Arizona state budget
From Sunshine Review
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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 $1.7 billion (February 2009 estimate) for FY 2009.[1]
Arizona projected in August 2008 a $74 million (positive) ending fund balance for the FY 2009 state budget, which was drastically revised in January 2009 to a $1.58 billion deficit. The Arizona State Legislature met from January to May of 2009 modifying the then current FY 2009 budget as the state economy worsened, revenue projections declined, and the deficit grew. The FY 2009 final budget revision passed in May of 2009 with an expected $0 ending fund balance deteriorated since into a 500 million shortfall.[2] 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.”[3]
“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.”[4]
In addition to the $500 million negative carry over for FY 2009, Arizona struggled with a $3.16 billion deficit for FY 2010. Disagreements between Gov. Jan Brewer and the Legislature marked the handling and eventual passage of a final 2010 budget with $2.71 billion in budget solutions (a mixture of higher taxes and spending cuts). FY 2010 has a $451 million deficit, which combined with the $500 million FY 2009 gap leaves Arizona facing 2011 $951 million in the red.[5]
[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.[6]
A comparison of Arizona’s FY 2000 to FY 2010 appropriations shows:[7]
| ' | 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.[8]
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] 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.[9]
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.[10]
| Credit Rating | Fitch | Moody's | S&P |
| Arizona[11] | 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.[12] 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.[13]
Legislation recently passed to create an online spending database.[14] The database will be placed online on or before January 1, 2011.[15] Until that time, however, Arizona does have a website that details how the Office of the Treasurer distributes state monies. That Web site 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.
[edit] 2008-2009 budget crisis
Labeled as one of the "worst budget deficits in the U.S." [16] Arizona was projected to have a $1.6 billion shortfall for the fiscal year than ended June 2009. This projected shortfall represented 16 percent of the $9.9 billion state budget. The budget shortfall was caused by a combination of declining revenues due to declining tax revenues, and a budget process that estimated tax revenues for the fiscal year using a revenue estimate that turned out to be unreliable.[17] Estimates put the gap for FY 2010 at anywhere from $2.4 billion to more than $3 billion, even after that $580 million in cuts for FY 2009. [18]
Despite the state's budget crisis in March 2009, Gov. Jan Brewer requested lawmakers restore funding to the FY 2009 budget. On March 11 lawmakers vowed to restore a $40 million cut to health care programs and allow the state to qualify for federal stimulus money for child care programs and health care in rural areas. The fund sweeps were part of budget cuts in early 2009. [19] However, in order to reduce the state's deficit Gov. Brewer proposed temporarily raising taxes. State officials estimate the tax would increase state revenue by $1 billion per year. Additionally Brewer called for overall structural budget reform and said that she would like to reform the state's tax structure. [19]
“It’s astonishing that our latest budgets were built on the most optimistic revenue projections at a time when nearly every economic forecaster was predicting a downturn,” said Brewer. “The FY2009 revenues needed to grow by 8 percent to meet the budget, but instead declined by 12 percent.” [19]
- See main article: Arizona state budget (2008-2009)
[edit] Economic Stimulus Package
Arizona is expected to receive $4.4 billion of the $787 billion dollar economic stimulus package. [20] [21] 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. [22] According to White House officials the package is expected to create approximately 70,000 jobs. [23]
According to preliminary reports Arizona is expected to receive: [24]
- $100.6 million for public transit [25]
- $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
[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.[26]
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act 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.[27]
- It is estimated that Arizona will receive at least $3 billion in federal funding.[28]
- The economic recovery website for Arizona is available here.
[edit] Legislation
Legislation recently passed to create an online spending database.[29] The database will be placed online on or before January 1, 2011.[30]
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:
| 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] Limitations and Suggestions
[edit] Support for creation of the database
Arizona Senate Bill 1235 (2008) was signed by Governor Janet Napolitano.
[edit] Independent transparency sites
[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
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- The Goldwater Institute
- Arizona state budget, joint legislative budget committee
- Arizona state and local spending
- Arizona Office of the State Treasurer, Distributions
- Arizona Department of Administration, SPIRIT Automated eProcurement System
- Arizona Treasury Revenue Distributions database
[edit] Additional reading
- Budget information for Arizona's Maricopa Community College system is available here.
- The Arizona Republic,"Schools prepare for worst-case budget scenario," March 7,2009
- Arizona Capitol Times,"State, federal cigarette taxes to hit $3 per pack on April 1," March 11,2009
[edit] References
- ↑ Phoenix Business Journal, "Arizona budget deficit labeled country's worst," February 28,2009
- ↑ Arizona Joint Legislative Budget Committee, “FY 2010 Appropriation Report, Budget Highlights 2010,” September 25, 2009
- ↑ Arizona Constitution
- ↑ Arizona Constitution
- ↑ Arizona Joint Legislative Budget Committee, “FY 2010 Appropriation Report, Budget Highlights 2010,” September 25, 2009
- ↑ Arizona Joint Legislative Budget Committee, “FY 2010 Appropriation Report, Budget Highlights 2010,” September 25, 2009
- ↑ Arizona Joint Legislative Budget Committee, “FY 2010 Appropriation Report, Budget Highlights 2010,” September 25, 2009
- ↑ State of Arizona, “New Legislator Orientation,” December 12, 2008
- ↑ State of Arizona, Office of the Auditor General Web site, retrieved October 8, 2009
- ↑ State of Arizona, Office of the Auditor General Web site, retrieved October 8, 2009
- ↑ "State of Indiana", “State Credit Ratings-as of June 24, 2009
- ↑ Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
- ↑ Arizona Department of Administration Leadership Staff Web site, retrieved October 8, 2009
- ↑ Goldwater Institute, "Piercing the Fog: A Call for Greater Transparency in State and Local Government" executive summary, July 29, 2008
- ↑ Arizona Senate Bill 1235 (2008)
- ↑ Phoenix Business Journal,"Arizona budget deficit labeled country's worst," February 28,2009
- ↑ Arizona Republic, "State's budget ax to cut deeply", January 11, 2009
- ↑ East Valley Tribune,"Brewer not revealing proposed budget cuts," March 11,2009
- ↑ 19.0 19.1 19.2 Arizona Capitol Times,"Legislature to restore funding to '09," March 11,2009
- ↑ The Arizona Republic,"Schools to receive stimulus by April," March 10,2009
- ↑ Arizona State Legislature,"Federal assistance to Arizona," February 19,2009
- ↑ ABC15,"Why Arizona could decide to turn down stimulus money," March 9,2009
- ↑ American Recovery and Reinvestment Act,"Estimated job effect," retrieved March 11,2009
- ↑ Phoenix Business Journal,"Arizona Stimulus Dollars," March 6,2009
- ↑ American Recovery and Reinvestment Act,"$8.4 Billion for Public Transit," March 5,2009
- ↑ Arizona Senate Bill 1235 (2008)
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal, "Stimulus Spending by State"
- ↑ Goldwater Institute, "Piercing the Fog: A Call for Greater Transparency in State and Local Government" executive summary, July 29, 2008
- ↑ Arizona Senate Bill 1235 (2008)
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