide, a 50.6% increase from last
year. This level of activity is comparable to the
amount of permitting seen in September 2008,
a month which marked the beginning of the
rapid decline in the state’s housing market. Still,
the current level of permitting remains far
below a more normal 3-month average of
3,000 to 4,000 permits. See Appendix A –
Tracking Arizona’s Recovery.

employment in December 2007. See Appendix
A – Tracking Arizona’s Recovery.

The performance of the multi-family housing
sector is similar to that of single-family housing.
For the 3-month period ending in September, a
total of 485 multi-family building permits had
been issued in the state. This figure represents a
level similar to October 2008. Multi-family
permitting activity remains (67.4)% below the
peak of activity in April 2007.

State Agency Data

Employment
The state gained a total of 11,900 nonfarm jobs
between September and October, of which
9,500 were attributable to the private sector
and 2,400 to the government sector. This
translates into month-over-month increase of
0.5%. While the state typically adds jobs in
October, the net increase this year was (0.2)%
below the average for October in the prior 10
years. Only 2 major sectors – manufacturing
and construction - had above average gains in
October.
Compared to October 2011, nonfarm
employment was up by 1.9%, or 46,600 jobs. The
largest contributors to October’s year-over-year
job gain were the professional and business
services sector (+15,200 jobs), followed by the
trade, transportation and utilities sector (+11,800
jobs), and the education and health services
sector (+6,200 jobs). Year over year, nonfarm
employment growth slowed from 2.3% in
September to 1.9% in October, the lowest rate of
growth since May this year.
The average monthly net gain for the first 10
months of 2012 is 48,100 jobs. With only 2 months
remaining in the current calendar year, Arizona
is on target to have its largest annual job
increase since 2006 when the state added
126,300 nonfarm jobs.
As of October, total nonfarm employment
remained (8.6)%, or (232,700) jobs, below peak

The state’s unemployment rate fell by (0.1)% in
October, going from 8.2% to 8.1%. October’s
jobless rate was the lowest since December
2008. By contrast, the U.S. unemployment rate
increased from a 43-month low of 7.8% in
September to 7.9% in October.

At the beginning of November, total AHCCCS
caseloads equaled 1.27 million members, a
(1.2%) decrease from the prior month. Overall
AHCCCS caseloads are currently (6.1)% below
November 2011 levels. The traditional AHCCCS
population, which consists primarily of lowerincome children and their parents, decreased
(0.8)% from last month and (1.3)% from 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 (131,497) since then to
92,995. Of the decline, (11,620) is attributed to
members who were transferred to the SSI
program. As a whole, the Proposition 204
program has declined (1.8)% compared to the
prior month, and (27.7)% from the prior year.
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 (3.8)% compared to the
prior month and (39.7)% 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,
17,338 children were enrolled in KidsCare II.
The 3-month average count of the Department
of Corrections (ADC) inmate population
increased to 39,975 inmates in October 2012.
Relative to the prior 3-month period, the
population has increased by 123 inmates.
Compared to a year ago, the population has
declined by (112) inmates.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

Recent 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

October
September
September
October
October
October
September
Aug-Oct
Aug-Oct

8.1%
18,024
47,243
2.48 million
152,700
122,500
40.7
$36.2 million
$142.1 million

(0.1) %
(17.3)%
(19.5)%
0.5%
0.6%
1.7%
(0.7)%
(2.1)%
(1.6)%

(1.1)%
(16.2)%
(27.0)%
1.9%
0.8%
3.0%
0.2%
(0.6)%*
3.8%*

Jul-Sep
Jul-Sep

1,455
485

(6.0)%
17.8%

50.6%
18.5%

September
September

7,814
1,099

(15.2)%
(12.7)%

(1.6)%
(4.8)%

September
September
August

$150,000
$90,000
119.28

0.0%
0.0%
1.8%

20.0%
17.3%
18.8%

October
October
August
September
August

13,458
22,702
3.40 million
$49.48
$4.35

(7.7)%
(0.7)%
(4.9)%
1.6%
5.1%

(41.2)%
(16.7)%
(0.4)%
16.0%
(33.8)%

2nd Quarter 2012
September
Jul-Sep
2nd Quarter 2012
July 1, 2011
November

September
September
Aug - Oct

68.6
181.24
4.5%
$235.1 billion
6.48 million
1,270,815
886,836
92,995
149,162
8,581
17,338
53,089
62,814
41,118
1,136,321
39,975

