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Budget Briefing

State of Arizona

Janice K. Brewer, GovernorApril 17, 2009

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Arizona’s Revenue Streams

General Fund RevenueFY08 Actual Collections

(before Urban Revenue Sharing distribution)

Individual Income

36%

Corporate Income

8%

Other10%

Sales Tax46%

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Annual Percent Growth in Selected Economic Variables

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

85Q1

86Q2

87Q3

88Q4

90Q1

91Q2

92Q3

93Q4

95Q1

96Q2

97Q3

98Q4

00Q1

01Q2

02Q3

03Q4

05Q1

06Q2

07Q3

08Q4

retail growth personal Income growth auto dealer sales growth

Arizona’s Revenue Trends

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Arizona’s Expenditures

General Fund Appropriations FY09 Adjusted Appropriations

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Caseload and enrollment for K-12 Education, AHCCCS, and Corrections are expected to grow by 107,000 from FY09 to FY10.

Arizona’s Expenditure Trends

The caseload growth translates to an increased funding requirement, from FY09 to FY10, amounting to $600 million.

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Arizona’s Expenditure Trends

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Arizona’s Budget Crisis

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How The Gap Has Been Filled

• Agency Reductions (Permanent) 248 584• Rainy Day Fund (Temporary) 560 130• K-12 Rollover (Temporary) 272 330• Other Fund Transfers (Temporary) 290 467• Federal Assistance (Temporary) 0 500

FY 2008 FY 2009in millions

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Arizona’s Future Fiscal Crisis

The cumulative gap between expenditures

and revenue from FY10 to FY14 is $15.4 Billion 4,114

3,783

3,4792,2361,781

1,0811,323

7,000

9,000

11,000

13,000

15,000

FY05 FY06 FY07 FY08 FY09Est.

FY10Est.

FY11Est.

FY12Est.

FY13Est.

FY14Est.

Expenditures Revenue Federal

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Building A Better ArizonaGovernor Jan Brewer’s 5 Point Plan

1. Reform budget process – focus on long-term needs and resources

2. Improve Prop. 105 – The Voter Protection Act

3. Further spending cuts, reduce general fund by $1 billion

4. Provide tax reform to attract business and more jobs

5. Temporary tax increase - $1 billion revenue to bridge the gap in our budget shortfall

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Fiscal Reforms

Substantial, Further Spending Cuts Reduction of Automatic Spending Growth Economic Vitality Tax Reform Long-term Financial Planning Long-term Capital Planning Effective Limits on Spending Growth Temporary Budget Balancing Tax Increase

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State of Arizona

Janice K. Brewer, GovernorApril 17, 2009

Budget Briefing www.azgovernor.gov/BetterAZ.asp