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 Brewer had already slashed $2 billion from the FY2010 budget and withdrawn Arizona from a federal program to provide health insurance for children who live just above the poverty line.[2] The increase expires on May 31, 2013.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

[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 6,9666,341
Adjustments1,3072,004
Total Resources 8,2747,865
Expenditures 8,7547,815
Adjustments00
Ending Balance-481 50
Budget Stabilization Fund20

[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 billion87%
AZ Medicaid+$494 million$1.2 billion140%
Health Services$248 million$458 million85%

+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:

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

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:

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


Credit Rating Fitch Moody's S&P
Arizona[26] NRAa1AA+

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]

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]

[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

[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

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 DatabaseSearchabilityGrantsContractsLine Item ExpendituresDept/Agency BudgetsPublic Employee SalaryExemption Level
Nonen/an/an/an/an/an/an/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

[edit] External links

[edit] Additional reading

[edit] References

  1. Bloomberg Businessweek "Expected Arizona budget gap expected to be smaller" July 29, 2010
  2. 2.0 2.1 Los Angeles Times "Arizona voters approve sales-tax increase" May 27, 2010
  3. The Arizona Republic "Arizona's divisive sales tax hike is rare sight on ballot" May 16, 2010
  4. 4.0 4.1 4.2 Arizona Daily Sun "Jobs bill leaves state $160M short on Medicaid " Aug. 11, 2010
  5. CB Online "Most Arizona. state government offices closed Friday for furlough to help balance budget" Aug. 20, 2010
  6. Businessweek "Expected Arizona budget gap expected to be smaller" July 29, 2010
  7. Businessweek "Ariz. judge rules against state on fund raid" June 21, 2010
  8. 8.0 8.1 8.2 8.3 [http://www.azgovernor.gov/dms/upload/PR_011510_GovernorProposesDetailedBudgetPlan.pdf State of Arizona,"Governor Jan Brewer Proposes Decisive, Balanced State Budget Plan," January 15, 2010]
  9. Bloomberg Businessweek "Expected Arizona budget gap expected to be smaller" July 29, 2010
  10. 10.0 10.1 [National Governors Association and National Association of State Budget Officers Fiscal Survey of the States June 2010]
  11. The Arizona Republic,"Few options left for fixing Arizona budget," January 11, 2010
  12. Associated Press,"Arizona Legislature sets ballot measures aside as special session on budget crisis narrows," December 17, 2009
  13. Phoenix Business Journal, "Arizona budget deficit labeled country's worst," February 28,2009
  14. Center on Budget and Policy Priorities,"Policy Points: Recession Still Causing Trouble for States," November 19, 2009
  15. New Mexico Watchdog, Aug. 3, 2010
  16. Howe Street,"Arizona Tax Hikes and So-Called "Balanced Budget" Proposals," retrieved January 23, 2010
  17. Associated Press,"Ariz. to close 13 parks by June due to budget woes," January 15, 2010
  18. Associated Press,"Arizona Senate Trying New Process for Budget Work," January 13, 2010
  19. Arizona Joint Legislative Budget Committee, “FY 2010 Appropriation Report, Budget Highlights 2010,” September 25, 2009
  20. Arizona Joint Legislative Budget Committee, “FY 2010 Appropriation Report, Budget Highlights 2010,” September 25, 2009
  21. State of Arizona, “New Legislator Orientation,” December 12, 2008
  22. Arizona Constitution
  23. Arizona Constitution
  24. State of Arizona, Office of the Auditor General Web site, retrieved October 8, 2009
  25. State of Arizona, Office of the Auditor General Web site, retrieved October 8, 2009
  26. "State of Indiana", “State Credit Ratings-as of June 24, 2009
  27. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  28. Arizona Department of Administration Leadership Staff Web site, retrieved October 8, 2009
  29. The Arizona Republic,"Schools to receive stimulus by April," March 10,2009
  30. Arizona State Legislature,"Federal assistance to Arizona," February 19,2009
  31. ABC15,"Why Arizona could decide to turn down stimulus money," March 9,2009
  32. American Recovery and Reinvestment Act,"Estimated job effect," retrieved March 11,2009
  33. Phoenix Business Journal,"Arizona Stimulus Dollars," March 6,2009
  34. American Recovery and Reinvestment Act,"$8.4 Billion for Public Transit," March 5,2009
  35. "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010
  36. Arizona Senate Bill 1235 (2008)
  37. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  38. Wall Street Journal, "Stimulus Spending by State"
  39. $6.4 Billion Stimulus goes to Phantom Districts, Watchdog.org, November 17, 2009
  40. Stimulus Creates Jobs in Non-Existent Congressional Districts, Watchdog.org, November 16, 2009
  41. Arizona, Watchdog.org, November 17, 2009
  42. Goldwater Institute, "Piercing the Fog: A Call for Greater Transparency in State and Local Government" executive summary, July 29, 2008
  43. Arizona Senate Bill 1235 (2008)
  44. Arizona Checkbook.com
  45. ABC News, New website shows how Arizona is spending your tax dollars, February 16, 2009
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