arizona department of revenue economic trends georganna meyer chief economist office of economic...

ARIZONA DEPARTMENT OF REVENUE

ECONOMIC TRENDS

Georganna MeyerChief Economist

Office of Economic Research & AnalysisArizona Department of Revenue

Office of Economic Research & Analysis

Elaine Smith Karen Jacobs Darlene Teller Karshannon Gene Oxana Gandolph Nick Buta

Ways We Reach Out and Touch You

Economic Estimates Commission – expenditure limitations (Karshannon)

Property Tax Oversight Commission – property tax levy limits, truth in taxation (Darlene)

Bonded Indebtedness – annual reporting (Darlene, Elaine)

Ways We Reach Out and Touch You

City payment journals/County payment journals (Elaine)

Transaction privilege tax and urban revenue sharing – distribution and forecast of distribution (Elaine, Karshannon)

Statistics – related to transaction privilege tax and individual income tax (Elaine, Karen)

The following slides are courtesy of Elliott D. Pollack & Company

7

http://www.dreamstime.com/stock-image-euro-suit-thief-image23968111

Elliott D. Pollack & Company

United States Real Gross Domestic Product* Annual Growth 1970 - 2014**

Source: U.S. Bureau of Economic Analysis & Blue Chip Economic Indicators

0.2%

3.4%

5.3%

5.8%

-0.6%-0.2%

5.4%

4.6%

5.6%

3.1%

-0.3%

2.5%

-1.9%

4.5%

7.2%

4.1%3.5%

3.2%

4.1%

3.6%

1.9%

-0.2%

3.4%2.9%

4.1%

2.5%

3.7%

4.5%4.4%4.8%

4.1%

1.1%1.8%

2.5%

3.5%3.1%

2.7%

1.9%

-0.3%

-3.5%

3.0%

1.8%2.2%

2.0%

2.7%

-4%

-2%

0%

2%

4%

6%

8%

* Based on chained 2005 dollars.

** 2013 and 2014 are a forecast from the Blue Chip Economic Indicators, March 2013Recession Periods

8


Real Disposable Personal IncomePercent Change Year Ago

2000 – 2013*Source: The Federal Reserve Bank of St. Louis Recession Periods

*Data through first quarter 20139


US Non-Farm EmploymentChange from Prior Month (S/A)

June 2010 – April 2013Source: Bureau Labor of Statistics

-130

-86

-37-43

228

144

9569

196205

304

115

209

78

132

225

166174

230

311

271

205

112125

87

153165138

160

247219

148

332

142

199195 195

1

(250)

(200)

(150)

(100)

(50)

0

50

100

150

200

250

300

350

400

10


Jobs are being created at a slow rate.

Those that have jobs are spending a little more but will remain cautious.

Unemployment to remain high, but should trend lower.

Wealth levels are improving.

Will the additional uncertainty translate into reduced consumer spending?

Consumer Summary:

11


Businesses are in better shape.

Spending on equipment to continue to grow.

Spending on plant will lag until capacity utilization goes higher…getting close.

Employment to continue to grow.

Business Summary:

12


NATIONAL SUMMARY Consumers still restructuring Confidence low, but spending will

continue to grow Business in good shape but not

confident because of: Low capacity utilization Cost of Obama Care Fiscal Cliff

Federal government, no leadership whatsoever.

13


Arizona & US Move Together (Non-farm Emp. Percent Change 1980 – June 2013)

-9%

-7%

-5%

-3%

-1%

1%

3%

5%

7%

9%

11%

U.S. Arizona Recession Periods


Job Growth 2013YTD April 2013 vs YTD April 2012

Source: US BLS

Utah 3.60% 2Texas 3.13% 3Idaho 2.78% 4Colorado 2.72% 5Nevada 2.25% 6Washington 2.17% 7California 2.10% 8North Carolina 2.09% 9Montana 1.94% 10Arizona 1.92% 11Georgia 1.91% 12Tennessee 1.80% 13Florida 1.76% 14Minnesota 1.72% 15Delaware 1.68% 16Hawaii 1.63% 17Indiana 1.56% 18South Carolina 1.51% 19Mississippi 1.45% 20New Jersey 1.44% 21Vermont 1.40% 22Massachusetts 1.40% 23Oregon 1.39% 24Louisiana 1.27% 25New Jersey 1.33% 26

Iowa 1.27% 26Maryland 1.24% 27Kentucky 1.23% 28South Dakota 1.19% 29Oklahoma 1.18% 30New York 1.07% 31Kansas 1.06% 32New Hampshire 1.05% 33Michigan 1.03% 34Virginia 0.99% 35Illinois 0.95% 36Missouri 0.85% 37New Mexico 0.66% 38Wisconsin 0.55% 39Alabama 0.50% 40Nebraska 0.48% 41Arkansas 0.47% 42Alaska 0.46% 43Connecticut 0.44% 44Rhode Island 0.42% 45West Virginia 0.41% 46Pennsylvania 0.39% 47Ohio 0.35% 48Maine 0.07% 49Wyoming -0.42% 50

16


Why are population flows slow?

