Arizona state budget

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Arizona's state budget for Fiscal Year 2011 is $8.5 billion dollars. In July 2010, the Legislative Budget Committee's staff projected on July 29, 2010, that the $8.5 billion budget has a shortfall ranging from zero to $1 billion, which is down from the previous projected range of up to $1.2 billion. The staff sated that the numbers improved due to higher than expected state tax collections. In addition, alterations to school funding payments gave the state sufficient funds to pay its bills from the regular budget through at least the first half of the fiscal year.^[1]

The state faced a $2 billion gap between projected spending and tax collections for FY2011. To address the gap and resulting budget cuts, the voters approved Prop 100, which increased the sales tax from 5.5% to 6.5% for the next three years.^[2] The move is expected to generate $1 billion per year for the state and will not require that the governor make harsh budget cuts. At the time the increase passed, Gov. Brewer had already slashed $2 billion from the FY2010 budget and withdrawn Arizona from a federal program to provide health insurance for children who live just above the poverty line.^[2] The increase expires on May 31, 2013. Two-thirds of the money raised by the tax would go to primary and secondary education, and the other third is split between public-safety and health-and-human-services programs.^[3]

See also: Arizona Sales Tax Increase, Proposition 100 (2010)

See also: The Arizona State Budget on State Budget Solutions

[edit] FY2011 State Budget

The federal jobs and education stimulus bill included only $236 million in new Medicaid dollars for Arizona, which is short of the nearly $400 million necessary just to keep the program running through the end of FY2011.^[4] "We'd be better off not to take the stimulus," said Sen. Russell Pearce, R-Mesa. Pearce, who chairs the Senate Appropriations Committee, said the state could achieve even greater savings if it were freed from all the federal constraints.

[edit] Furloughs

Lawmakers approved six furlough days for FY2011 and six for FY2012 to cut pay of more than 29,000 state employees, saving $20 million to help balance the state budget. Exceptions to the mandatory closures include prisons, the state mental hospital and juvenile corrections facilities. State police and other key public safety personnel such as child-abuse hotline workers will also not be subjected to furloughs.^[5]

[edit] Federal Funds

When balancing the FY20111 budget in 2010, lawmakers voted to scale back eligibility for the state's Medicaid program, eliminating care for about 310,000 Arizonans effective at the end of December 2010, as well as to eliminate the Kids Care program. Both programs are subsidized with federal funds, but legislators said Arizona couldn't afford its share of the programs' cost. Then the federal health care law was signed and It requires states to maintain their existing program to receive all future Medicaid dollars, meaning a loss of $7.8 billion a year to Arizona. Legislators then restored both programs under the presumption was that Congress would come up with the cash to make up the difference, the federal funds were not as much as the state presumed, leaving the state $160 million short.^[4]

The state also expects to receive $208 million in education job funds from the federal stimulus bill passed in August 2010.^[4]

Prior to the passage of the federal funds, at the end of July 2010, the Joint Legislative Budget Committee's staff estimated that the $8.5 billion budget's shortfall ranged from zero to $1 billion, less than the previous range of $400 million and $1.2 billion.^[6]

[edit] 2009-2010 budget crisis

The Arizona legislature attempted to balance the state's FY2010 budget in part by transferring funds from a variety of special accounts. Gov. Jan Brewer signed the legislation authorizing the fund transfers. The state transferred $4.7 million from a fund for injured workers into the state general fund. That move was found to be illegal by Maricopa County Superior Court Judge Larry Grant on June 21, 2010, who reasoned that the transferred money did not constitute public property but rather was private and held in trust by the state. When the lawsuit was first filed in 2009, an injunction kept the money where it was while the case made its way through the court system, so the state has not yet spent those funds.^[7]

For FY 2010 the projected budget shortfall was $1.4 billion in January 2010^[8], and the Joint Legislative Budget Committee's staff at the end of July projected that the $8.5 billion budget has a shortfall ranging from zero to $1 billion.^[9] After FY2010 budget was passed, the state cut $120 million.^[10]

