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Review of Budgeting Process. State General Fund Revenues. State General Fund Expenditures. General Fund only part of the story…Total FY ’09 Budget is $28.2B. Fiscal Year 2010 Projections.

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fiscal year 2010 projections
Fiscal Year 2010 Projections
  • FY2010 revenue is projected at $7.22B. Although the revenue projections show an improvement from FY2009, the overall forecast projects a (2.1)% revenue decline
  • Projected Corporate Income Tax Collections: $530M
  • Projected Individual Income tax Collections: $2.87B
  • Projected Sales Tax Collections: $3.79B

Source: Finance Advisory Committee March 29th Presentation to the Legislature

balanced budget mandate
Balanced Budget Mandate
  • Arizona Constitution contemplates balanced budget, on a “cash” basis
  • A requirement in nearly every state
  • Empowers Legislature to raise revenues in instances where expenditures exceed revenues (Article IX, Section 4)
prop 108
“Prop 108”
  • 1992’s Prop 108 amended Arizona Constitution to require 2/3 of Legislature to approve any measure that results in net increase in state revenues (Article IX, Section 22)
  • Includes imposition of any new tax; increase in a tax rate/rates; reduction or elimination of a tax deduction, exemption, exclusion, credit or other tax exemption feature in computing tax liability; fees/ elimination of fees; change in allocation among state, counties or cities of Arizona transaction privilege, severance, jet fuel, use, rental occupancy, or other taxes
appropriations and debt limits
Appropriations and Debt Limits
  • Arizona Constitution restricts appropriation of certain state revenues to no more than 7.41% of Arizona personal income (Article IX, Section 20)
  • Applicable revenues are primarily tax and fee collections that may be deposited to either the General Fund or dedicated funds
  • Arizona Constitution limits debt to $350K (Article IX, Section 5)
saving for a rainy day
Saving for a Rainy Day
  • Statute creates Budget Stabilization Fund (BSF) for use in times of economic downturn
  • A.R.S. § 35-144 limits the balance of the BSF to 7% of the current year’s General Fund revenues
  • The “Rainy Day” fund balance is $0
the ballot box
The Ballot Box
  • There have been 4 ballot propositions enacted since 1998 that have required substantial General Fund support:
    • Campaign Financing (Prop 200, 1998)
    • Urban Trust Land Purchases (Prop 303, 1998)
    • K-12 Inflation (Prop 301, 2000)
    • AHCCCS Expansion (Prop 204, 2000)
  • 1998’s Prop 105 requires 3/4 vote of Legislature to change ballot-required funding so as to “further the purposes” of the original ballot measure (Arizona Constitution, Article IV, Section 1)
  • 2004’s Prop 101 requires future ballot propositions to designate a non-General Fund source for any new spending required by new initiatives (Arizona Constitution, Article IX, Section 23)
budgeting a year round process
Budgeting: A Year-Round Process
  • The state’s fiscal year begins on July 1 per the Arizona Constitution
  • Interim work conducted by Joint Legislative Budget Committee (JLBC), a legislative panel that convenes to review information, program performance and implementation of budgets and programs
  • Legislative financial advisors meet three times yearly to review economic forecasts
  • OSPB sends copy of each agency’s budget request to JLBC staff
  • The OSPB and JLBC each develop a revenue estimate for the upcoming fiscal year
the budget bills
The Budget Bills
  • Final budget product is placed in bill form for consideration by the House and Senate
  • Constitution requires one bill for general appropriations; remainder of budget bills must be placed in separate bills by subject
  • Referred to as the “feed bill,” General Appropriations Act includes: maintenance and operations (“M&O”) funding levels, FTE positions, footnotes, performance measures, statutory revisions and a budget format for each state agency
  • JLBC works with Legislative Council to draft this legislation
other budget bills
Other Budget Bills
  • Supplemental Appropriations: If it becomes necessary to adjust an agency budget adopted in prior year, adjustments are reflected in Supplemental Appropriations Act; this bill typically amends General Appropriations Act
  • Capital Outlay Bill: A second element of the overall budget is the Capital Outlay Bill, which funds construction, major maintenance and repair of state facilities; capital outlay budget process is similar to M&O budget -- differences primarily involve timeframes for submission
  • Budget Reconciliation Bills: Budget also includes changes in law necessary to implement the budget or other policy modifications; changes are contained in bills referred to as “BRBs”