(1.3)%
0.3%
0.7%
1.3%
N/A
(1.2)%
(0.8)%
(3.5)%
(0.7)%
(3.8)%
(11.7)%
0.2%
(1.9)%
(2.6)%
(0.6)%
123 inmates

32.2%
3.2%
2.1%
3.6%
1.1%
(6.1)%
(1.3)%
(100.0)%
(47.6)%
(5.3)%
(39.7)%
2.7%
16.2%
8.8%
(0.9)%
(112) inmates

September
September

17,978
25,394

(124)
(89)

(908)
(476)

3rd Quarter 2012
(1st Estimate)
October
September
July-September
October

$13.6 trillion

2.0%

2.3%

72.2
95.9
$4.43 billion
231.8

5.6%
0.6%
5.8%
0.1%

76.5%
2.9%
(3.9)%
2.2%

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

Summary of Recent Agency Reports
Arizona Department of Administration – Performance
Management Software Report – Pursuant to Laws 2009,
3rd Special Session, Chapter 7, Section 36C, the Arizona
Department of Administration (ADOA) is required to
submit an annual report detailing the savings generated
from performance management software. The Chapter
also required that ADOA only enter into a contract if the
performance software vendor would agree to receive
payment solely through savings created by the use of
the software. ADOA has indicated that no vendors
have agreed to such an agreement, therefore, no
procurement has been achieved. (Brett Searle)
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 latest report 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 48,182 individuals in FY 2012. During this period,
AHCCCS and DES referred 20 citizens and 7 non-citizens
for prosecution for fraudulent schemes, theft, or forgery.
(Amy Upston)
Arizona Commerce Authority – Arizona Competes Fund
Annual Report – Pursuant to A.R.S. § 41-1545.04, the
Arizona Commerce Authority (ACA) is required to report
annually on grants from the previous fiscal year and
other projects currently funded from the Arizona
Competes Fund and performance measures for the
recipients including job creation, capital investment and
median wages.
ACA reports awarding 4 grants, totaling $5.2 million,
from the Arizona Competes Fund in FY 2012. The largest
grant of $3.0 million was awarded to Silicon Valley Bank,
with Clean Energy Systems Inc. and Ulthera, Inc. each
receiving $1.0 million. United Healthcare Services, Inc.
received the smallest grant award of $200,000.
Each recipient agreed, as part of the granting process,
to meet certain metrics regarding job creation. In
summation, the 4 recipients agreed, over the next 3
years, to create a collective total of 956 jobs, provide
average annual wages of $58,800, make a collective
capital investment of $17.7 million, and pay for at least
65% of health insurance costs. As of June 30, 2012, the
grantees had created 152 jobs, average annual wages
of $105,000, and $373,500 in capital investment.
The Arizona Competes Fund receives an annual $21.5
million deposit of income tax withholding monies and
$3.5 million in state lottery revenues. The monies are

