JLBC - Monthly Fiscal Highlights

May 2015

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

April General Fund revenue totaled $1.05
billion, which was a 23.4% increase above April
2014. April collections were $145.4 million
above the enacted budget forecast.
The growth was fueled by a $148.9 million, or
37.7%, rise in individual income tax
collections. There are 2 likely reasons for this
spike:
•
•

www.azleg.gov/jlbc.htm

“Compared to
the enacted
budget,
overall
[FY 2015]
collections are
$233.1 million
above
forecast.”

Higher stock market capital gains and
dividend payments
The “low” FY 2014 capital gains base
associated with the federal “fiscal cliff” at
the beginning of calendar year 2013.

The JLBC Staff reported more extensively on
these issues in its May 4 report on April Income
Tax Collections.
While the final April overall results generally
mirror the May 4 findings, the Department of
Revenue (DOR) did make some adjustments
to its earlier estimates. For example,
Corporate Income Tax (CIT) collections were
originally reported to have grown by 43% to
$126 million. In the final numbers, CIT
collections actually declined by (5.6)% to
$83.2 million. Due to technical DOR
accounting issues, however, the April numbers
were understated by $23 million and the state
will pick up the difference in May.
The state’s single largest revenue and most
stable revenue source, the sales tax, did not
play a significant role in the April
results. Growth remained very moderate in
April. Sales Tax collections rose by 4.0% over
the prior year and were $3.8 million above
forecast.

Year-to-date base revenues (excluding
Urban Revenue Sharing and one-time
transfers) are 7.1% above last year through
April. Compared to the enacted budget,
overall collections are $233.1 million above
forecast.
By the end of the fiscal year, this estimate will
likely change further. For example, May
month-to-date CIT revenues are higher than
anticipated. Other factors may work in the
opposite direction. Due to processing
issues, there are more individual income tax
refunds in the pipeline than in prior years,
which could reduce some of the April
gains.
If sustained for the entire year, the year-todate $233.1 million overage would offset the
forecasted FY 2015 budget shortfall of $(132)
million. The enacted budget required this
shortfall to be covered by a transfer from the
Budget Stabilization Fund (the Rainy Day
Fund). As a result, a BSF transfer would not
be required if current trends hold.
Any assessment of the sustainability of the
unexpected FY 2015 revenue gains will
depend on further analysis once the fiscal
year ends. Capital gain income tax
collections have been very volatile over
time, which creates a challenge in
determining the ongoing nature of the FY
2015 returns.
The state’s fiscal health can also be
measured by the operating fund balance.
The state pays its bills out of the operating

Table of Contents

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
May 20, 2015.

Summary

• DCS – Performance Benchmarks ..................... 8

• State Credit Rating ............................................. 2

• ACA – Healthy Forest Program ......................... 9

April Revenues ........................................................ 2

• ADE – Budget Status Report ............................. 9

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

• DEQ – E-Licensing Project ................................. 9

Summary of Recent Agency Reports

• DPS – Quarterly GIITEM Fund Report ............... 9

• DCS – Ofc. of Child Welfare Investigations .... 8

April Spending .......................................................10
Tracking Arizona’s Recovery ............ Appendix A

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

Summary (Continued)
fund balance, which consists of the General Fund and
certain dedicated funds. The operating balance as of
mid-April 2015 is $2.10 billion. In addition, the state’s
Budget Stabilization Fund has a balance of $457.1
million.
State Credit Rating
On May 4, 2015, Moody’s Investor Service upgraded
Arizona’s credit rating from Aa3 with a positive outlook
to Aa2 with a stable outlook. Aa2 is the third highest
rating out of 10 possible levels. In comparison to other
states, 25 states have a higher rating, 9 states have a
similar rating, and 15 states have a lower rating or are
not rated due to a lack of state level debt.
In adopting the new credit rating for Arizona, Moody’s
listed some of the following positive trends: 1) budget
actions to eliminate the state’s structural shortfall; 2)

improved economic conditions; and 3) below
average debt and pension liabilities amongst states.
Even with the ratings upgrade, Moody’s did note
several concerns regarding the state’s current
financial condition: 1) ongoing K-12 litigation; 2)
extremely narrow budget reserves; 3) absence of
authority for mid-year reductions; and 4) reduced
financial flexibility due to restrictions enacted by
Proposition 105 and Proposition 108.
The other major credit rating agency, Standard &
Poor’s, has not updated its credit rating for Arizona
since November 2013. S&P’s credit rating for Arizona
is AA- (the 4th highest rating level) with a positive
outlook.

