JLBC - Monthly Fiscal Highlights

September 2014

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

www.azleg.gov/jlbc.htm

“Collections
[are] $(60.2)
million below
the enacted
forecast so far
in FY 2015.”

The recent trend of weak General Fund revenue
collections continued in August. General Fund
revenues during the month totaled
$639.8 million, which represented an increase of
1.4% above August 2013. August General Fund
collections were $(25.2) million below the
forecast, leading to the 5th consecutive month
where revenues failed to meet the enacted
budget projection.
Combining the July and August results, General
Fund revenues have remained essentially flat
compared to the prior year, growing at a rate
of only 0.3%. This has resulted in collections
being $(60.2) million below the enacted
forecast so far in FY 2015.
The primary cause of the weak August
collections was another slow withholding month.
Withholding only grew 0.8% over last year and is
actually negative for July and August
combined. Sales Tax collections grew by a
moderate 4.5%.
In comparison to revenue of $639.8 million,
August 2014 spending was $725.6 million which is
a decrease of $(54.3) million from the prior year.
The state’s fiscal health can also be measured
by the operating fund balance. The state pays
its bill out of the operating fund balance, which
consists of the General Fund and certain
dedicated funds. The operating balance as of
mid-September 2014 is $1.7 billion. In addition,
the state’s Budget Stabilization Fund has a
balance of $455.9 million.

FY 2014 Preliminary Ending Balance Report
As required by the General Appropriation Act,
the General Accounting Office (GAO) has
issued its first report on the estimated FY 2014
ending balance. After adjusting for late
arriving revenues, the adjusted GAO FY 2014
ending balance would be $577 million. This
amount is comparable to the projection in last
month’s Monthly Fiscal Highlights.
As a result, the JLBC Staff’s shortfall projections
remain unchanged at $(282) million in FY 2015
and $(765) million in FY 2016.
These projections, however, will be updated at
the upcoming Finance Advisory Committee
(FAC) meeting on October 7th (compared to
the previously reported date of October 3rd).
Child Safety Staff Report
Pursuant to statute, the Department of Child
Safety (DCS) has submitted the August report
on its progress in hiring child safety staff.
Direct Line Child Safety Staff - The Legislature
authorized DCS to hire 212 additional direct
line child safety staff. The number of direct line
child safety staff (caseworkers, caseworkers in
training, and hotline staff) has grown by 116
FTE Positions between January and August.
The number of case-carrying caseworkers has
declined by (4), while training and hotline staff
have grown by 115 and 5, respectively.

Table of Contents
Summary
This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
September 19, 2014.

 FY 2014 Prelim. Ending Balance Report ...........1

 SFB – ASDB New Construction Report ............. 8

 Child Safety Staff Report ....................................1

 Supreme Court – Automation Projects ........... 8

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

 Homeland Security – Funding Report ............. 8

Monthly Indicators ..................................................5

August Spending .................................................... 9

Summary of Recent Agency Reports

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

 DEQ – Water Quality Assurance Fund .............8

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014

Summary (Continued)
DCS also revised downward the number of filled direct
line child safety staff in July by (28) positions. Of its 1,406
authorized caseworker positions, DCS filled 1,306 in
August, or 25 above its revised July estimate.
Non-Direct Line Child Safety Staff - The Legislature has
also authorized DCS to hire 240 non-direct line child
safety staff. Non-direct line child safety staff has grown
by 117 to 1,178 since January. From July to August,
staffing grew by 33 FTE Positions.

Backlog of Non-Active Cases - One of the main
purposes of the 2nd Special Session was to reduce the
non-active case backlog. These cases have had no
documentation entered into the DCS computer system
for 60 days or more.
DCS reported that as of June 2, 2014 there were 13,024
backlog cases. As of August 31, 2014, there were 6,295
total backlog cases, although the figure is preliminary.
The 6,295 figure includes backlog cases added postJune 2.

T a ble 1

Change in the Department of Child Safety
Staff since January 2014

Direct Line Staff
Caseworkers
Hotline Staff 1/
Staff in Training
Subtotal - Direct Line
Non-Direct Line Staff
Asst. Program Managers
Unit Superv isors
Case Aides
OCWI
Other Non-Direct Line Staff
Subtotal - Non-Direct Line
Grand Total

January
983
70

Original
July
990
77

Revised
July
970
77

Change
since January
(4)
5

August
979
75

137

242

234

252

115

1,190

1,309

1,281

1,306

116

36
168
211
33
613

36
203
243
38
625

36
203
243
38
625

36
209
251
44
638

0
41
40
11
25

1,061
2,251

1,145
2,454

1,145
2,426

1,178
2,484

1/ Excludes 20 tempo rary staff.
2/ There are an estimated 180 unit secretaries included in this figure.