Slow job growth High unemployment Delayed retirement Difficulty in selling home Difficulty in qualifying for a loan

17


Year Rank # MSA’s

2001 7 26

2002 5 25

2003 3 25

2004 3 25

2005 1 26

2006 1 27

2007 9 28

2008 24 28

2009 24 25

2010 24 24

2011 14 25

2012 6 27

2013* 9 26

Year Rank # MSA’s

1991 4 19

1992 4 19

1993 2 19

1994 1 19

1995 1 20

1996 1 21

1997 1 22

1998 1 23

1999 3 24

2000 9 25

Phoenix-Mesa Employment Growth(Ranking among all metro areas greater than 1,000,000)

Source: Arizona State University, U.S. Bureau of Labor Statistics

*Year-to-date, April 2013

18


Maricopa County PopulationSource: U.S. Bureau of Census; Arizona Department of Economic Security; University of Arizona Forecasting Project

AnnualYear Population Rate 1950 331,7701960 663,510 7.2%1970 971,228 3.9%1980 1,509,175 4.5%1990 2,122,101 3.5%2000 3,072,149 3.8% 2010 3,817,117 2.2%2020(forecast) 4,569,572 1.8%

19


It’s hard not to be optimistic about HOUSING


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

8,065

5,340 5,4653,891 2,243

5,385

20,407

43,17146,834

32,203

18,637

9,059

Total Pending Foreclosures Greater Phoenix

Source: Information Market


$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$137,500$146,000

$157,000

$223,500

$259,900 $253,000

$214,500

$115,000$128,350

$110,000

$137,000

$172,000

Greater Phoenix Median Sales PriceNew and Resale Single Family

Source: Cromford Report


Greater Phoenix Single Family Permits

Source: RL Brown

Year Permits % chg

2004 60,872 27.6%

2005 63,570 4.4%

2006 42,423 -33.3%

2007 31,172 -26.5%

2008 12,582 -59.6%

2009 8,027 -36.2%

2010 6,822 -15.0%

2011 6,794 -0.4%

2012 11,615 71.0%

2013* 4,449 20.9%*Data through YTD Apr. 2013 v. Apr. 2012


Growth in Single Family Home Median Prices

March 2013 / March 2012Source: Cromford Report

PhoenixNew Homes: 30.8%

Resale Homes: 26.8%

NOTE: Resale includes normal and distressed single family home prices (MLS)


Percent of 25-34 Year Olds Living With Parents vs. Homeownership Rate, Under 35 Years Old

U.S.: 1983 – 2012 Source: US Census Bureau

10.0%

10.5%

11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

14.0%

14.5%

15.0%

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

% L

ivin

g w

/ Pa

ren

ts

36%

37%

38%

39%

40%

41%

42%

43%

44%

Ho

me

ow

ner

ship

Rat

e

% Living w/ parents Homeownership Rate

25


Retail Space Vacancy RatesMaricopa County 1985–2014*

Source: CBRE**

6.6%

8.9%

10.0%

11.8%13.1%

14.2%13.5%

12.7%

11.1%

9.8% 8.7%

7.9%7.5%

6.3%5.5%

5.3%6.6%7.3%

7.4%

6.1%5.3%

5.1%

6.2%7.5%

11.4%12.2%

12.2%

11.0%10.9%10.2%

0%

5%

10%

15%

20%

* 2013-2014 are forecasts from GPBC** Data prior to 1992 is from Grubb & Ellis

Recession Periods

The rest of the presentation is courtesy of the Office of

Economic Research & Analysis at the Arizona Department of

Revenue.