April Revenues
Table 1

General Fund Revenues ($ in Millions)

April
Year-to-Date

FY 2015
Collections
$ 1,049.1
$ 7,215.7

Sales Tax collections of $373.0 million were 4.0% above
April of last year and $3.8 million above the forecast for
the month. Year to date, collections have increased
by 4.2% and are $25.6 million above forecast. April
collections reflect March transactions.
Table 2 includes the major categories of the state’s
sales tax, which together account for approximately
90% of total collections. The retail category, which
makes up roughly half of sales tax collections,
increased by 11.7% in April compared to the same
month in the prior year. Year to date, retail collections
are up by 4.9%. Due to technical adjustments,
however, this figure understates the underlying growth
rate of 6.7%.
Year over year, collections from contracting activity
declined by (16.4)% in April. Year to date, contracting
collections are down by (2.8)%.
As noted in previous editions of the Monthly Fiscal
Highlights, some of the retail increase and the
contracting reduction may be related to a new law
that went into effect at the beginning of the current

Difference From
Budget Forecast
$ 145.4
$ 233.1

Difference
From FY 2014
$ 198.7
$ 398.1

calendar year. Under this legislation, service
contractors that do work related to maintenance,
repair or replacement of existing property are
exempt from the prime contracting tax, beginning
January 1, 2015. Instead, such contractors are now
required to pay the retail transaction privilege tax
on materials that they purchase as a part of the
service contract.
Use tax collections decreased by (11.6)% in April and
are up by 22.5% for the first 10 months of FY 2015.
After a technical adjustment, however, the
underlying year-to-date growth rate would be 1.6%.
Table 2
Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Use
Restaurant & Bar
Utilities

April
11.7%
(16.4)%
(11.6)%
3.2%
(0.9)%

YTD
4.9%
(2.8)%
22.5%
8.5%
(0.3)%

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

April Revenues (Continued)
Individual Income Tax net revenues were $543.3 million in
April, which was 37.7% more than the prior year.
Collections were $118.7 million above the forecast for the
month. Year to date, revenue has grown 10.4% over the
prior year and is $182.3 million above forecast. (See the
JLBC Staff - April 2015 Income Tax Collections report for a
discussion on potential causes of this month’s collection
increases).

April collections for the category, however, were
artificially reduced by $23 million due to a technical
adjustment. The $23 million loss will be recouped
when the May CIT results are processed.

As indicated in Table 3, withholding increased 5.7% in
April and was $6.1 million above forecast. The April
collections bring withholding tax collections for the fiscal
year to 3.3% over the prior year. This amount is $12.3
million above the budgeted forecast.

This result is surprising, as the enacted budget
forecast assumed CIT collections would decline
during the second half of FY 2015 due to the
estimated impact of the tax reductions being
phased in during FY 2015 – FY 2018 (which
corresponds to Tax Years 2014 – 2018).

April estimated and final payments were 21.1% above
last year, and were $103.2 million above the forecast.
Year to date, payments have grown 14.0% over the prior
year. This amount is $126.4 million above the forecast.
April refunds totaled $(382.0) million, which was (6.4)%
below last year and a $9.5 million gain to the forecast.
Year to date, a decline in the level of refunds has
resulted in a gain of $43.6 million compared to the
enacted forecast.
However, some of the overage may be a function of the
timing of processing and taxpayer filing rather than a
change in taxpayer liability. According to information
provided by DOR, as of May 8, there was approximately
$59 million of Individual Income Tax refunds which have
been filed, but are not being issued pending error
resolution. During the error resolution process, DOR
attempts to address certain issues with a taxpayer filing,
which can range from mathematical
(addition/subtraction) issues to more substantive
problems.
Table 3
Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

April
5.7%

YTD
3.3%

21.1%
(6.4)%

14.0%
(5.0)%

Corporate Income Tax net collections were $83.2 million
in April, which was (5.6)% less than April 2014. Collections
for the month were $6.8 million above the enacted
forecast. Year to date, net collections are up 7.9%
compared to the prior year and are $18.4 million above
forecast.

After adjusting for this item, April CIT revenues would
have increased by 20.8% compared to the prior
year.

Given the timing of corporation tax filings, however,
a majority of the first year impact of the phase-in
may not occur until FY 2016. (Please see the March
2015 Monthly Fiscal Highlights for more information).
Insurance Premium Tax collections of $69.5 million in
April were 71.9% above the prior year and $9.9
million above forecast. The monthly increase
above the forecast may be the result of delays in
processing March collections. Year to date,
collections are 9.6% above last year and are
$453,800 above forecast.
The Lottery Commission reports that March ticket
sales were $65.3 million, which is $3.4 million, or 5.6%,
above sales in the prior year. Year-to-date ticket
sales are $621.1 million, which is 2.2% above last
year’s sales. In terms of General Fund collections,
year-to-date lottery revenues have increased by
18.8% compared to the prior year and are $7.6
million above the forecast.
Highway User Revenue Fund (HURF) collections of
$120.2 million in April were up $6.9 million, or 6.0%
compared to April of last year. Collections for the
month were $4.6 million above forecast. Year-todate collections are 3.7% above FY 2014, and are
$17.3 million above forecast.
The recent trend of above forecast HURF collections
is likely the result of the decline in gas prices during
FY 2015, which tends to increase gas consumption
and collections of the state’s fixed price-per-gallon
gas tax.