2/

117
233

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014

August Revenues
Table 2

General Fund Revenues ($ in Millions)

August
Year-to-Date

FY 2015
Collections
$ 639.8
$ 1,301.4

Sales Tax collections of $345.2 million were 4.5% above
August of last year and $1.5 million above the forecast for
the month. Year-to-date, collections are up by 2.1% and
are $(18.2) million below forecast.
Although August’s sales tax revenue growth of 4.5% was
an improvement over July’s decline of (0.1)%, the current
trend of modest growth remains essentially unchanged.
Sales tax growth in each of the last 5 months has been
below 5%.
Table 3 below includes the major categories of the state’s
sales tax, which together account for approximately 90%
of total collections. As indicated in Table 3, the retail
category, which makes up roughly half of sales tax
collections, grew by 6.6% in August compared to the same
month in the prior year. Although the use tax grew by
10.0% in August, it remains (0.6)% below last year’s
collections on a year-to-date basis. Collections from
contracting activity and sales of utility services (electricity,
natural gas, and water) remained weak in August, with
growth rates of 2.7% and (3.1)%, respectively.
Table 3

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Use
Restaurant & Bar
Utilities

August
6.6%
2.7%
10.0%
5.0%
(3.1)%

YTD
3.7%
0.6%
(0.6)%
5.1%
(1.4)%

Individual Income Tax net revenues were $277.1 million in
August, which was $2.5 million above the prior year.
Collections were $(15.4) million below the forecast for the
month. Year-to-date, revenue has grown 0.7% over the
prior year to a level that is $(16.5) million below the budget
forecast.
As indicated in Table 4, withholding increased by 0.8% for
the month. This slight increase follows on a (1.0)%
decrease in July. Year-to-date withholding collections are
$(15.1) million below the budget forecast.
August estimated and final payments of $18.7 million
were (2.9)% below last year, and were $(2.1) million
below the forecast. Year-to-date, payments are $(0.6)
million below the budget forecast.

Difference From
Budget Forecast
$ (25.2)
$ (60.2)

Difference
From FY 2014
$ 5.6
$ (88.0)

August refunds were (7.6)% below last year, and were
$1.0 million above forecast. Year-to-date, refunds are
$(0.8) million below the budget forecast.
Table 4
Individual Income Tax Growth Rates
Compared to Prior Year
Withholding
Estimated +
Final Payments
Refunds

August
0.8%
(2.9)%
(7.6)%

YTD
(0.2)%
4.6%
(9.5)%

August Corporate Income Tax collections are always
relatively low. This year the state collected $14.0 million in
August, which was $3.5 million more than August 2013.
Collections for the month were $0.3 million above the
forecast. Year-to-date, net collections are down (25.5)%
compared to the prior year, and are $(12.9) million below
the budget forecast.
Insurance Premium Tax collections were $43.3 million in
August, which represents a decrease of $(3.0) million, or
(6.4)% compared to August 2013. Collections for August
were $(3.0) million below forecast. Year-to-date
collections are $(2.5) million below the budget forecast.
Highway User Revenue Fund (HURF) collections of $103.8
million in August were up $4.5 million, or 4.5% compared
to August of last year. August collections were $2.5 million
above forecast. Year-to-date collections are $1.6 million
above the forecast.

4
Table 5

General Fund Revenue:
Change from Previous Year and Budget Forecast
August 2014
Current Month

FY 2015 YTD (Two Months)

Change From
Actual

August 2013

August 2014

Amount

Change from
Budget Forecast

Percent

Amount

Actual

Percent

August 2013

August 2014

Amount

Budget Forecast
Percent

Amount

Percent

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

$345,173,344

$14,719,461

277,051,358

2,478,261

0.9

13,999,358

3,455,829

32.8

40,931

(15,375,860)

0.4 %

$684,068,344

$14,395,672

(5.3)

585,030,838

3,872,880

248,849

1.8

26,527,851

(9,097,186)

0.7
(25.5)

($18,157,955)

(2.6) %

(16,512,160)

(2.7)

(12,900,813)

(32.7)

931

2.3

216,015

3.7

76,015

(17.1)

101,682

5.0

4,062,033

(363,144)

(8.2)

326,470

2,091,727

706,794

51.0

(28,288)

(1.3)

4,958,985

(95,933)

(1.9)

(831,030)

(2,972,324)

(6.4)

85,044,319

2,119,855

2.6

(2,462,029)

(2.8)

(101,198)

(75.0)

89,442

8,685

10.8

(180,558)

(66.9)

$1,389,997,827

$10,848,502

(2,970,678)
4,649

$683,866,944

$17,956,309

(6.4)
15.9
2.7 %

($16,624,903)

(2.4) %

7,673

2.1 %

(438,460)

33,802

1.1

$1,501,305

2,127,245
43,349,179

453

4.5 %

0.8 %

($50,642,060)

54.3
8.7
(14.4)

(3.5) %

Other Revenue
Lottery
License, Fees and Permits
Interest

0
2,495,797
803

(3,318,025) (100.0)
(350,785)
796

(12.3)
--

(4,000,000) (100.0)
(504,203)
803

0

(16.8)

4,788,903

--

3,130

(3,318,025) (100.0)
(426,974)
2,095

Sales and Services

1,221,146

(6,241)

(0.5)

(278,854)

(18.6)

1,832,048

Other Miscellaneous

2,628,021

(453,785)

(14.7)

(1,371,979)

(34.3)

5,651,262

1,834,702

--

0

0

(88.5)

624,492

(4,951,494)
($7,090,334)

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

0

0

315,445

(4,606,047)

$6,661,212

($8,734,087)

$690,528,156

-(93.6)

0
(2,434,555)

(56.7) %

($8,588,788)