used to retain, attract, and expand businesses in Arizona
through the provision of grants and loans. (Eric Billings)
Department of Economic Security - Annual Report on
Temporary Assistance for Needy Families (TANF) Grant
Diversion Program - Pursuant to A.R.S. § 46-298, the
Department of Economic Security (DES) has provided
the 2012 annual report on the TANF Grant Diversion
Program. The program’s purpose is to divert applicants
from long-term TANF cash assistance by offering
immediate, one-time assistance to resolve a financial
crisis. In FY 2012, 16,599 applicant households chose the
grant diversion option and were diverted from long-term
assistance. A total of 8,597 households obtained
employment within 90 days of receiving assistance
under the diversion program in FY 2012. Through
January 2012, the most recent month for which data is
available, 2,024 of 13,744 households, or 15%, reapplied
for long-term assistance within 180 days of their
participation in the diversion program. Complete data
for FY 2011 indicates 2,156 of the total 22,196 households
receiving diversion payments, or 10%, reapplied within
180 days. In December 2011, the department
implemented a policy that restricted qualified
applicants of the grant diversion option to one diversion
payment in a single year. (Ben Beutler)
Department of Education – Budget Status Report –
Pursuant to A.R.S. § 35-131D, the Arizona Department of
Education (ADE) recently provided an update
regarding its budget status for FY 2013. In that report,
ADE estimates that it will experience a $46.5 million net
funding surplus for formula programs for FY 2013. The
estimated surplus includes a $36.4 million savings from
prior year (FY 2012) overpayments that are being
recaptured in the current year. ADE’s final formula costs
for FY 2013 will not be known until later in the year due to
ongoing data updates and corrections. (Steve
Schimpp)
Arizona Department of Education – K-12 Aggregate
Expenditure Limit Report – Pursuant to A.R.S. § 15-911B,
the State Board of Education reported on October 31,
2012 that currently budgeted expenditures for all school
districts collectively statewide for FY 2013 are $(678.5)
million below the Constitution’s aggregate expenditure
limitation (AEL). For FY 2012 the difference was $(750.1)
million. The AEL limits growth in statewide K-12
expenditures to the combined rate of growth for
enrollment and inflation, with certain exceptions. (Steve
Schimpp)
Department of Health Services – Arnold v. Sarn Report –
Pursuant to a footnote in the FY 2013 General
Appropriation Act, the Department of Health Services
(DHS) has submitted the 1st quarter report (July-October

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

Summary of Recent Agency Reports
2012) on settling the Arnold v. Sarn lawsuit, which dealt
with Seriously Mentally Ill (SMI) clients in Maricopa
County.
Due to the state’s fiscal condition, the plaintiffs and the
state agreed in March 2010 to suspend the lawsuit for 2
years due to lack of funding. In accordance with the
May 2012 agreement to end the suspension, the state
has agreed to utilize restored funding to provide Arnold
class members with access to additional medical
services, crisis services and support services. The FY 2013
budget included $95 million for services to the Arnold
population, including $38.7 million for Non-Medicaid
services.
DHS reports that, as prescribed by the agreement to
end the suspension of the lawsuit, the parties have met
to discuss and review the implementation of the
agreement. Additionally, the parties have worked to
develop Quality Service Reviews and assist Magellan,
the Maricopa County Regional Behavioral Health
Authority (RHBA), in planning for service modifications.
DHS reports that these service implementation
adjustments have resulted in the following
improvements:
•

Increased Seriously Mentally Ill adult employment
and referrals to vocational rehabilitation programs
•
Increased coordination between the Arizona State
Hospital and Magellan to produce timely hospital
discharges
•
Reduced inpatient days due to continued use of
Assertive Community Treatment (ACT)
•
Development of data collection methodologies for
Non-Medicaid SMI clients by comparing Supported
Housing performance measures with Substance
Abuse Services performance measures
•
Development of an infrastructure for a Peer Support
Certification process with the assistance of
statewide and national peer organizations for
substance abuse treatment
(Art Smith)
JLBC – County Flexible Revenue Report –The FY 2013
Revenue Budget Reconciliation Bill (BRB) (Laws 2012,
Chapter 297) continued a prior year provision to permit
counties to meet any FY 2013 fiscal obligation from any
source of county revenue, including countywide special
taxing jurisdictions. Chapter 297 requires counties to
report on their use of this provision.
Of the 13 counties that submitted a report, 6 reported
using the flexibility:

•
•

•
•

•
•

(Continued)

Apache County: $900,000 from 3 special taxing
districts to the General Fund.
Mohave County: $980,334 from 3 special taxing
districts to the General Fund and $6 million from the
Television District for debt service reserve needs for
the County Jail.
Navajo County: $864,661 from the Flood Control
District to the General Fund and Child Support Fund
(administers child support program).
Pinal County: $8.9 million from numerous funds to
the Debt Service Fund. The County reports that
these transfers were effectively used to lower the
primary property tax rate and levy as well as offset
other cost shifts and increases.
Yavapai County: $550,000 from the Flood Control
District to the General Fund.
Yuma County: $14,706 from the Library District to the
General Fund.