4
Table 4

General Fund Revenue:
Change from Previous Year and Budget Forecast
April 2015
Current Month

FY 2015 YTD (Ten Months)

Change From
Actual

April 2014

April 2015

Amount

Change from
Budget Forecast

Percent

Amount

Actual

Percent

April 2014

April 2015

Amount

Budget Forecast
Percent

Amount

Percent

Taxes
Sales and Use
Income - Individual
- Corporate

$373,027,607

$14,212,040

543,319,360

148,878,967

4.0 %
37.7

$3,500,130,360

$140,517,705

$25,585,378

0.7 %

118,743,166

$3,822,962

28.0

3,130,071,473

295,184,451

10.4

182,320,172

6.2

8.8

485,275,212

35,695,993

7.9

18,359,469

3.9

(57.0)

23,929,409

7,880,110

49.1

449,410

1.9

30.7

19,621,926

(1,799,962)

(8.4)

177,622

0.9
(0.5)

83,163,999

(4,940,727)

(5.6)

6,755,078

Property

1,514,404

(2,893,211)

(65.6)

(2,003,687)

Luxury - Tobacco

2,655,280

- Liquor
Insurance Premium
Other Taxes
Sub-Total Taxes

534,698

25.2

624,103

4.2 %

3,006,027

660,977

28.2

(3.9)

27,390,507

780,775

2.9

(148,155)

69,510,687

29,073,259

71.9

9,851,794

16.5

316,850,791

27,718,375

9.6

453,823

0.1

694,314

103,177

17.5

59,314

9.3

6,511,091

2,118,153

48.2

1,142,435

21.3

$1,076,891,678

$185,629,181

$7,509,780,768

$506,482,425

14,366,600

14,366,600

139.4

44,909,200

7,105,600

18.8

(22.1)

24,854,360

1,209,470

5.1

--

30,050

27,925

20.8 %

(120,741)

1.0 %

$137,731,990

14.7 %

7.2 %

$228,340,153

3.1 %

Other Revenue
Lottery
License, Fees and Permits
Interest

1,946,544
6,739

(501,478)
7,853

-(20.5)
--

8,366,600
(553,456)
6,739

Sales and Services

2,131,420

594,795

38.7

131,420

Other Miscellaneous

1,067,845

(576,226)

(35.0)

(932,155)

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

6.6
(46.6)
--

--

7,582,600
(678,146)
12,722

20.3
(2.7)
73.4

24,293,428

809,266

3.4

(1,672,429)

(6.4)

17,081,101

2,124,971

14.2

(4,660,022)

(21.4)

0

0

--

0

3,389,786

3,179,429

--

639,786

$22,908,934

$17,070,973

292.4 %

$7,658,934

50.2 %

$152,193,234

$1,868,446

1.2 %

$4,768,421

3.2 %

$1,099,800,612

$202,700,154

22.6 %

$145,390,923

15.2 %

$7,661,974,003

$508,350,871

7.1 %

$233,108,574

3.1 %

23.3

0
41,025,096

0
(9,408,785)

--

0

(18.7)

4,183,695

-11.4

Other Adjustments
Urban Revenue Sharing
One-Time Transfers
Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE

(50,744,642)
0
(50,744,642)

(4,035,312)
0
(4,035,312)

8.6

0

0.0

--

0

--

8.6 %

0

0.0 %

(507,446,422)
61,154,456
(446,291,966)

(39,863,889)
(70,391,693)
(110,255,582)

8.5
(53.5)

0

0.0

0

(0.0)