(56.3) %

$12,899,835

$9,222,222

1.4 %

($25,213,691)

(3.5) %

$1,402,897,662

(3,586,849)

7.6

(230,638)

(8.2)
202.4

(4,000,000) (100.0)
(711,097)
3,130

(12.9)
--

(11.2)

(667,952)

(26.7)

48.1

651,262

13.0

-(88.8)

0
(4,875,508)

-(88.6)

(35.5) %

($9,600,165)

(42.7) %

$3,758,168

0.3 %

($60,242,225)

(4.1) %

(7,581,393)

8.1

Other Adjustments
Urban Revenue Sharing

(50,744,642)

0

0.0

(101,489,286)

(2)

0.0

One-Time Transfers

0

0

--

0

--

0

(81,541,148) (100.0)

0

--

Sales Tax - 1¢ Increase

0

0

--

0

--

0

(2,611,367) (100.0)

0

--

(3,586,849)

7.6 %

0

0.0 %

$639,783,514

$5,635,373

0.9 %

$103,783,904

$4,507,025

4.5 %

Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE

(50,744,642)

($25,213,691)

(101,489,286)

(3.8) %

$1,301,408,376

2.5 %

$209,736,652

(91,733,908)

-- %

(2)

0.0 %

($87,975,740)

(6.3) %

($60,242,227)

(4.4) %

Non-General Funds
Highway User Revenue Fund

$2,521,488

$5,660,856

2.8 %

$1,579,341

0.8 %

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014

Monthly Indicators
NATIONAL
National
According to the U.S. Department of Commerce Bureau
of Economic Analysis, the U.S. Real Gross Domestic
Product (GDP) increased at an annual rate of 4.2% in the
second quarter of 2014. This represents a 0.2% upward
revision from the original second quarter estimate and a
strong turnaround from a (2.1)% decrease during the first
quarter of the year. The growth was primarily due to
increases in inventory investment, exports, consumption,
nonresidential fixed investment, state and local
government spending, and residential fixed investment.
Some of the large increase in the second quarter likely
represents a rebound following a harsh winter and other
temporary issues in the first quarter.
The Conference Board’s U.S. Consumer Confidence
Index rose by 2.3% in August and 13.0% above a year
earlier. The index now stands at 92.4, the highest
reading since October 2007. The August increase was
the 4th consecutive month of growth, the first time the
index has sustained consecutive gains for this long since
early 2011. Recent gains were the result of significant
improvement in people’s outlook on the short term
economic environment, partially offset by a worsening
view of the economic environment 6 months into the
future.
The Conference Board’s U.S. Leading Economic Index
increased by 0.9% in July and 7.0% since July 2013. This
month marked the fifth consecutive monthly increase in
the index. Of the index’s 10 components, 7 improved
while 3 remained the same or decreased. The low levels
of unemployment insurance claims was the largest
positive contributor to the index while a reduction in
average hours worked provided the largest negative
contribution. After dragging on the index the prior
several months, building permit increases provided a
positive contribution to the index in July.
According to the U.S. Department of Commerce Bureau
of Economic Analysis, the U.S. Personal Consumption
Expenditure Price Index (PCEPI) rose 0.1% in July and
1.6% above July 2013 levels. While the year-over-year
growth rate has dipped slightly since reaching 1.8% in
May, it is still well above the 1.0% rate in February.
Inflation as tracked by the PCEPI is the Federal Reserve
Bank’s preferred inflation measure for determining the
pace at which monetary stimulus to the economy is
reduced. The Bank generally aims to maintain annual
inflation of 2% over the medium term. Since the start of
2014, the Bank has reduced its monthly purchases of
bonds, from $85 billion to $15 billion. The Fed continues
to issue short-term loans at nearly 0% interest rates.

Consumer prices, as measured by the U.S. Consumer
Price Index (CPI), decreased (0.2)% in August, but were
1.7% above August 2013 levels. The monthly decline,
which was the first since April of 2013, was largely due
to a (2.6)% drop in energy prices. Gasoline prices fell
(4.1)% while core inflation (all items less food and
energy) remained flat 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.
Arizona’s coincident index increased by 2.4% compared
to July 2013. Over the same time period, the U.S.
coincident index which measures economic growth of
the entire country increased by 3.2%. See Appendix A –
Tracking Arizona’s Recovery for additional historical
information.
Housing
The total housing inventory in the Greater Phoenix area
is 26.6% larger than August of last year, suggesting a
slower market.
The median price of a single family home decreased
to $200,000 in August. The price is 11.2% higher than
August of last year. (Note: Some of our housing
information was previously provided by Arizona State
University Center for Real Estate Theory. Since they
have started to charge a fee to access their home
sales data, home sales statistics are based on data
available through the Arizona Regional Multiple Listing
Service.)
Single-family housing construction continues to be a
drag on Arizona’s economy. The 12-month total of
single-family building permits is 17,541, or (0.1)% less
than last July. Arizona’s single-family sector is
considerably weaker than it was at its peak in June
2005, when building permits totaled 79,283. See
Appendix A – Tracking Arizona’s Recovery for historical
information.
In contrast, the 12-month total of multi-family building
permits has increased significantly since last year. The
8,642 multi-family building permits is 30.1% above 2013.
This total is less than the peak in June 2006 when
annual permits of multi-family buildings was 12,699.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014

Monthly Indicators (Continued)
Employment
The state’s regular unemployment rate increased from 7.0%
in July to 7.1% in August. This marked the third consecutive
month with 0.1% increase of the jobless rate. Compared to
the same month in the prior year, however, the state’s
unemployment rate is down by (1.0)%. The U.S.
unemployment rate decreased in August, going from 6.2%
to 6.1%.

