Arizona state budget

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Arizona state budget

Flag of Arizona.png
Budget calendar:  Biennial
Current fiscal year:  2015
State credit rating:  AA- (as of 2014)
Current governor:  Jan Brewer
Financial figures
GF expenses[1]:  $8.6 billion (estimated for FY 2013)
All funds expenses:  $29.2 billion (estimated for FY 2013)
Spending % change:  Green Arrow Up Darker.svg2.46%[2]
% from federal funding:  38.04%
State debt:  $61,082,635,000
Per capita state debt:  $9,321
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Between fiscal year 2010 and fiscal year 2013, Arizona's total state expenditures increased by approximately $1.3 billion, from $27.9 billion in 2010 to $29.2 billion in 2013. This represents a 4.66 percent increase, below the cumulative rate of inflation during the same period (6.27 percent, calculated using the Consumer Price Indices for January 2010 and January 2013).[3][4]

This page contains information about budget processes and policy issues in Arizona, including:

  • a summary of the budget drafting process
  • trends in expenditures and revenues
  • current and past fiscal year budget developments
  • financial transparency measures

Budget process

Arizona operates on a biennial budget cycle, with each biennium beginning in July. The sequence of key events in the budget process is as follows:[5][6]

  1. Budget instructions are sent to state agencies on June 1 of the year preceding the start of the new biennium
  2. State agencies submit their budget requests to the governor by September 1.
  3. Agency hearings are held in November and December.
  4. The governor submits his or her proposed budget to the state legislature in January.
  5. From January through April, the legislature debates the budget. A simple majority is required to pass a budget.

Arizona is one of 44 states in which the governor has line item veto authority.[6]

The governor is required by law to submit a balanced budget to the legislature. In turn, the legislature is legally required to pass a balanced budget.[6]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[7]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."[7]
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."[7]
  • Federal funds: "Funds received directly from the federal government."[7]
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."[7]

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[7] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[7]
State General fund Federal funds Other funds Bonds Total Per capita expenditures
Arizona $8,567 $12,332 $7,624 $770 $29,293 $4,420.50
Colorado $7,942 $7,334 $13,203 $0 $28,479 $5,405.66
Nevada $3,179 $2,918 $2,769 $27 $8,893 $3,187.30
New Mexico $5,656 $5,660 $3,227 $0 $14,543 $6,974.10
Utah $4,990 $3,405 $3,739 $469 $12,603 $4,344.56
Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]|align="left" colspan="8" | Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8]
Source: National Association of State Budget Officers
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Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in Arizona can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures by function, FY 2012 (as percents)[7]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
Arizona 19.0% 13.5% 1.0% 32.0% 3.6% 6.4% 24.6%
Colorado 25.3% 9.0% 0.0% 20.7% 2.7% 5.4% 36.9%
Nevada 23.6% 9.7% 3.2% 25.4% 3.8% 9.5% 24.9%
New Mexico 19.7% 19.3% 0.5% 24.7% 2.0% 5.9% 27.9%
Utah 24.7% 11.9% 0.9% 17.5% 2.0% 9.2% 33.9%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Expenditure trends

From 2008 to 2012, expenditures for elementary and secondary education fell by 8.5 percentage points, or 30.9 percent, as a share of the budget. Meanwhile, during the same period Medicaid expenditures rose by more than nine percentage points, or 40.4 percent, as a share of the budget. Higher education expenditures rose by 2.6 percentage points, or 23.9 percent, as a share of the budget. The table below details changes in expenditures from 2008 to 2012.[7][9][10][11][12] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other**
2012 19.0% 13.5% 1.0% 32.0% 3.6% 6.4% 24.6%
2011 20.0% 13.9% 0.2% 33.9% 3.5% 6.2% 22.3%
2010 22.0% 12.6% 0.3% 27.7% 3.8% 5.6% 28.0%
2009 23.9% 11.7% 0.4% 29.4% 3.8% 5.9% 24.8%
2008 27.5% 10.9% 0.5% 22.8% 4.2% 7.0% 27.2%
Change in % -8.5% 2.6% 0.5% 9.2% -0.6% -0.6% -2.6%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[7]