32.8 %

0

0.0 %

$1,049,055,970

$198,664,842

23.4 %

$145,390,923

16.1 %

$7,215,682,036

$398,095,289

5.8 %

$233,108,574

3.3 %

$120,165,051

$6,853,531

6.0 %

$4,587,301

4.0 %

$1,071,938,614

$37,948,071

3.7 %

$17,268,260

1.6 %

Non-General Funds
Highway User Revenue Fund

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

Monthly Indicators
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 0.2% in the
first quarter of 2015. This estimate is a sharp deceleration
from the 2.2% and 5.0% growth third and fourth quarters
of 2014, respectively. The decrease relative to the prior
quarter’s growth was primarily due to worsening of the
trade deficit and decreases in nonresidential fixed
investment and state and local government spending.
Economists cite cold weather, disruptions at west coast
docks and a drop in oil and gas drilling as the main
drivers behind the numbers.
The Conference Board’s U.S. Consumer Confidence
Index decreased by (6.1)% to 95.2 in April. The April
decrease included widespread decreases in the index’s
sub-components, but was most negatively impacted by
a loss in optimism of job prospects. With year-over-year
growth of 16.5% though, the index still stands well above
its April 2014 level.
The Conference Board’s U.S. Leading Economic Index
increased by 0.2% in March and 5.2% since March 2014.
Of the index’s 10 components, 7 made positive
contributions during the month. Movement in interest
rates and reduced initial unemployment claims were the
largest positive contributors to the index while building
permits were a negative influence. Improvement in
building permits for single-family units was more than
offset by a drop in permits for multi-family units.
According to the U.S. Department of Commerce Bureau
of Economic Analysis, the U.S. Personal Consumption
Expenditure Price Index (PCEPI) increased by 0.2% in
March from the prior month. The index’s annual growth
stands at 0.3%, which is well below the Federal Reserve
Bank’s 2% annual inflation target. While a (18.5)% yearover-year decrease in energy prices has drastically
reduced the overall index, the year-over-year growth in
the core index (all items except food and energy) stands
at 1.3% in March.
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 3.4% compared
to March 2014. Over the same time period, the U.S.
coincident index also increased by 3.4%. Currently,
Arizona’s rate of annual coincident index growth is 24th in
the nation. Last year at this time, Arizona’s rate was
38th highest among states. See Appendix A – Tracking
Arizona’s Recovery for additional historical information.
Housing
The total housing inventory in the Greater Phoenix area
is (12.6)% smaller than April of last year. Inventory levels
have been steadily decreasing since March of last
year.
The median price of a single family home was $222,228
in April, a 2.4% increase from March. The price is 10.6%
higher than April of last year.
Single family housing construction appears to have
stabilized, while multi-family construction may have
peaked. Arizona’s 12-month total of single-family
building permits is 18,078, or 0.5% more than a year
ago. The comparable single-family permit growth rate
for the entire U.S. is 2.6% above last year. See Appendix
A – Tracking Arizona’s Recovery for historical information.
In contrast, the 12-month total of multi-family building
permits had been increasing strongly compared to last
year, but may reached its peak. Arizona’s total of
8,979 multi-family building permits is 15.9% above 2014.
Arizona’s rate of increase is still somewhat greater than
the comparable multi-family permit growth for the U.S.
as a whole which is 7.8% above 2014.
Employment
In March, the Average Weekly Hours worked by
individuals in Arizona’s private sector was 34.9 hours.
This workload is (0.9)% below the March 2014 level.
The Average Hourly Earnings received by these private
sector workers was $22.97, which is (0.2)% below the
average in the prior month. The year-over-year growth
rate continued to recover somewhat from (1.8)% in
January to reach (0.6)% in March. The average hourly
earnings nationwide in April 2015 were 2.2% above the
average from a year prior.
The U.S. Bureau of Labor Statistics releases estimates
quarterly for a broader measure of labor
underutilization called the total unemployment rate.
Besides the “regularly” unemployed, the measure also
includes persons who are available to work but
stopped looking for a job (“discouraged workers”), and
persons who had to settle for part-time employment
(“underemployed workers”). The Arizona rate

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

Monthly Indicators (Continued)
averaged 14.3% for the second quarter of 2014 through
the first quarter of 2015. This rate is (0.3)% below the
average rate during 2014. The state’s total
unemployment rate reading of 14.3% was the third highest
of any state. The national average for the measure was
11.6% during the quarter.
Tourism
The number of airplane passengers traveling through
Phoenix Sky Harbor International Airport reached a record
of 4.25 million in March and represents a 5.5% increase
above the level in March 2014. March coincides with the
peak of the state’s tourism season, which was bolstered
this year by strong visitation for the baseball spring training
season and spring break trips. Revenue per available
room increased 15.7% during the month and is 14.4%
above the amount in March 2014.
State Agency Data
At the beginning of May 2015, the total AHCCCS
caseload was 1.64 million members. Since the federal
health care expansion in January 2014, the overall
AHCCCS population has grown by 378,501 members.
Total monthly enrollment increased 1.2% during April,
continuing the recent bound from flat or decreasing
enrollment during October through February. The
slowdown in prior months may have been exacerbated
by a change in the length of eligibility redetermination.
The overall increase in May was concentrated primarily in
the Traditional population of the lowest income parents
and children. Enrollment in the Traditional population
increased 15,800 in May to a level of 975,200 members.
The May level represents an increase of 1.6% since last
month and a 5.5% increase since last year.
In January 2014, the state started accepting new
enrollment to the Proposition 204 childless adults program.
In May 2015, the childless adult population decreased by
(400), or (0.1)%. Since January 2014, the childless adult
population has increased by 213,300 to reach a level of
281,000. The state share of the Proposition 204 physical
health cost is paid through a hospital assessment while the
behavioral health costs are paid through the General
Fund.
The state also opted to expand adult Medicaid coverage
to 133% of FPL. The 100% - 133% enrollment increased by
4,200 in May and now totals 55,100 individuals enrolled
since January 2014. The federal government is currently
paying 100% of this cost.

There were 24,668 TANF recipients in the state in March,
representing a (4.2)% decline in monthly caseloads from
February. The year-over-year number of TANF recipients
has declined by (16.4)%. 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. This March,
there were 1.0 million food stamp recipients in the state,
representing a (0.9)% decrease from February
caseloads. Compared to March of last year, food
stamp participation declined by (3.5)%.
At the end of April 2015, the Arizona Department of
Corrections reported at total inmate population of
42,407. This is a 0.4% increase from the previous month,
and a 2.6% increase since April 2014.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015
Table 5

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
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 (1406 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 (2010 = 100)
- Consumer Price Index, SA (1982-84 = 100)
- Personal Consumption Price Index (2009 = 100)