Arizona faced the largest budget shortfall as a percentage of their total spending of any state in the United States in early 2009 according to the Center for Budget & Policy Priorities. The housing slowdown, rise of foreclosures, subprime-mortgage-induced credit crunches, overly optimistic state revenue projections, and increased state spending combined to create an estimated deficit of $1.6 billion (December 2009 estimate) for the end of FY 2009 after approximately $452 million in spending cuts during a November 2009 special session. According to January 2010 reports, a total of a $4.5 billion shortfall is projected for the next budget which includes FY 2010 and 2011. For FY 2010 the projected fall is $1.4 billion, whereas for FY 2011 the projected deficit is $3.2 billion.^[11] The previous estimated cumulative shortfall was $3 billion.^[12][13][14] The current debt per capita is $736.^[15]

[edit] Proposed budget cuts

• According to the governor's proposed budget plan, in an effort to eliminate the state's budget deficit she has recommended a mandatory 5 percent pay cut for state employees.^[16]

• In January 2010 an Arizona oversight board voted to close 13 state parks in an effort to ease the state's looming budget deficit. Since July 2009 the state legislature cut approximately 61% of the state parks budget.^[17]

• In order to avoid major budget cuts to Public Safety the governor has proposed using $20 million in federal stimulus dollars to "fund grants for local public safety to help cities and towns."^[8]

• Education funding, according to the proposed budget, will be reduced to the FY 2006 funding levels, however, the Gov. Brewer emphasized that funding will not drop below the FY 2006 levels.^[8]

• Additional proposed reductions include: reduce Arizona Health Care Cost Containment System by 25%; eliminate the KidsCare program; reduce mental health services; eliminate cash assistance for 10,000 families; place a hard cap on day care assistance and eliminate services for for more than 10,000 children of low-income working parents; close the Department of Juvenile Corrections, transitioning the custody of minors to county detention centers and laying off an additional 900 State employees; reduces State employee pay by 5%; and redirect Lottery revenue streams.^[8]

[edit] New budget process

In January 2010 Arizona senators announced that they are going to try a different approach for balancing the state's budget. According to the new system legislative budget analysts will present lawmakers with various budget options and the estimated impacts. According to reports the process will be open to the public. Typically, budget proposals aren't presented to the public until "they are deemed reader for formal action." Senate President Bob Burns said that the new process will not only increase transparency but also "produce a wider range of ideas."^[18]

[edit] General Fund

General Fund^[10]

Category	FY2009 Amount in millions Actual	FY 2010 Amount in millions Estimated
Beginning Balance	1	-481
Revenues	6,966	6,341
Adjustments	1,307	2,004
Total Resources	8,274	7,865
Expenditures	8,754	7,815
Adjustments	0	0
Ending Balance	-481	50
Budget Stabilization Fund	2	0

[edit] 2008-2009 budget crisis

See main article: Arizona state budget (2008-2009)

[edit] Budget Background

Arizona’s fiscal year runs from July 1 to June 30. FY 2009 general fund revenues were $8.44 billion with $8.22 billion expected for FY 2010. General fund revenue sources for the current fiscal year are 49% from sales and use tax, 34% from individual income tax, 7% from corporate income tax, and 10% other.^[19]

A comparison of Arizona’s FY 2000 to FY 2010 appropriations shows:^[20]

	FY 2000	FY 2010	% Change
K-12	$2.3 billion	$4.4 billion	87%
AZ Medicaid+	$494 million	$1.2 billion	140%
Health Services	$248 million	$458 million	85%

+Arizona Health Care Cost Containment System (AHCCCS)

Overall state general fund spending has increased 8.7% from 2004 to 2009 compared to the 5.8% population/inflation increase for the same period.^[21]

The Governor releases a budget proposal shortly after each session of the Legislature convenes (2nd Monday in January). The Joint Legislative Committee (JLBC) then releases its estimate of baseline spending. The JLBC:

• 8 members from each house.
• Chairmanship rotates between 2 Appropriations Committee Chairmen.
• Committee meets monthly – has 188 statutory responsibilities.
• Publishes a monthly update on revenue collections and other fiscal issues.
• Especially during the interim between sessions, the JLBC provides legislative oversight of state fiscal issues.
• The Joint Committee on Capital Review is comparable committee for capital issues.