The following 7 counties did not utilize this provision:
Cochise, Coconino, Gila, Graham, Greenlee, Maricopa,
and Pima Counties.
La Paz and Santa Cruz Counties did not respond to the
statutory reporting requirement. (Stefan Shepherd)
Supreme Court – Report on Current and Future
Automation Projects – Pursuant to a General
Appropriation Act footnote, the Administrative Office of
the Courts (AOC) has provided its FY 2013 report to the
JLBC on current and future automation projects
coordinated by the AOC. The AOC estimates total state
automation expenditures in FY 2013 will be
approximately $21.7 million. Of this amount,
approximately $7.6 million, or 35%, will be spent on 6
new projects; $8.5 million, or 39%, will be spent on shared
infrastructure; and $5.6 million, or 26%, will be spent on
ongoing automation support in FY 2013. Of the 6 new
projects, the larger projects include:

• Replacement of the current case management

system in AOC limited jurisdiction courts ($3,665,300)

• Improvements to the electronic filing system
($2,900,500)

• The provision of remote electronic access to court
documents ($630,000) (Eric Billings)

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

October Spending
October 2012 General Fund spending of $500.7 million
was $42.0 million higher than October 2011. Year-todate, spending is $4.3 billion, or $142.4 million above last
year.

Fund funding for the agency, as well as
increased charter school enrollment.
•

The Department of Corrections spent $26.3
million more than October 2011 due to an
additional pay period that occurred in October
2012.

•

Many agencies whose budgets have a
significant portion of spending on personnel had
increases due to: 1) An additional pay period in
the month and 2) The employee retention
payments which began in October 2012.

FY 2013 Spending
October 2012 spending of $500.7 million was $42.0
million higher than October 2011 (See Tables 6 & 7).
•

The Department of Education spent $11.1 million
more than October 2011. The higher
expenditure amount reflects higher General

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
Budget Stabilization
Fund Deposit
Grand Total

Oct 12

Change from
Oct 11

120.4
90.6
50.8
92.6
17.2
2.7
0.2

(9.3)
26.3
(5.3)
11.1
2.7
(3.1)
0.0

49.9
0.0

7.4
0.0

(77.6)
500.7

(68.9)
42.0

Year to Date

YTD Change
from FY 12

458.3
306.7
433.7
1,649.3
468.1
13.4
141.7

(111.7)
(7.1)
13.3
(36.5)
58.2
(17.0)
9.0

372.8
84.1

(1.6)
35.1

210.8
4,138.9

0.7
(57.6)

0.0

0.0

200.0

200.0

500.7

42.0

4,338.9

142.4

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2012

Table 7

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
October 12
October 11

Year-to-Date

YTD Change
from FY 12

5,146.6
123.5
937.5
120,379.1
1,487.6
-

4,386.3
60.6
345.3
(9,272.1)
251.7
(51.5)

11,939.4
84,119.8
342.5
3,015.4
458,325.5
7,101.6
4.1

3,480.0
35,069.1
66.0
19.3
(111,747.7)
(10.4)
440.4
(183.8)

83.4
2,625.0
16,048.2
68.7
90,577.8
3,290.8
50,862.7
92,635.0
1,859.0
6.4
81.2
48.2
332.6
348.4
561.3
91.2
823.9
203.2
17,177.2
319.7
71.0
152.4
8.3
539.3

37.1
(1,212.7)
22.4
26,273.3
2,193.1
(5,292.7)
11,081.6
1,319.9
(20.1)
(15.0)
(2.9)
148.4
85.6
(1,116.3)
(105.5)
(197.1)
(3.3)
2,681.3
95.8
5.1
(120.5)
(3.3)
108.6

291.5
10,500.0
32,096.3
190.1
306,708.6
9,753.7
433,745.0
1,649,321.9
3,036.3
7,000.0
55.0
282.7
259.1
986.5
858.2
1,557.5
270.6
2,157.5
666.5
468,081.6
1,338.5
252.5
500.9
22.5
1,824.6

16.4
(2.5)
8.3
(7,111.9)
2,188.5
13,325.0
(36,516.9)
(582.6)
(10.4)
(6.1)
(54.0)
(3.5)
71.7
(923.3)
(78.2)
3.1
(464.2)
(30.4)
58,211.0
(27.9)
33.2
(699.9)
(0.8)
(107.0)