Time Period

Current Value

March
1st Q 2015
March
March
March
March
March
March
March

6.2%
14.3%
17,842
29,414
2.63 million
156,100
126,700
34.90
$22.97

March
March
March

$935.8 million
$314.2 million
$353.6 million

March
March

Change
From
Prior Period

(0.3)%
(0.4)%
21.6%
3.8%
0.2%
(0.3)%
0.6%
(0.6)%
(0.2)%

Change From
Prior Year

(0.8)%
(1.8)%
(13.3)%
(17.7)%
2.6%
(0.3)%
1.5%
(0.9)%
(0.9)%

7.2%
(7.9)%
10.5%

11.1%
5.7%
5.6%

18,078
8,979

2.8%
(9.3)%

0.5%
15.9%

April

7,095

2.5%

9.3%

April

$222,,228

2.4%

10.6%

February
April
April

148.33
5,589
25,889

0.3%
(1.3)%
(2.2)%

2.9%
(21.2)%
(12.6)%

March
December
February
March

4.25 million
605,350
266,769
$112.38

1st Q 2015
March
March
th
4 Q 2014
July 2014

79.1
192.12
6.5%
$259.0 billion
6.73 million

N/A
0.7%
2.3%
1.1%
N/A

14.8%
3.4%
4.5%
4.6%
1.5%

AA- / Aa2
Positive/Stable

N/A
N/A

N/A
N/A

Dec 09/May 15

Nov 13/May 15

28.9%
(34.9)%
42.5%
15.7%

4.7%
20.5%
11.9%
14.4%

May

1,636,643
975,158
281,025
168,619
55,136
1,235
56,989
89,481

1.2%
1.6%
(0.1)%
(1.8)%
8.3%
(4.1%)
0.3%
2.7%

14.8%
5.5%
42.5%
9.0%
237.9%
(40.7)%
3.5%
30.2%

Jan. 2015
January
February
April

48,720
17,272
1,396
42,407

0.0%
1.0%
1
0.4%

10.4%
12.6%
206
2.6%

March
March

24,668
1,000,684

(4.2)%
(0.9)%

(16.4)%
(3.5)%

February
February

17,889
26,629

1st Q, 2015 (1st
Estimate)
April
March
March
March

7
126

618
1,560

$16.3 trillion

3.0%

0.2%

95.2
121.4
235.7
108.6

(6.1)%
0.2%
0.2%
0.2%

16.5%
5.2%
0.0%
0.3%

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

Summary of Recent Agency Reports
Department of Child Safety – Report on the Transfer of
OCWI Funding – A footnote in Laws 2014, 2nd Special
Session, Chapter 2 requires the Department of Child
Safety (DCS) to notify the Director of the Joint
Legislative Budget Committee at least 30 days prior to
making any transfer into or out of the Office of Child
Welfare Investigations (OCWI) line item. DCS plans to
transfer $5.0 million of savings from unfilled OCWI
positions to the operating budget and the Overtime line
item in FY 2015. The OCWI line item had an original
appropriation of $10.5 million. The $5.0 million in
vacancy savings is possible because DCS has only filled
65 of the 127 authorized OCWI positions. (Ben Beutler)
Department of Child Safety –Report on Performance
Benchmarks – Pursuant to a footnote in Laws 2014, 2nd
Special Session, Chapter 2, the Department of Child
Safety (DCS) has submitted its 3rd quarter report on the
backlog, hiring, and expenditures (See Table 6 below).
3rd Quarter Benchmark - Filled FTE Positions
DCS had 1,396 filled direct line staff in the 3rd quarter, or
(10) FTE Positions below its benchmark of 1,406. The
1,396 filled direct line staff figure includes 43 prospective
caseworkers who have accepted a job offer but have
not yet begun work. DCS had 1,366 filled non-direct line
staff at the end of the 3rd quarter, or (33) FTE Positions
below its benchmark of 1,399.

3rd Quarter Benchmark - Reducing the Backlog
In June 2014, DCS set benchmarks for reducing the
backlog. As shown in Table 1, DCS activated all 13,024
June 2 backlog cases meeting the 2nd and 3rd quarter
benchmarks, but 3,473 cases had lapsed into inactivity
as of March 2015. In total, DCS had 15,473 backlog
cases as of March 2015 including 12,000 post-June 2
cases, 13,473 more than the 3rd quarter benchmark of
2,000. DCS states that “progress has been slower than
expected due to several factors, including the
identification of underlying inefficiencies and the
continued growth in new incoming cases. As a result,
the department is focusing significant effort on
removing system inefficiencies.”
3rd Quarter Benchmark - Expenditures on Personal
Services
In its June 2014 expenditure plan, DCS estimated
spending $30.5 million on Personal Services in the 3rd
quarter for 2,805 FTE Positions. DCS actually spent $26.3
million, or $(4.2) million less than the benchmark, on
2,762 FTE Positions.
3rd Quarter Benchmark - Expenditures to Reduce the
Backlog
DCS was appropriated $23.1 million from the General
Fund and $5.9 million from Federal Funds for a total of
$29.0 million in FY 2015 for the elimination of the June 2
backlog. Third quarter spending of $4.2 million is
significantly lower than the anticipated amount of $9.1
million. However, DCS has stated its intent to spend
$13.5 million of the $29.0 million in total backlog funding
on new post-June 2 backlog cases. (Ben Beutler)