The Proposition 204 childless adult category accounts for
much of this growth above forecast. In January, the state
started accepting new enrollment in this program. Since
that time, the childless adult population has increased by
190,399 to reach a level of 258,169. This is compared to a
budgeted level of 178,057. The state share of the
Proposition 204 cost is paid through a hospital assessment
and not the General Fund.

According to the latest employment report released by
the Department of Administration, the state added 39,500
Nonfarm jobs in August compared to the prior month. This
was slightly less than the average increase of 40,800 jobs
for August in the prior 10 years. Job gains are typical in
August when most schools start up their new academic
year. About 81% of August’s employment increase (or
32,000 jobs) was attributable to state and local
education. The private sector added 10,100 jobs between
July and August, the smallest August gain since 2010.

In September the number of childless adults increased by
9,381, or 3.8% above August. The September monthly
gain is the lowest of the calendar year.

In terms of specific industries, 7 of 11 sectors gained jobs
while 4 lost jobs from July to August. The largest monthover-month gains in private industries were concentrated
in Education and Health Services (+6,100), Leisure and
Hospitality (+1,900), and Professional and Business Services
(+1,800). The greatest job losses occurred in the
Information sector (-300).

The traditional acute care AHCCCS population of lower
income children and their parents grew by 11,894 in
September to a level of 982,791 (versus a budgeted
caseload of 987,091). The September level represents an
increase of 1.2% since last month and 9.7% since last year.

Compared to the same month in the prior year, nonfarm
employment in August was up 2.1%, or 51,400 jobs. While
this amount represents a drop from the July year-overyear growth of 2.5%, it still exceeds the 1.9% average over
the first 8 months of 2014.
Jobs have increased in all industries since August 2013,
except in construction (-6,600) and information (-200).
Gains since last year are almost exclusively coming from 5
of the private service-providing sectors of the Arizona
economy: Education and Health Services (+17,800),
Professional and Business Services (+12,100), Leisure and
Hospitality (+10,000), Financial Services (+8,400), and
Trade (+6,200).
State Agency Data
At the beginning of September, the total AHCCCS
caseload was 1.6 million members. Since the federal
health care expansion in January, the overall AHCCCS
population has grown by 323,540 members. The enacted
budget assumed the AHCCCS population would grow by
245,205 members through September 2014.
Total monthly enrollment growth increased 1.9% in
September, a deceleration from growth of 2.6% in August
and 3.0% in July. New enrollment from the expansion may
be gradually phasing down, which would continue to
reduce the pace of monthly caseload increases.

The state also opted to expand adult Medicaid coverage
to 133% of FPL. The 100% - 133% enrollment increased by
1,196 in September and now totals 28,477 individuals
enrolled since January 2014 (versus a budgeted caseload
of 37,413). The federal government is currently paying
100% of this cost.

Reports of child maltreatment grew by 2.8% in FY 2014,
based on preliminary data from the Department of Child
Safety. There were 16,556 children in out-of-home care in
June 2014, up by 0.5% from May. Year-over-year, the
number of out-home-children grew by 14.2%.
For August 2014, the Arizona Department of Corrections
(ADC) reported an inmate population of 42,052. This was
a 0.3% increase from the previous month, and a 3.3%
increase since August 2013.
The Department of Economic Security (DES) reported that
there were 28,819 TANF recipients in the state in July,
representing a monthly caseload increase of 3.6% over
June. While month-to-month caseloads increased, the
year-over-year number of TANF recipients has declined
by (18.5)%. The statutory lifetime limit on cash assistance
is 24 months.
The Supplemental Nutrition Assistance Program (SNAP),
formerly known as Food Stamps, provides assistance to
low-income households to purchase food. In July, there
were a total of 1.1 million food stamp recipients in the
state, a 0.6% increase over the prior month. Compared to
the same month last year, food stamp participation was
down by (5.0)%.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014
Table 6