See Arizona state budget (2008-2009) for more information.

[edit] State Constitution

While Arizona is viewed as having a balanced budget provision, the Arizona Constitution allows shortfalls to carry over to the next fiscal year.

Article 9, sections 4 and 5 read:

“The fiscal year shall commence on the first day of July in each year. An accurate statement of the receipts and expenditures of the public money shall be published annually, in such manner as shall be provided by law. Whenever the expenses of any fiscal year shall exceed the income, the legislature may provide for levying a tax for the ensuing fiscal year sufficient, with other sources of income, to pay the deficiency, as well as the estimated expenses of the ensuing fiscal year.”^[22]

“The state may contract debts to supply the casual deficits or failures in revenues, or to meet expenses not otherwise provided for; but the aggregate amount of such debts, direct and contingent, whether contracted by virtue of one or more laws, or at different periods of time, shall never exceed the sum of three hundred and fifty thousand dollars; and the money arising from the creation of such debts shall be applied to the purpose for which it was obtained or to repay the debts so contracted, and to no other purpose. In addition to the above limited power to contract debts the state may borrow money to repel invasion, suppress insurrection, or defend the state in time of war; but the money thus raised shall be applied exclusively to the object for which the loan shall have been authorized or to the repayment of the debt thereby created. No money shall be paid out of the state treasury, except in the manner provided by law.”^[23]

[edit] Accounting Principles

Main article: Arizona government accounting principles

The Joint Legislative Audit Committee, which oversees all audit functions of the Arizona Legislature, provides direction for the Auditor General’s Office. Subject to approval by a majority vote of both legislative houses, the Committee also appoints the Auditor General for a 5-year renewable term. Debra K. Davenport has been the Auditor General since 1999. The Auditor General’s Office publishes online their audits and must:

• ascertain whether public entities are making wise use of their resources—public money, personnel, property, equipment, and space;
• determine whether public entities are complying with applicable laws, regulations, and governmental accounting and financial and reporting standards;
• define standards and establish procedures for accounting and budgeting, as the Legislature requires; and
• provide technical assistance to state and local governmental entities.^[24]

Arizona Revised Statutes §41-1279 established the Joint Legislative Audit Committee (JLAC). Among other duties, it is charged to:

• Oversee all audit functions of the legislature and state agencies including sunset, performance, special and financial audits, special research requests and the preparation and introduction of legislation resulting from audit report findings.
• Appoint an auditor general subject to approval by a concurrent resolution of the legislature and direct the auditor general to perform all sunset, performance, special and financial audits and investigations.
• Require state agencies to comply with findings and directions of the committee regarding sunset, performance, special and financial audits.^[25]

Credit Rating	Fitch	Moody's	S&P
Arizona[26]	NR	Aa1	AA+

The Institute for Truth in Accounting (IFTA) rates Arizona “Worst” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Arizona’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[27] Arizona’s Department of Administration, General Accounting Office under the state comptroller is responsible for filing the CAFR, which are published on their Web site. D. Clark Partridge has been Arizona’s State Comptroller since 2002.^[28]

[edit] Economic Stimulus Package

Arizona is expected to receive $4.4 billion of the $787 billion dollar economic stimulus package. ^{[29] [30]} However, Gov. Brewer said that she might turn down the funds because she said she is skeptical about the unemployment funds. The funds would help extend benefits for people who been out of work for longer periods of time, however, some lawmakers said that they are worried the provision could leave the state paying for benefits long after the stimulus money runs out. ^[31] According to White House officials the package is expected to create approximately 70,000 jobs. ^[32]

According to preliminary reports Arizona is expected to receive: ^[33]