Table 6
Progress Reducing the June 2 Backlog in FY 2015

Cases Activated
Activated Cases in Investigation Phase
In-Home Preventive Services
Out-of-Home Support Services and Placements
Cases Closed
Cases with No Service or Placement Payments in CHILDS
Remaining Backlog Cases
Number of Backlog Cases as of March 14
Number of June 2 Backlog Cases
Number of Post-June 2 Backlog Cases
____________
1/ Data labeled as preliminary

3rd Quarter
Benchmark
13,024
3,867
741
751
5,787
N/A
2,000
0
2,000

3rd Quarter
Actual 1/
13,024
5,707
214
686
5,844
6,280
15,473
3,473
12,000

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

Summary of Recent Agency Reports (Continued)
Arizona Commerce Authority – Annual Report on the
Healthy Forest Enterprise Incentives Program – Pursuant
to A.R.S. § 41-1516I, the Arizona Commerce Authority is
required to report on the Healthy Forest Enterprise
Incentives Program by May 1 annually regarding the: 1)
quantity and measured weight of qualifying forest
products reported; 2) number of new full-time
employees hired in qualified employment positions; and
3) number of full-time employees employed in qualified
employment positions. In calendar year 2014 the total
weight of qualified harvest, processed, or transported
forest products was 531,751 tons; none of the 7
companies, however, participated in the income tax
credit portion of the program.
The Healthy Forest Enterprise Incentives Program allows
businesses primarily engaged in the harvesting, initial
processing, or transporting of forest products in Arizona
to qualify for the following: a use and transaction
privilege tax exemption on qualified purchases, a 50%
reduction in the use fuel tax, a reduction in the
assessment ratio of personal and real property from 25%
to 5%, and an income tax credit of up to $3,000 per
employee on new jobs created. (Eric Billings)
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 2015. In that report,
ADE estimates that it will experience a $3.4 million net
funding surplus for formula programs for FY 2015. ADE
previously projected a $(27.3) million funding shortfall for
formula programs for FY 2015, but that shortfall was
eliminated through the appropriation of $26.9 million in
supplemental funding to the department for FY 2015
through the recently enacted budget and through
updated (lower) cost projections. ADE’s current $3.4
million surplus estimate is subject to further revision as
additional data become available. (Steve Schimpp)
Department of Environmental Quality – Third-Party Report
on E-Licensing Project – Pursuant to a FY 2015 General
Appropriation Act footnote and a provision of the
Committee’s favorable review of the initial E-Licensing
proposal in June 2014, the Department of Environmental
Quality (DEQ) has provided an update of the ELicensing project. DEQ provided a follow-up on the
third-party assessment provided in March 2014, but did
not submit a quarterly progress report as requested by
the Committee in June 2014. In the report, the vendor
reiterated its prior positive evaluation of DEQ’s
approach in which it sees a “credible path to success.”
The vendor gave an overall favorable evaluation of
DEQ’s progress in incorporating recommendations from
the previous third-party report. In response to customer
and stakeholder feedback, the portal has been

modified in order to create a more guided online
application process. The report attributed delays in
Phase 1 and Phase 2 deliverables to a number of
factors, including changes to the scope of the project,
turnover of ADOA-ASET senior IT management, and
changes in consulting partnerships. The report also
provided 11 recommendations for the project, such as
implementing a budget and staffing plan, quantifying
operational costs, and establishing greater
collaboration between DEQ and state IT agencies. No
foreseeable end date to the project was provided.
(Josh Hope)
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. In FY
2015, the GIITEM Fund was appropriated $2.6 million in
General Fund monies for grants to local law
enforcement agencies to help with border security.
During the third quarter of FY 2015 DPS expended $900
for cell phone services for local GIITEM Subaccount
grant participants bringing the year-to-date total to
$2.1 million.
Additionally, the GIITEM Border Security and Law
Enforcement Subaccount received $576,400 in
criminal fine and fee revenues in the third quarter of FY
2015, bringing the year-to-date revenue total to $1.7
million. DPS expended $372,200 in the third quarter
bringing the year-to-date expenditure total to $1.5
million. The monies were granted to 10 local law
enforcement agencies and the Arizona Department
of Corrections for border security purposes. (Eric
Billings)

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

April Spending
April 2015 General Fund spending of $652.7 million was
$37.2 million more than April 2014. Year to date,
spending is $8.16 billion, or $477.0 million above last year.
(See Tables 7 & 8).
•

Year to date, the Department of Education has spent
$140.7 million more than the prior year.

Year to date, Department of Health Services spending
has increased by $66.2 million compared to the prior
year. This increase is in part due to the

•

restoration of childless adult Medicaid coverage,
which is entirely paid for with General Fund monies
in the Department of Health Services.

•

During FY 2015, Department of Public Safety
spending has increased by $38.6 million compared
to the prior year. This increase is mostly due to the
shift of $30.0 million of Highway Patrol funding from
the Highway User Revenue Fund to the General
Fund in the FY 2015 budget.