MONTHLY INDICATORS

Indicator
Arizona
Employment
- Regular Unemployment Rate
- Total Unemployment Rate (discouraged/underemployed)
- Initial Unemployment Insurance Claims
- Unemployment Insurance Recipients
- Non-Farm Employment - Total
Manufacturing
Construction
- Average Weekly Hours, Private Sector
- Average Hourly Earnings, Private Sector
Sales
- Retail Taxable Sales
Motor Vehicles/Misc. Auto
Furniture/Home Furnishings
Building Material/Lawn & Garden
Building
- Residential Building Permits (12-month avg)
Single-family
Multi-family
- Maricopa County/Other, Home Sales (ARMLS)
Single-Family (Pending Sales)
- Maricopa County/Other, Median Home Price (ARMLS)
Single-Family (Pending Sales)
- Phoenix S&P/C Home Price Index (2000 = 100)
- Maricopa Pending Foreclosures
- Greater Phoenix Total Housing Inventory, (ARMLS)
Tourism
- Phoenix Sky Harbor Air Passengers
- National Park Visitors
- State Park Visitors
- Revenue Per Available Hotel Room
General Measures
- Arizona Consumer Confidence Index (1985 = 100)
- Arizona Coincident Index (July 1992 = 100)
- Arizona Leading Index -- 6 month projected growth
- Arizona Personal Income
- Arizona Population
- State Debt Rating
Standards & Poor’s/Moody’s
Outlook
Agency Measures
- AHCCCS Recipients
Acute Care Traditional
Prop 204 Childless Adults
Other Prop 204
Adult Expansion
Kids Care I
Kids Care II
Long-Term Care – Elderly & DD
Emergency Services
- Department of Child Safety (DCS)
Annual Reports of Child Maltreatment (12-month total)
DCS Out-of-Home Children
Filled Caseworkers (1,406 Budgeted)
- ADC Inmate Growth
- Department of Economic Security
- TANF Recipients
- SNAP (Food Stamps) Recipients
- Judiciary Probation Caseload
Non-Maricopa
Maricopa County
United States
- Gross Domestic Product
(Chained 2009 dollars, SAAR)
- Consumer Confidence Index (1985 = 100)
- Leading Indicators Index (2004 = 100)
- Consumer Price Index, SA (1982-84 = 100)
- Personal Consumption Price Index (2009 = 100)

Change
From
Prior Period

Time Period

Current
Value

August
2nd Q 2014
August
June
August
August
August
July
July

7.1%
15.9%
18,501
42,214
2.55 million
155,600
127,000
34.2
$22.94

0.1%
(0.2)%
(26.5)%
7.3%
1.6%
(0.1)%
0.1%
(2.0)%
0.2%

(1.0)%
0.2%
(9.8)%
1.8%
2.1%
0.3%
(5.2)%
(0.9)%
(0.3)%

July
July
July

$851.1 million
$334.5 million
$311.0 million

(9.0)%
16.4%
(2.5)%

1.0%
(3.8)%
3.5%

July
July

17,541
8,642

(0.6)%
1.7%

(0.1)%
30.1%

August

4,757

(10.4)%

(19.5)%

August

$200,000

(3.4)%

11.2%

June
August
August

146.90
6,215
27,066

0.6%
(2.1)%
0.5%

6.9%
(35.0)%
26.6%

June
May
June
June

3.59 million
1,177,331
171,864
$51.64

0.1%
21.9%
(43.6)%
(17.7)%

3.0%
(4.6)%
(5.6)%
5.2%

3rd Q 2014
July
July
st
1 Q 2014
July 2013

71.6
188.80
3.7%
$249.0 billion
6.63 million

(4.7)%
0.2%
0.4%
3.6%
N/A

(1.2)%
2.4%
2.0%
4.0%
1.2%

Dec 09/July 10

AA- / Aa3
Positive

N/A
N/A

N/A
N/A

September

1,581,682
982,791
258,169
166,781
28,477
1,966
0
55,901
87,597

1.9%
1.2%
3.8%
1.8%
4.4%
(1.2%)
0.0%
0.6%
4.0%

June 2014
June
August
August

45,365
16,556
1,306
42,052

1.3%
0.5%
25
0.3%

2.8%
14.2%
115
3.3%

July
July

28,819
1,053,738

3.6%
0.6%

(18.5)%
(5.0)%

May
May

17,499
25,012

Nov 13

(42)
(348)

Change From
Prior Year

23.1%
9.7%
258.4%
12.0%
(71.0)%
(100.0)%
3.4%
28.3%

(249)
(316)

2nd Q, 2014

$16.0 trillion

2.5%

4.2%

August
July
August
July

92.4
103.3
237.4
109.1

2.3%
0.9%
(0.2)%
0.1%

13.0%
7.0%
1.7%
1.6%

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014

Summary of Recent Agency Reports
Department of Environmental Quality – Report on
Water Quality Assurance Revolving Fund for FY 2014 –
Pursuant to a General Appropriation Act footnote, the
Department of Environmental Quality (DEQ) is required
to report annually by September 1 to the Joint
Legislative Budget Committee (JLBC) on the progress
of activities in the Water Quality Assurance Revolving
Fund (WQARF) Program. The WQARF Program is similar
to the federal Superfund program and is designed to
remediate contaminated groundwater at specified
sites. The report lists FY 2014 expenditures at $14.9
million. Unexpended funds at the end of FY 2014
totaled $5.6 million.
At the end of FY 2014, there were 34 sites on the
WQARF Registry plus 1 undergoing evaluation for
registry placement. During FY 2014, DEQ removed its
second site from the registry after completing its
remedy. The department also decommissioned 2
groundwater remediation systems and completed a
residential indoor air assessment/vapor intrusion study.
DEQ moved 12 WQARF sites through the Remedial
Investigation phase of the WQARF process.
DEQ prioritized sites where treatment systems were
actively operating and curtailed other WQARF
activities (groundwater monitoring, feasibility studies,
design and construction of remediation systems). In FY
2015, program expenditures for the 32 listed WQARF
site budgets that remain active are projected to be
$7.9 million. (Josh Hope)
School Facilities Board - Report on Costs for New
Construction at the Arizona State Schools for the Deaf
and the Blind - The School Facilities Board (SFB) is
required to biennially report on the resources needed
to fulfill the new construction requirements for the
Arizona State Schools for the Deaf and the Blind
(ASDB). ASDB operates 2 campuses, a campus in
Phoenix and a campus in Tucson. According to SFB,
new construction costs would total $17.7 million for
ASDB to meet minimum space requirements. This cost
pertains to a space deficiency at the ASDB Phoenix
campus, which has capacity for 169 students and a
current enrollment of 306 students. The ASDB Tucson
campus does not have a space deficiency, as it has
capacity for 397 students and a current enrollment of
176 students. (Josh Hope)
Supreme Court – Report on Current and Future
Automation Projects – Pursuant to a FY 2015 General
Appropriation Act footnote, the Administrative Office
of the Courts (AOC) has provided its FY 2015 report to
the JLBC on current and future automation projects
coordinated by the AOC. The AOC estimates total
state automation expenditures in FY 2015 will be
approximately $22.0 million. Of this amount,
approximately $4.6 million, or 21%, will be spent on 6