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[7] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
Arizona $3,822 $3,288 $688 $0 $785 $8,583 $1,295.23
Colorado $2,186 $5,642 $640 $13 $111 $8,592 $1,630.87
Nevada $919 $0 $0 $705 $1,463 $3,087 $1,106.40
New Mexico $2,395 $1,210 $250 $69 $1,731 $5,655 $2,711.86
Utah $1,633 $2,652 $313 $0 $495 $5,093 $1,755.68
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[8]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[7][9] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, Arizona ($ in millions)[7][9]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $3,822 $3,288 $688 $0 $785 $8,583 $1,295.23
2012 $3,655 $3,092 $648 $0 $833 $8,228 $1,255.96
2011 $3,467 $2,864 $560 $0 $1,490 $8,381 $1,295.60
2010 $3,382 $2,416 $413 $0 $2,114 $8,325 $1,299.00
2009 $3,756 $2,568 $592 $0 $1,360 $8,276 $1,254.74
Change in % 1.76% 28.04% 16.22% 0.00% -42.28% 3.71% 3.23%
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[8][13]
Source: National Association of State Budget Officers

State budgets by year

Fiscal year 2015

DocumentIcon.jpg See budget bill: Fiscal Year 2015 Enacted Budget

Governor Jan Brewer announced her fiscal year 2015 budget proposal on January 17, 2014. Under the governor's proposal, total general fund spending for fiscal year 2015 would have equaled approximately $9.3 billion, including a $50 million deposit into the state's rainy day fund. In addition, Brewer's budget proposal included $37.6 million in "performance funding" for K-12 education.[14]

On April 11, 2014, Brewer signed into law the fiscal year 2015 budget, which included general fund spending totaling $9.2 billion. The enacted budget increased spending by $440.7 million over fiscal year 2014.[14][15]

Fiscal year 2014

Arizona state budget -- 2014
Arizona State Legislature
Text:HB 2001
Legislative history
Introduced:June 11, 2013
House:June 13, 2013
Vote (lower house):33-27
Senate:June 13, 2013
Vote (upper house):19-10-1
Governor:Jan Brewer
Signed:June 17, 2013

Governor Jan Brewer signed the fiscal year 2014 budget into law on June 17, 2013. Brewer negotiated the budget with a bipartisan group of state legislators, the same who helped enact her Medicaid expansion plan during the same special legislative session.[16][17]

The $8.8 billion dollar budget was approximately $100 million less than Brewer initially proposed. The budget included additional funding for Child Protective Services, community colleges, and the state's public universities. The budget also included $82 million in extra funding for elementary and secondary education, as well as $3.6 million for school resource officers. Democrats had pushed for $17 million for school officers.[18]

Fiscal year 2013

See also: Arizona state budget (2012-2013)

Fiscal year 2012

See also: Arizona state budget (2011-2012)

Fiscal year 2011

See also: Arizona state budget (2010-2011)

Fiscal year 2010

See also: Arizona state budget (2009-2010)

Historical spending

State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[7][10]

Historical state budget spending in Arizona ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $8,414 29.5% $7,064 24.8% $12,299 43.1% $763 2.7% $28,540
2010-2011 $8,306 27% $6,715 21.8% $14,971 48.7% $741 2.4% $30,733
2009-2010 $9,016 32.3% $7,192 25.7% $10,626 38% $1,112 4% $27,946
Averages: $8,578.67 30% $6,990.33 24% $12,632 43% $872 3% $29,073
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Arizona had a state debt of over $61 billion. Its state debt per capita was $9,321. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[19][20]

Total state debt in Arizona[21]
Type Totals U.S. rank
Total state debt $61,082,635,000 25
Per capita debt $9,321 45
State and other fund expenditures $15,478,000,000 27

Public pensions

See also: Arizona public pensions and Arizona public employee salaries

A 2012 report from the Pew Center on the States noted that Arizona's pension system was funded at 75 percent at the close of fiscal year 2010, below the 80 percent funding level experts recommend. Consequently, Pew designated the state's pension system as cause for "serious concern."[22]

Taken together, the funded ratio for the state's pension systems decreased from 80.1 percent in fiscal year 2007 to 71.9 percent in fiscal year 2012, a decrease of 8.2 percentage points, or 10.2 percent. Likewise, unfunded liabilities increased from approximately $7.8 billion in fiscal year 2007 to more than $14 billion in fiscal year 2012.[23][24][25][26]

Credit ratings

See also: State credit ratings

Credit rating agencies, such as Standard and Poor's, assign grades to states that take into account a state's ability to pay debts and the general health of the state's economy. Generally speaking, a higher credit rating indicates lower interest costs on the general obligation bonds states sometimes sell to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). This is turn results in lower interest costs, thereby lowering the cost to taxpayers.[27][28]

The table below lists the Standard and Poor's credit ratings for Arizona and surrounding states from 2004 to 2014. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest.[29]

State credit ratings, 2004 to 2014
State 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Arizona AA- AA- AA- AA- AA- AA- AA AA AA AA AA
Colorado AA AA AA AA AA AA AA AA AA- AA- AA-
Nevada AA AA AA AA AA+ AA+ AA+ AA+ AA+ AA AA
New Mexico AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+
Utah AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA
Source: Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014.