Table 7
General Fund Spending ($ in Millions)
Change From
April 15

YTD Change

April 14

Year-to-Date

from FY 14

Agency
AHCCCS

18.7

10.6

1,024.9

29.1

Corrections

100.5

(3.5)

813.7

16.3

Child Safety

0.6

0.6

241.5

241.5

Economic Security

103.7

10.8

580.7

(104.0)

Education

249.3

18.7

3,325.9

140.7

Health Serv ices

18.6

1.6

582.0

66.2

Public Safety

27.7

5.0

85.0

38.6

School Facilities Board

14.4

9.9

188.9

(4.0)

Univ ersities

46.6

1.4

679.4

29.7

Leaseback Debt Serv ice

0.0

0.0

84.1

0.0

Other

72.6

(17.9)

555.1

22.9

Total

652.7

37.2

8,161.2

477.0

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

Table 8

General Fund Spending
($ in Thousands)
Agency
Dept. of Admin./Automation Projects Fund
ADOA – Sale/Leaseback Debt Service
Office of Administrative Hearings
Commission of African-American Affairs
Department of Agriculture
AHCCCS
Attorney General
State Board of Charter Schools
Department of Child Safety
AZ Commerce Authority
Community Colleges
Corporation Commission
Department of Corrections
County Funding
AZ State Schools for the Deaf & Blind
Dept. of Econ. Security/Dept. of Child Safety
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, 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

April 15
19,100.9
112.2
6.3
715.6
18,732.4
2,333.7
81.3

Change from
April 14
(3,889.2)
14.7
6.3
(313.2)
10,552.6
819.5
1.0

Year-to-Date
66,564.5
84,123.7
750.5
22.8
6,588.2
1,024,870.6
18,504.3
767.2

YTD Change
from FY 14
10,231.8
3.9
15.5
22.8
(153.9)
29,084.0
1,835.1
73.3

616.9

616.9

241,495.7

241,495.7

2,625.0
18,229.8
50.2
100,535.6
1,959.9
103,686.8
249,279.1
991.8
9.5
23.6
94.7
280.1
187.2
887.3
104.6
561.1
18,622.8
318.1
55.1
62.6
4.2
573.6

1,436.0
(23.7)
(3,460.0)
(2,373.5)
10,823.8
18,673.9
169.0
(33.6)
(8.2)
33.1
(41.6)
(0.0)
(2,626.6)
17.3
(94.1)
1,580.6
18.6
(44.5)
(28.5)
(4.7)
(49.2)

26,475.0
72,058.9
506.9
813,689.9
7,650.5
17,535.0
580,663.1
3,325,910.1
7,346.4
7,000.0
124.2
424.8
770.8
2,519.0
1,709.7
6,331.5
801.5
8,598.5
582,004.9
2,758.8
695.5
863.9
46.5
4,432.4

225.0
2,545.5
80.1
16,309.4
500.0
(3,124.8)
(103,996.9)
140,691.2
744.7
(58.5)
(17.7)
97.1
41.2
46.7
384.4
(15.5)
1,048.0
66,236.4
64.1
84.3
(241.8)
(2.2)
(75.6)

10,711.6
1,174.7
3,016.8

(1,492.7)
(447.1)
(1,421.0)

81,658.5
11,830.0
33,219.0

1,055.9
(3.1)
10.5

12

JLBC – MONTHLY FISCAL HIGHLIGHTS – MAY 2015

Table 8 (Continued)

Agency
State Land Department
Legislature
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
Senate
Mine Inspector
Nav. Streams & Adjudication
Occupational Safety and Health Review
Phoenix Convention Center
Pioneers’ Home
Comm. for Postsecondary Ed.
Department of Public Safety
Public Safety Personnel Retirement System
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

April 15
773.7

Change from
April 14
(810.7)

Year-to-Date
9,813.6

YTD Change
from FY 14
(145.0)

1,998.8
1,004.6
168.4
434.1
970.0
83.1
10.3
249.5
27,745.7
60.9
249.9
168.4
(939.6)
14,389.1
740.1
21.2
710.4

(120.5)
(525.3)
(52.4)
(116.3)
(47.9)
(41.6)
(16.1)
(169.9)
5,000.8
(47.1)
(8.2)
(72.5)
(3,374.7)
9,902.3
(344.0)
(4.7)
(1,066.3)

17,231.7
11,416.1
1,933.4
7,095.9
7,477.8
958.7
157.6
0.9
20,449.0
1,435.1
1,396.8
85,019.5
6,000.0
1,930.5
1,343.2
2,082.9
37,607.8
188,866.6
12,327.8
224.5
9,103.7

1,251.6
771.2
219.6
1,531.8
386.9
(43.4)
17.6
(1.4)
(164.0)
38,592.5
1,000.0
(53.4)
9.0
20.6
(2,089.3)
(4,006.5)
2,456.4
(1.1)
990.8

1,029.4
21,559.2
7,315.5
16,666.4
395.9
917.4
120.0
81.1
4.9
652,720.6

(1,341.2)
1,918.8
753.0
70.0
(196.9)
(332.0)
(4.7)
(42.5)
(167.1)
37,181.5

24,014.3
306,167.4
103,650.1
245,593.7
3,949.0
9,368.1
1,000.0
1,117.6
794.7
232.8
8,161,227.6