• $100.6 million for public transit ^[34]
• $522.0 million for highway funding
• $55.8 million for the Drinking Water State Revolving fund
• $32.4 million for home funding (community-based affordable-housing block grants)
• $26.9 million for the Clean Water State Revolving Fund
• $22.2 million for the Homelessness Prevention Fund
• $12.1 million for the Public Housing Capital Fund
• $246.2 million for Title I education for the disadvantaged
• $178.5 million for special education Part B state grants
• $18.5 million for dislocated workers state grants
• $18.0 million for the Department of Labor’s youth state grants
• $11.6 million toward education technology
• $10.3 million toward vocational rehabilitation
• $7.7 million for the Department of Labor’s adult state grants
• $6.9 million for State Employment Service grants

One Arizona project was noted in Senator Coburn and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. Researchers at the University of Arizona received over $300,000 in stimulus funds to study computer simulations to follow the formation of galaxies through the period 1-2 billion years after the Big Bang as well as create a course in astronomy for nonastronomy majors to at the University of Cape Coast in Ghana. As of August 2010, the project has created one-quarter of a job, according to reporting by the school.^[35]

• The economic recovery website to show how legislators and government officials in Arizona are spending Federal funds is available here.

[edit] Budget transparency

Arizona currently has no statewide, official spending database online. However, a database will be placed online on or before January 1, 2011.^[36]

See also: Evaluation of Arizona state website

[edit] Economic Stimulus Transparency

• The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[37]

• It is estimated that Arizona will receive at least $3 billion in federal funding.^[38]

• The economic recovery website for Arizona is available here.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[39][40]

ARRP sent up to $84 million to 14 phantom districts in Arizona.^[41]

[edit] Legislation

• Arizona Senate Bill 1235 (2008)

Legislation recently passed to create an online spending database.^[42] The database will be placed online on or before January 1, 2011.^[43]

Until that time, however, Arizona does have a website that details how the Office of the Treasurer distributes state monies. That website is accessible here. The Arizona Department of Administration also publishes a website that provides a database of statewide contracts for state agencies and over 400 colleges and universities, counties, cities, school districts, and qualified not-for-profit organizations. Users can view bids as well as closed contracts and pending solicitations. The site is available here.

[edit] Government tools

This table can be used to evaluate the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary	Exemption Level
None	n/a	n/a	n/a	n/a	n/a	n/a	n/a

[edit] Arizona checkbook register

In February of 2010 the state began posting its checkbook register online, dubbing the website AZCheckbook. The checkbook shows a snapshot of the daily total deposits and withdrawals from the State's Operating Account.^[44] State Treasurer Dean Martin launched the website wanting it to be searchable, user-friendly website that discloses all revenues and expenditures for Arizona State government.^[45]

[edit] Support for creation of the database

Arizona Senate Bill 1235 (2008) was signed by Governor Janet Napolitano.

[edit] Public employee salaries

Information about Arizona's state employee salaries, current as of July 2008, is available here, thanks to the work of www.tulsaworld.com.

The website www.azcentral.com has a public employee salary website available. Its data is current as of July 2007. It is available here.

[edit] See Also

• Arizona taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

[edit] References

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	v • d • e State of Arizona Phoenix (capital)
Transparency	Public Records Law | Open Meetings Act | Government corruption reports | Transparency Legislation | Open Records procedures | Transparency Advocates |
Divisions	State | List of counties | List of Cities | List of school districts | Evaluation of State website | Evaluation of county websites | Evaluation of city websites | Evaluation of township websites | Evaluation of school district websites |
State spending	State budget | State salaries | Stimulus allocations | Taxpayer-funded lobbying |
Government	Arizona State Constitution | Executive | House of Representatives | Senate | Local officials | Public school system |
Judiciary	Arizona Supreme Court | Arizona Court of Appeals | Arizona General Jurisdiction Court | Arizona Limited Jurisdiction Courts | Judicial selection in Arizona | Judicial News | Judicial activists organizations |
Ballot Measures	2008 ballot measures | Arizona citizen initiatives 2002-2006 | Arizona local initiative and referendum | Arizona School Bond Issues | Process of Initiatives | Campaign finances |