27

28

June 2006

29

June 2007

30

June 2008

32

June 2009

33

June 2010

34

June 2011

Transaction Privilege Tax Collections with % Change

40

Transaction Privilege Tax Taxable Sales

Transaction Privilege Tax Taxable Sales Mix

TPT - % of Total Taxable Sales by TypeFY97 FY00 FY01 FY05 FY07 FY08 FY09 FY10 FY13

utilities 7.8 7.3 7.6 7.3 7.5 8.2 9.6 10.7 10.1

Communications 2.8 3.4 3.8 3.1 3.0 3.3 3.0 4.1 3.1

Restaurants & bars 8.0 8.2 8.3 8.5 8.3 8.6 9.4 10.3 10.7

Amusements 1.0 1.1 1.0 0.9 0.9 1.0 1.1 1.2 1.1

Personal prop rental

4.3 4.7 4.8 3.5 3.4 3.6 3.7 3.6 3.3

Contracting 13.0 14.9 14.8 17.2 19.4 17.9 15.4 10.6 10.3

Retail 47.4 50.1 50.3 49.7 47.6 46.8 47.9 49.0 52.1

Mining/timber sev 1.8 .7 .2 .7 1.5 1.6 0.8 1.3 1.2

Hotel/motel 2.6 2.5 2.5 2.2 2.1 2.1 2.2 2.2 2.3

Use 4.0 4.8 5.1 5.6 5.3 6.1 6.1 6.2 5.3

All other 7.2 2.3 1.7 1.2 0.9 0.9 0.8 0.7 0.6

Utilities

Communications

Restaurants & Bars

Amusements

Personal Property Rentals

Contracting

Retail

Components of Retail Taxable Sales for FY13

Components of Retail Taxable Sales for FY05

Mining/Timber Severance

Hotel/Motel

Net Corporate Income Tax Collections with % Change

Net Individual Income Tax Collections with % Change

58

Federal Adjusted Gross Income in Arizona from Resident Tax Returns (Billion$)

Resident FAGI plus Nonresident and Part-Year Resident FAGI (Billions$)

Personal Income Estimates Compared to FAGI on Tax Returns (Bill$)

Average Federal Adjusted Gross Income (Resident)