1,428.1
17,231.1
1,487.0
4,536.5
349.4
7.5

457.7
672.7
411.8
121.7
(12.3)
3.0

6,814.2
34,105.2
4,817.1
15,049.4
486.6
22.5

1,727.0
(691.0)
(12.9)
(2,444.0)
(61.2)
6.1

2,004.3
1,254.0
211.2
1,916.5
837.3

747.7
307.6
73.0
1,612.9
254.2

5,946.6
3,691.2
631.7
3,348.2
2,435.0

63.7
(215.0)
(36.3)
1,163.2
(171.7)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 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
Office 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

October 12

Change from
October 11

Year-to-Date

YTD Change
from FY 12

104.5
11.9
18.1
610.4
2,777.0
11.0
264.7
459.8
4,146.8
154.1
1,620.3
25.1
424.9
3.0

39.8
4.7
(110.2)
522.4
(3,142.5)
(124.0)
6.0
289.5
(681.0)
81.1
822.3
(1.9)
424.9
0.8

428.3
46.9
499.7
698.4
13,437.7
1,790.5
603.9
912.9
16,360.3
141,745.2
8,215.4
106.2
1,732.6
15.9

5.2
(19.4)
(284.3)
(17,016.7)
(637.4)
(62.1)
(63.2)
(5,002.4)
9,048.6
4,582.1
0.8
1,732.6
3.2

10,737.8
17,381.2
5,925.8
15,870.8
833.0
979.7
166.1
39.5
500,717.6
500,717.6

10,240.1
(1,788.1)
(21.4)
(1,001.8)
(579.6)
728.5
88.5
(103.7)
42,006.8
42,006.8

16,045.3
160,100.3
54,198.1
142,412.8
2,024.6
3,036.6
457.2
147.7
4,138,970.4
200,000.0
4,338,970.4

9,695.2
(7,152.6)
(85.7)
(4,007.3)
(737.5)
1,173.1
115.3
(2,516.7)
(57,551.2)
200,000.0
142,448.8

Contents
Slide:

Tracking Arizona’s Recovery

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

November 2012

JLBC

2

JLBC

Total Non‐
Non‐Farm Employment

Initial Claims for Unemployment Insurance
45,000

Total Monthly Claims for UI Benefits

2,800

Thousands of Jobs

2,700

2,600

2,500

2,400

2,300

2,200

40,000
35,000
30,000
25,000
20,000
15,000
10,000

JLBC

2002

2003

2004

2005

Not seasonally adjusted

2010

2001

2002

2003

2004

2005

2009

2010

JULY

JUL

JAN

JUL

JAN

JUL

2008

JAN

JUL

2007

JAN

JUL

2006

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

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

JAN

5,000
2,100

2011

2011

3

JLBC

Not seasonally adjusted

4

1

State Sales Tax Collections – Retail Category

State Sales Tax Collections – Contracting Category
$100

$225

$200

$ in Millions

$ in Millions

$75

$175

$150

$50

$25

5

Jul‐12

Oct‐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

July 08

Jan 08

Apr 08

Oct 07

July 07

Jan 07

Apr 07

Oct 06

July 06

Jul‐12

Excludes temporary 1 ¢ sales tax

JLBC

$0

Oct‐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

July 08

Jan 08

Apr 08

Oct 07

July 07

Jan 07

Apr 07

Oct 06

$100

July 06

$125

Excludes temporary 1 ¢ sales tax

JLBC

6

Maricopa County Pending Foreclosures

Single Family Building Permits
100,000

60,000

Single Family Building Permits

90,000

50,000

80,000
70,000

40,000
60,000
50,000

30,000

40,000

20,000

30,000
20,000

10,000

10,000

JLBC

2003

2004

2005

2006

12‐Month Moving Sum

2007

2008

2010

2002

2011

7

JLBC

2003

2004

2005

2006

2007

2008

2009

2010

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

JULY

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

JAN

JAN

JULY

JUL

JUL

2009

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JUL

JAN

JAN

JUL

JUL

JAN

JAN

JUL

JUL

2002

JAN

JAN

JUL

JAN

2001

JAN

0

0

2011

8

2

Economic Activity Index
210

Coincident Index Value

200
190
180
170
160
150

JLBC

2003

2004

2005

2006

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.

JULY

JUL

JAN

JUL

2009

JAN

JUL

2008

JAN

JUL

2007

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

2002

JAN

JUL

2001

JAN

JAN

140

2011

9

3