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[30]

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[30]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid National rank
Arizona 38.04% $10,394,549,000 8
Colorado 28.85% $6,310,538,000 35
Nevada 25.48% $2,798,426,000 44
New Mexico 36.61% $5,171,367,000 9
Utah 31.61% $4,481,494,000 31

Stimulus

According to Recovery.gov, the official government website for the Recovery Accountability and Transparency Board, under the American Recovery and Reinvestment Act, Arizona received $6.7 billion in federal stimulus funding between February 2009 and June 2013.[31] [32]

Budget transparency

Transparency evaluation
Arizona OpenBook
Searchability Y
600px-Yes check.png
Grants N
600px-Red x.png
Contracts Y
600px-Yes check.png
Line item expenditures Y
600px-Yes check.png
Dept./agency budgets Y
600px-Yes check.png
Public employee salaries Y
600px-Yes check.png
Last evaluated in 2012.
See also: Evaluation of Arizona state website and Constitutional provisions regarding reading of bills

Arizona publishes a website that tracks government spending, Arizona OpenBook.

Arizona does not have a constitutional provision providing a legislative review period.

Government tools

The table to the right can be helpful in evaluating the level of transparency provided by a state spending and transparency database:

Arizona checkbook register

In February 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.[33][34]

Multi-measure budget transparency profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Arizona, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[35][36]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. Arizona ranked last in the nation, earning two out of eight possible points.[36]

Arizona - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures
{{{1}}}
"Generally Accepted Accounting Principles" budget N
600px-Red x.png
Multi-year forecasting N
600px-Red x.png
Annual cycle N
600px-Red x.png
Binding revenue forecast N
600px-Red x.png
Legislative revenue forecast N
600px-Red x.png
Nonpartisan staff N
600px-Red x.png
Constitution or statutory tax/spend limitations Y
600px-Yes check.png
TOTAL 2

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[36]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[37] According to the report, Arizona received a grade of B and a numerical score of 84, indicating that Arizona was an "advancing" state in terms of transparency regarding state spending.[37]

Accounting principles

See also: 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 five-year renewable term. 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.[38]

Arizona Revised Statute §41-1279 establishes 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.[38]

See also

External links

Additional reading

References

  1. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 7.11 7.12 7.13 7.14 7.15 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  8. 8.0 8.1 8.2 8.3 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  9. 9.0 9.1 9.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  11. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  12. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  13. United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  14. 14.0 14.1 National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
  15. Arizona State Legislature, "Overview of Budget Proposals - General Fund," accessed September 22, 2014
  16. Fox News, "Arizona passes Medicaid expansion after months of negotiation," June 13, 2013
  17. State of Arizona - Office of the Governor, "Statement from Governor Jan Brewer," June 17, 2013
  18. MyFoxPhoenix.com, "Brewer signs $8.8 billion state budget into law," June 17, 2013
  19. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  20. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  21. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  22. Pew Center on the States, "Widening Gap Update: Arizona," June 18, 2012
  23. Arizona State Retirement System, "Actuarial Report on the Valuation of the Plan as of June 30, 2012," accessed October 29, 2013
  24. Arizona Corrections Officer Retirement Plan, "Arizona Corrections Officer Retirement Plan Consolidated Report, June 30, 2012," accessed October 29, 2013
  25. Elected Officials' Retirement Plan, "Elected Officials' Retirement Plan Consolidated Report, June 30, 2012," accessed October 29, 2013
  26. Public Safety Personnel Retirement System, "Public Safety Personnel Retirement System Consolidated Report, June 30, 2012," accessed October 29, 2013
  27. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  28. Bankrate, "The 6 states with the worst credit ratings," September 27, 2012
  29. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014
  30. 30.0 30.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  31. Recovery, "Stimulus Spending by State"
  32. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  33. AZCheckbook.com, "Home page," accessed April 15, 2014
  34. ABC News, "New website shows how Arizona is spending your tax dollars," February 16, 2009
  35. Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
  36. 36.0 36.1 36.2 Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
  37. 37.0 37.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  38. 38.0 38.1 State of Arizona, Office of the Auditor General, "Overview," accessed October 8, 2009