Average Federal Adjusted Gross Income in Cochise County

Average Federal Adjusted Gross Income in Coconino County

Average Federal Adjusted Gross Income in Gila County

Average Federal Adjusted Gross Income in Greenlee County

Average Federal Adjusted Gross Income in La Paz County

Average Federal Adjusted Gross Income in Maricopa County

Average Federal Adjusted Gross Income in Mohave County

Average Federal Adjusted Gross Income in Navajo County

Average Federal Adjusted Gross Income in Pima County

Average Federal Adjusted Gross Income in Pinal County

Average Federal Adjusted Gross Income in Santa Cruz County

Average Federal Adjusted Gross Income in Yavapai County

Average Federal Adjusted Gross Income in Yuma County

Average FAGI by County, 1990 vs. 2010

Average FAGI by City/Town, 1990 vs. 2010

1990 Avg FAGI 1990 Rank 2010 Avg FAGI

2010 Rank

Apache Junction $21,083 62 $44,704 31

Avondale $18,857 69 $43,651 36

Benson $24,249 36 $41,616 46

Bisbee $21,576 56 $37,819 63

Buckeye $25,698 30 $46,224 28

Bullhead City $26,543 22 $33,094 76

Camp Verde $20,811 64 $36,334 67

Carefree $72,938 1 $143,321 1

Casa Grande $23,214 41 $41,217 51

Cave Creek $37,005 4 $86,026 3

Chandler $32,830 7 $64,145 7



2010 Rank

Chino Valley $20,980 63 $39,315 58

Clarkdale $22,547 45 $44,358 33

Clifton $22,440 47 $43,171 37

Colorado City $12,163 80 $24,024 85

Coolidge $21,469 58 $35,003 70

Cottonwood $22,240 51 $35,736 68

Dewey Humboldt $---------- --- $42,128 41

Douglas $17,827 73 $28,872 82

Duncan $22,849 43 $40,345 54

Eagar $26,331 27 $45,560 29

El Mirage $14,124 79 $35,485 69



2010 Rank

Eloy $14,480 78 $30,832 80

Flagstaff $26,704 21 $51,246 17

Florence $21,540 57 $44,618 32

Fountain Hills $---------- --- $77,149 4

Fredonia $21,591 55 $32,303 78

Gila Bend $17,795 74 $31,645 79

Gilbert $36,957 5 $66,893 5

Glendale $30,228 10 $46,737 26

Globe $24,851 32 $41,679 44

Goodyear $28,098 15 $59,614 8

Hayden $22,379 49 $38,119 61



2010 Rank

Holbrook $19,957 68 $36,912 65

Huachuca City $21,459 59 $42,542 38

Jerome $18,312 71 $34,176 71

Kearny $26,207 28 $44,053 34

Kingman $24,395 34 $39,855 56

Lake Havasu City $27,035 20 $41,558 47

Litchfield Park $45,157 3 $66,439 6

Mammoth $23,372 40 $32,922 77

Marana $20,555 66 $58,425 10

Maricopa $--------- --- $48,631 21

Mesa $27,781 17 $46,435 27



2010 Rank

Miami $22,154 52 $38,999 59

Nogales $18,313 70 $33,688 75

Page $30,201 11 $44,044 35

Parker $22,437 48 $36,641 66

Patagonia $22,990 42 $40,008 55

Payson/Star Valley $22,718 44 $41,627 45

Peoria $31,870 8 $57,194 11

Phoenix $28,682 13 $48,585 22

Pima $17,503 76 $42,247 40

Pinetop-Lakeside $25,249 31 $47,529 25

Prescott $28,537 14 $54,925 15



2010 Rank

Prescott Valley $20,566 65 $37,478 64

Quartzsite $18,288 72 $27,569 83

Queen Creek $23,522 38 $52,612 16

Safford $24,292 35 $41,402 49

Sahuarita $---------- --- $56,422 12

St. Johns $26,347 26 $41,302 50

San Luis $8,931 81 $19,594 86

Scottsdale/Paradise Valley $46,789 2 $101,466 2

Sedona $33,652 6 $54,990 14

Show Low $22,474 46 $41,540 48

Sierra Vista $29,621 12 $55,529 13

Average FAGI by City/Town, 1990 vs. 20101990 Avg FAGI 1990 Rank 2010 Avg

FAGI2010 Rank

Snowflake $25,833 29 $40,475 53

Somerton $14,659 77 $28,874 81

Springerville $24,664 33 $41,738 43

Superior $21,683 54 $38,724 60

Surprise/Sun City $27,672 19 $48,360 23

Taylor $26,414 25 $42,005 42

Tempe/Guadalupe $31,090 9 $50,230 18

Thatcher $23,664 37 $50,029 19

Tolleson $21,940 53 $59,031 9

Tombstone $20,023 67 $33,911 73

Tucson/So. Tucson/ Oro Valley

$27,888 16 $47,741 24



2010 Rank

Tusayan $---------- --- $39,690 57

Wellton $26,541 23 $42,394 39

Wickenburg $27,731 18 $49,987 20

Willcox $21,093 61 $27,002 84

Williams $21,367 60 $37,886 62

Winkelman $23,465 39 $41,161 52

Winslow $22,241 50 $33,779 74

Youngtown $17,556 75 $34,073 72

Yuma $26,506 24 $44,981 30

DISTORTIONS

Corporate Income Tax Changes Between 1986 and 2013

Arizona Corporate Tax Rate 1986 – mostly 10.5% 2013 – 6.968% 2017 – 4.9%

Apportionment Formula 1986 - 3 Factor (property, payroll, sales) evenly-weighted

formula 2013 – choice between double-weighted sales factor and 80%

weight on sales 2017 – choice between double-weighted sales factor and 100%

weight on sales

Individual Income Tax Changes Between 1986 and 2013

Individual income tax rates 1986 – maximum rate of 8% at $10,000 taxable income 2012 – maximum rate of 4.54% at $150,000 taxable income

Personal exemption 1986 - $2000/$4000 2012 - $2100/$4200/$6300

Standard Deduction 1986 - $3500/$7000 2012 - $4833/$9665

Number of Corporate and Individual Income Tax Credits

Net Individual Collections plus Liability Offset by Tax Credits

93

Net Corporate Collections plus Liability Offset by Tax Credits

TPT Reform

On June 25, 2013, Governor Brewer signed HB2111, the TPT Reform Bill. The bill includes changes to TPT taxation of contracting, audits and the collection of local taxes. It becomes effective on January 1, 2015. The Governor is holding a kick-off meeting with the stakeholders on Monday. The Department’s implementation is in progress. The process will include input from the existing non-program cities, taxpayers, special interest groups and practitioners.

Folks from the Department would be happy to come back in the future to provide a status report.

Thank You!

arizona department of revenue economic trends georganna meyer chief economist office of economic...

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