2,325.7
19,187.8
7,530.2
700.2
(376.3)
416.2
1,000.0
121.0
(20.5)
49.3
476,987.1

JLBC
Jul 14

3

JLBC
Jul 13

Jan 15

Jul 14

Jan 14

35,000

Jul 12
Jul 13

Jan 15

Jul 14

Jan 14

8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%

Jan 13

Jan 15

Jul 14

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

Jul 11

Jan 11

Jul 10

Jan 10

Jul 09

Jan 09

Jul 08

Jan 08

Jul 07

Jan 07

Jul 06

Jan 06

Jul 05

Jan 05

Jul 04

Jan 04

Jul 03

Jan 03

Jul 02

Jan 02

Jul 01

Jan 01

2,200

Jul 12

Jan 12

Jul 11

Jan 11

Jul 10

Jan 10

Jul 09

Jan 09

Jul 08

Jan 08

Jul 07

Jan 07

Jul 06

Jan 06

Jul 05

Jan 05

Jul 04

Jan 04

Jul 03

Jan 03

Jul 02

Jan 02

Jul 01

Thousands of Jobs
2,300

Jan 13

Year Over Year Growth (%)

2,400

Jan 12

Jul 11

Jan 11

Jul 10

Jan 10

Jul 09

Jan 09

Jul 08

Jan 08

Jul 07

Jan 07

Jul 06

(0.6)% Y/Y Growth
(March 2015)

Jan 06

$19

Jul 05

$20

Jan 05

$22.97 / Hour
(March 2015)

Jul 04

$23

Jan 04

$25

Jul 03

Average Hourly Earnings – Private Sector
Jan 01

JLBC

Jan 03

$22

Total Monthly Claims for UI Benefits

1

Jul 02

Jul 14
Jan-15

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

Jan 02

Jul 13
Jan 14

$ / Hour

Page:

Jul 01

Jan 01

Jan-15

12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%

Jan 14

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

$21

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

Year Over Year Growth (%)

Tracking Arizona’s Recovery
Contents

Total Non-Farm Employment

2,800

2,700

2,600

2,500

$22.73 / Hour
(Octoberjobs
2014)
2,633,600
(March 2015)

2,100

2.6% Y/Y Growth
(March 2015)

2

Initial Claims for Unemployment Insurance

$24

45,000

40,000

30,000

17,842 Claims
(March 2015)

25,000

20,000

15,000

10,000

5,000

Not seasonally adjusted

4

State Sales Tax Collections – Retail Category

State Sales Tax Collections – Contracting Category
$100

$225
$75

$ in Millions

$175

$150

$25

$204.7 million
(April 2015)

5

Jul 14

Jan 15

Jul 13

Jan 14

Jul 12

Jan 13

Jan 12

Jan 11

July 11

Jan 10

July 10

Jan 09

July 09

Jan 08

July 08

Jan 07

Jul 14

Jan 15

Jul 13

Jan 14

Jan 13

Jul 12

Jan 12

July 11

Jan 11

Jan 10

July 10

Jan 09

Jan 08

Economic Activity Index
220

100,000
90,000

210

80,000

200

Coincident Index Value

70,000
60,000

Single Family Unit- 18,078 Permits
Multi-Family Unit - 8,979 Permits
(Mar. 2015)

50,000
40,000

190
180
170

30,000

160

20,000

150

10,000

192.1 Index Value
(March 2015)

7

JLBC

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 15

Jul 14

Jul 13

Jan 14

Jul 12

Jan 13

Jan 12

Jul 11

Jan 11

Jul 10

Jul 09

Jan 10

Jul 08

Jan 09

Jan 08

Jul 07

Jul 06

Jan 07

Jul 05

Jan 06

Jul 04

Jan 05

Jul 03

Jan 04

Jan 03

Jul 02

Jul 14

Jan 15

Jul 13

Jan 14

Jul 12

Jan 13

Jan 12

Jul 11

Jul 10

Jan 11

Jan 10

Jul 09

Jul 08

Jan 09

Jul 07

Jan 08

Jul 06

Jul 05

Jan 06

Jan 05

Jul 04

Jul 03

Jan 04

Jul 02

Jan 03

Jul 01

Jan 02

Jan 01

Jan 07

12-Month Moving Sum

Jan 02

Jan 01

140

0

Jul 01

Building Permits

6

Excludes temporary 1 ¢ sales tax

Residential Building Permits

JLBC

July 09

JLBC

July 07

July 06

(16.4)% Y/Y Growth
(April 2015)
July 08

Jul 14

* January 2014 estimate adjusted downward by $30 million to reflect onetime category shift.

Excludes temporary 1 ¢ sales tax

Jan 15

Jul 13

Jan 13

Jul 12

Jan 12

Jan 11

July 11

Jan 10

July 10

July 09

Jan 09

Jan 08

July 08

* Jan 14

JLBC

July 07

Jan 07

11.7% Y/Y Growth
(April 2015)

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

July 07

Year Over Year Growth (%)

Jul 14

$0

Jan 15

Jul 13

* Jan 14

Jul 12

Jan 13

Jan 12

Jan 11

July 11

Jan 10

July 10

Jan 09

July 09

Jan 08

July 08

July 07

20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
July 06

Year Over Year Growth (%)

July 06

Jan 07

$100

Jan 07

$125

$32.2 million
(April 2015)

$50

July 06

$ in Millions

$200

8