ongoing or new projects; $10.4 million, or 47%, will be
spent on shared infrastructure; and $7.1 million, or 32%,
will be spent on ongoing automation support in FY 2015
(numbers do not sum due to rounding). The 6 ongoing
or new projects include:

 Updating outdated software within the statewide

case management system in limited jurisdiction courts
($1,065,800)
 Increasing the effectiveness of the electronic case
filing system ($1,597,200)
Streamlining and standardizing the E-Bench program
that allows judges to access relevant electronic
documents while on the bench ($1,070,000) (Eric Billings)
Arizona Department of Homeland Security – Report on
Homeland Security Funding – Pursuant to A.R.S. § 414255, 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) 2010 through FFY 2013. The
report indicates that 21.4% of the FFY 2013 allocation
has been expended. Information for FFY 2010 - FFY 2013
is included in Table 7 below.
The state was allocated and the Arizona Department of
Homeland Security awarded $23.0 million in Homeland
Security grants for FFY 2013. The department reported
total expenditures of $4.9 million, leaving $18.1 million
unexpended. State agencies were awarded $1.6
million, of which $292,800 has been expended. Local
governments were awarded $21.4 million, of which $4.6
million has been expended. The largest local grantee
was the Pima County Sheriff’s Department ($1.5 million).
The largest state grantee was the Department of Public
Safety ($1.3 million). The largest individual grant of $1.2
million went to the Pima County Sheriff’s Department for
overtime and mileage payments while working in
support of U.S. Customs and Border Protection border
security efforts.
Total combined state and local awards for FFY 2013
represented an increase from the amount received in
FFY 2012, but did not reach the funding level of FFY 2011
or FFY 2010. Arizona received $18.6 million in total
combined state and local awards in FFY 2012, $36.3
million in FFY 2011, and $51.1 million in FFY 2010. Of the
funds received, 99.9% have been expended for
FFY 2010, 93.3% have been expended for FFY 2011, and
86.2% have been expended for FFY 2012. (Krista
MacGahan)

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014

Summary of Recent Agency Reports (Continued)
Table 7

Awards and Expenditures by Homeland Security Grant Recipients
FFY 2010
$5,056,900

State Aw ards
Local Gov ernment Awards

FFY 2011
$3,027,000

46,044,600

Total Awards

33,271,500

$51,101,500 $36,298,500

State Expenditures

$5,056,800

Local Gov ernment Expenditures

$2,982,100

46,044,600

Total Expenditures

30,875,900

$51,101,400 $33,858,000

Percentage of Total Aw ards
Currently Expended

99.90%

93.30%

FFY 2012
$1,768,700

FFY 2013
$1,586,000

16,842,400

21,384,500

$18,611,100

$22,970,500

$1,763,500

$292,800

14,284,200
$16,047,700
86.20%

4,637,300
$4,930,100
21.40%

August Spending
August 2014 General Fund spending of $725.6 million
was $(54.3) million less than August 2013. Year-to-date,
spending is $3.2 billion, or $155.8 million above last year.
(See Tables 8 & 9).


Due to the state accounting system, at this time
Department of Economic Security and Department
of Child Safety expenditures cannot be displayed
separately.



Year-to-date, the Department of Education has
spent $21.1 million more than the prior year.



Year-to-date, Department of Health Services
spending has increased by $61.9 million
compared to the prior year. This increase is in
part due to the expansion of adult Medicaid
coverage to 133% of FPL, which is entirely paid
for with General Fund monies in the Department
of Health Services.

Table 8
General Fund Spending ($ in Millions)
Change From

YTD Change

Aug 14

Aug 13

Year-to-Date

from FY 14

AHCCCS

72.2

(35.4)

197.1

(21.3)

Corrections

78.2

(2.2)

160.4

5.9

Economic Security/Chlld Safety

1.8

1.8

479.9

68.1

Education

144.2

(66.9)

1,390.5

21.1

Health Serv ices

341.5

47.1

460.7

61.9

Public Safety

Agency

(0.5)

(2.1)

22.5

12.5

School Facilities Board

0.1

(0.2)

151.0

(1.7)

Univ ersities

45.7

1.4

90.4

6.1

Leaseback Debt Serv ice

0.0

0.0

84.1

0.0

Other

42.4

2.2

126.4

3.2

Total

725.6

(54.3)

3,163.0

155.8

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014

Table 9

General Fund Spending
($ in Thousands)
Agency
Dept. of Admin./Automation Projects Fund
ADOA – Sale/Leaseback Debt Service
Office of Administrative Hearings
Department of Agriculture
AHCCCS
Attorney General
State Board of Charter Schools
AZ Commerce Authority
Community Colleges
Corporation Commission
Department of Corrections
AZ State Schools for the Deaf & Blind
Dept. of Econ. Security/Dept. of Child Safety
Department of Education
DEMA
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Department of Financial Institutions
Department of Fire, Bldg and Life Safety
State Forester
Arizona Geological Survey
Governor/OSPB
Department of Health Services
Arizona Historical Society
Prescott Historical Society of AZ
Independent Redistricting Comm.
Commission of Indian Affairs
Department of Insurance
Judiciary
Supreme/Superior Court
Court of Appeals
Department of Juvenile Corrections

Aug 14
5,792.3
104.5
585.3
72,180.5
1,662.9
60.0

Change from
Aug 13
4,260.0
19.9
(448.0)
(35,395.4)
(1,671.2)
(124.2)

Year-to-Date
6,314.4
84,123.7
169.5
1,284.3
197,081.2
3,983.0
104.8

YTD Change
from FY 14
2,539.9
3.9
23.3
(353.5)
(21,276.5)
(865.3)
(135.8)

2,625.0
46.9
78,183.8
2,485.0
1,756.0
144,237.5
341.2
12.3
34.0
148.7
382.2
319.8
273.0
41.6
718.8
341,531.7
582.4
64.4
98.7
5.7
462.3

(212.3)
3.3
(2,238.6)
(100.3)
1,842.3
(66,867.9)
(83.0)
(2.3)
4.0
15.9
195.1
14.5
(67.2)
(19.0)
(32.4)
47,097.7
43.6
14.4
(73.2)
2.8
(242.3)

5,250.0
16,521.5
90.2
160,449.8
4,152.2
479,874.7
1,390,491.9
1,134.2
26.3
144.7
214.8
565.2
403.4
623.4
100.2
1,319.3
460,685.9
882.9
132.0
133.4
10.8
829.0

405.4
4.6
5,943.1
(166.4)
68,058.6
21,103.2
(52.1)
(6.1)
5.0
24.5
7.6
(27.6)
33.7
(24.4)
(74.0)
61,861.9
37.6
14.0
(209.6)
3.8
(269.9)

6,984.9
1,013.3
3,148.5

1,764.1
(380.6)
(247.5)

21,721.6
2,041.1
6,487.3

437.7
(365.0)
(82.8)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2014

Table 9 (Continued)

Agency
State Land Department
Legislature
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
Senate
Mine Inspector
Nav. Streams & Adjudication
Phoenix Convention Center
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
Universities
Board of Regents
Arizona State University
Northern Arizona University
University of Arizona
Department of Veteran Services
Department of Water Resources
Water Infrastructure Finance Authority
Department of Weights & Measures
Other - JP Salaries Distribution
Other
Total

Aug 14
1,524.2

Change from
Aug 13
519.6

Year-to-Date
2,316.2

YTD Change
from FY 14
546.4

1,454.2
864.6
163.4
516.5
586.2
164.2
37.0
59.5
599.4
(454.6)
88.1
196.3
4,715.8
142.5
924.3
17.5
0.4

(251.1)
7.0
(20.6)
140.0
11.6
6.7
27.8
14.9
555.4
(2,099.2)
(29.7)
(237.6)
(2,253.6)
(244.6)
225.5
(31.8)
(156.9)

2,910.2
1,826.2
334.6
1,482.3
1,244.6
270.7
46.1
20,449.0
474.0
698.4
22,499.3
1,779.5
343.0
364.8
8,724.2
150,957.9
1,577.4
34.4
3,186.3

(140.4)
(1.2)
1.0
411.0
27.1
16.8
28.2
61.0
654.4
12,450.2
(31.4)
(227.5)
(2,810.0)
(1,741.3)
171.0
(32.7)
2,864.3

1,340.1
20,396.8
7,315.5
16,666.4
398.0
766.6
1,000.0
91.3
123.9
725,582.2

515.8
1,916.6
261.4
(1,254.2)
(33.1)
(29.1)
1,000.0
5.9
60.1
(54,347.1)

1,608.3
40,793.5
14,631.1
33,332.8
820.1
1,616.8
1,000.0
158.8
123.9
4.0
3,162,955.6

691.3
3,924.7
1,506.0
(49.5)
(75.3)
(14.9)
1,000.0
(12.5)
60.1
4.0
155,833.1

Total Non-Farm Employment

Tracking Arizona’s Recovery
September 2014
Appendix A

2,800

2,549,800 jobs
(August 2014)

2,700

Thousands of Jobs

Slide:
2……Total Non-Farm Employment
3……Average Hourly Earnings – Private Sector
4……Initial Claims for Unemployment Insurance
5……State Sales Tax Collections – Retail Category
6……State Sales Tax Collections – Contracting
Category
7……Residential Building Permits
8……Economic Activity Index

2,600

2,500

2,400

2,300

2,200

2001

1

JLBC

2002

2005

JLBC

2006

2007

2008

2009

2010

2011 2012

JUL

JUL

JAN

JAN

JULY

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

2004

2003

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JAN

2,100

2013 2014

2

Not seasonally adjusted

Average Hourly Earnings – Private Sector
Initial Claims for Unemployment Insurance

$25

$24

45,000

$22

Total Monthly Claims for UI Benefits

$22.94 / Hour
(July 2014)

$21

$20

Oct-13
Jan-14

Apr-14
Jul-14

Apr-13
Jul-13

Jul-12
Oct-12
Jan-13

Jan 12
Apr 12

July 11
Oct 11

Oct 10
Jan 11
Apr 11

Apr 10
July 10

Oct 09
Jan 10

Jan 09
Apr 09
July 09

July 08
Oct 08

Jan 08
Apr 08

Jan 07

11%
9%
7%

(0.3)% Y/Y Growth
(July 2014)

5%
3%

35,000

18,501 Claims
(August 2014)

30,000
25,000
20,000
15,000
10,000

2001

2002

2003

2004 2005

2006

2007 2008

2009

2010

2011 2012

2013

JUL

JAN

JUL

JUL

JAN

JUL

JAN

JAN

JUL

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JAN

JAN

5,000

1%
-1%

2014

Excludes temporary 1 ¢ sales tax

Jul-14

Jan-14

Oct-13

Apr-14

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Jan 12

Apr 12

Oct 11

July 11

Jan 11

Apr 11

Oct 10

July 10

Apr 10

Jan 10

Oct 09

July 09

Apr 09

Jan 09

Oct 08

Jan 08

July 08

Apr 08

Oct 07

July 07

Jan 07

-3%
Apr 07

Year Over Year Growth (%)

JLBC

Apr 07
July 07
Oct 07

$19

40,000

JUL

$ / Hour

$23

3

JLBC

Not seasonally adjusted

4

State Sales Tax Collections – Contracting Category

State Sales Tax Collections – Retail Category

$100
$225
$75

$44.8 million
(August 2014)

$ in Millions

$175

$150

$25

$160.1 million
(August 2014)

5

* January 2014 collections reflect the reclassification of approximately $40
million of revenue from other tax categories to retail collections

Excludes temporary 1 ¢ sales tax

July 06
Oct 06
Jan 07
Apr 07
July 07
Oct 07
Jan 08
Apr 08
July 08
Oct 08
Jan 09
Apr 09
July 09
Oct 09
Jan 10
Apr 10
July 10
Oct 10
Jan 11
Apr 11
July 11
Oct 11
Jan 12
Apr 12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Jul-14

Apr-14

Jul-13

Jan-14

Oct-13

Jan-13

Jul-12

Oct-12

Jan 12

Oct 11

Apr 12

Jan 11

July 11

Oct 10

Apr 11

Jan 10

July 10

Oct 09

Apr 10

Jan 09

July 09

Oct 08

Apr 09

Jan 08

July 08

Oct 07

Apr 08

Apr-13

JLBC

July 07

2.7% Y/Y Growth
(August 2014)
Apr 07

Jul-14

Apr-14

Jul-13

Oct-13

Apr-13

Jul-12

Jan-13

Oct-12

Jan 12

Oct 11

Apr 12

July 11

Jan 11

Oct 10

Apr 11

Jan 10

July 10

Oct 09

Apr 10

Jan 09

July 09

Oct 08

Apr 09

July 08

Jan 08

Oct 07

Apr 08

July 07

Apr 07

Jan 07

*Jan-14

JLBC

40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%

Jan 07

Year Over Year Growth (%)

July 06
Oct 06
Jan 07
Apr 07
July 07
Oct 07
Jan 08
Apr 08
July 08
Oct 08
Jan 09
Apr 09
July 09
Oct 09
Jan 10
Apr 10
July 10
Oct 10
Jan 11
Apr 11
July 11
Oct 11
Jan 12
Apr 12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
* Jan-14
Apr-14
Jul-14

$0

6.6% Y/Y Growth
(August 2014)
Oct 06

20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%

July 06

Year Over Year Growth (%)

$100

Oct 06

$125

$50

July 06

$ in Millions

$200

6

Excludes temporary 1 ¢ sales tax

Economic Activity Index

Residential Building Permits
100,000

210

188.8 Index Value
(July 2014)

200

80,000

Coincident Index Value

Building Permits

90,000

70,000
60,000

Single Family Unit - 17,541 Permits
Multi-Family Unit - 8,642 Permits
(July 2014)

50,000
40,000
30,000

190
180
170
160

20,000
150

10,000

JLBC

2003

2007

2008

12-Month Moving Sum

2010

2011

2012

2001

2014

7

JLBC

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

JAN

JAN

JUL

JUL

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JUL

2002

JAN

JAN

JAN

JUL

JUL

2013

JAN

JAN

JAN

JULY

JUL

JAN

JUL

JUL

2009

JAN

JAN

JUL

JAN

JUL

JUL

2005 2006

JAN

JAN

JUL

JUL

2004

JAN

JAN

JUL

JUL

2002

JAN

JAN

JUL

JAN

2001

JUL

140

0

2013 2014

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.

8