Budget Update and Orientation

December 5, 2012December 5, 2012

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Presentation Summary

Revenues

Spending

Budget Status

Budget Process

JLBC Staff Role

Revenue Overview

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FY 2013 General Fund Revenue ‐ 92% Generated by 3 Taxes

Percent of General Fund Revenue

8%7%

35%

50%

0%

10%

20%

30%

40%

50%

60%

Sales IndividualIncome

Corporate Other

Excludes beginning balance, urban revenue sharing, and one‐time revenue adjustments, but includes all on‐going legislative revenue changes.

1/

$      9,359.4TOTAL REVENUE

771.9Other

656.5Corporate Income Tax

3,233.1Individual Income Tax

$       4,697.9Sales and Use Tax

(Millions)Source

1/

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FY ’13 Revenue Shares Are Comparable To FY ’03

Excludes beginning balance, urban revenue sharing, and one‐time revenue adjustments, but includes all on‐going legislative revenue changes.

1/

49% without Prop 100 1‐cent tax

Percent of General Fund Revenue 1/49%

34%

6%

11%

50%

35%

7% 8%

0%

10%

20%

30%

40%

50%

60%

Sales Individual Income Corporate Other

FY 2003 FY 2013

45% without Prop 100 1‐cent tax Percent of General Fund Revenue 1/

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How Does JLBC Forecast Revenues?‐ Four‐Sector Consensus Forecast of Sales and Income Taxes

4‐sector forecast equally weights:

FAC average

UofA model – base

UofA model – low

JLBC Staff forecast

Remaining revenues (10% of total) are staff forecast

JLBC25%

UA ‐ Low 25%

FAC Consensus 

25%

UA ‐ Base 25%

* The Finance Advisory Committee is a 15‐member panel of public and private sector economists that publicly meets 3 times a yearto advise the Legislature on the state of the Arizona economy.

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18.1%

6.7%4.3% 5.8% 5.7% 6.3%

20.1%

6.9%10.6%

‐4.6%

‐18.2%

‐10.3%

‐30%

‐20%

‐10%

0%

10%

20%

30%

FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Year over Ye

ar Percent Change

Actual 4‐Sector Forecast

Percent Change in Base revenues excluding balance forward, tax law changes, one‐time revenues, and urban revenue sharing

Consensus Forecasts Continuing Moderate GrowthRates Through FY ’16

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Fiscal Impacts of Enacted Tax Laws‐ Includes Property Tax Change Impact on K‐12 Budget

Revenue Loss/Spending Increase Relative to Enacted FY 2013 Budget

634618

501

357

223

67

0

100

200

300

400

500

600

700

'14 '15 '16 '17 '18 '19

$ in M

illions

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Consensus Forecasts Still Below FY ’07 Level

Excludes balance forward and other one‐time revenues.  Includes tax law changes and Urban Revenue Sharing.

7.72

9.269.62

8.76

6.976.29

8.128.71 8.95

8.43 8.789.23

0

2

4

6

8

10

12

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

$ in Billions

Base 1 ¢ Sales Tax

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A Risk to the Forecast – The Federal Fiscal Cliff‐ Plus Federal debt ceiling is expected to be reached in February 2013

20No Medicare Reimbursement Rate Fix

120No Alternative Minimum Tax (AMT) Patch

115Payroll Tax Holiday Expires

40Unemployment Insurance Expiration

32Other Tax Provisions (Bonus Depreciation/Tax “Extenders”)

100Automatic Spending Reductions (“Sequestration”)

708Total

281Federal Tax Increases (Expiration of Bush Tax Cuts)

‐ Tax Bracket Range Increases from 10%‐35% to 15%‐39.6%

‐ Capital gains tax rate increases from 15% to 20%

January 2013 Provisions Deficit Reduction($ in Billions)

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Beyond the “Cliff”, Other Risks to theEconomic Forecast

Unforeseen natural disasters and political events have economic consequences

International events have domestic repercussions –Euro debt crisis and slowing Chinese boom

4‐sector Baseline has accelerating revenue growth in FY ’16 – long term forecasts usually get more cautious

To address these concerns, JLBC’s has developed an alternate revenue forecast of 5% annual growth through FY ‘16

Spending OverviewSpending Overview

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FY 2013 Total Spending is $28 Billion‐ General and Non‐General Fund

1,927.5Health Services

$        27,852.8TOTAL

1,294.3Capital

4,903.4Other Agencies

1,059.3Corrections

2,732.6Economic Security

4,346.1Universities

5,209.7Education (K‐12)

$          6,379.9AHCCCS

(Millions)Budget UnitAHCCCS23%

K‐1219%

Univ16%

DES10%

DHS7%

DOC4%

Other Agencies17%

Capital4%

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The $8.6 B General Fund Share is 31% of Total Funds‐ GF Share Down from 43% in FY ’02

$            27,852.8TOTAL

9,473.2Federal Funds

6,440.6Non‐Appropriated Funds

3,330.1Other Appropriated Funds

$              8,608.9General Fund

(Millions)Fund Source

Non‐Appropriated 

Funds23%

Federal Funds34%

Other Appropriated 

Funds12%

General Fund31%

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FY ‘03 vs. FY ‘13 General Fund Spending‐ AHCCCS’ Share Grows

Agency Share of GF Spending

9.912.6

9.76.8

5.0

0.7

11.6

16.2

8.211.1

7.1 6.8

2.0

8.0

43.740.6

0

10

20

30

40

50

K‐12 AHCCCS Univ ADC DES DHS SFB Other

% of G

F

FY 2003 FY 2013

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FY ‘03 vs. FY ‘13 General Fund Spending‐ K‐12 Added Most Dollars While AHCCCS Had Highest Percent Growth

Dollar Change from FY 2003 to FY 2013 by Agency

899809

382

208290

134

(40)

‐500

‐250

0

250

500

750

1,000

1,250

K‐12

AHCC

CS ADC

DHS

DES

SFB

Univ

$ in M

illions

Percent Change from FY 2003 to FY 2013 by Agency

17

(5)

3551

67

97

137

‐60

‐10

40

90

140

190

AHCC

CS DHS

ADC

DES

K‐12 Univ

Othe

r

% Change

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Statutory Formulas/Debt Service Represent 68% of General Fund Spending‐ $5.5 Billion in Statutory Spending Excludes over $600 M in Suspended Formulas

Examples of Formulas:

K‐12 Operating

Medicaid

Debt Service

$2.8 B$5.5 B

Non‐StatutoryStatutory

$8.6 B GF Budget On‐Going $

Debt Service $316 M

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The 3 Main Drivers of General Fund Spending Are Education, Health, and Prisons‐ Represents 84% of On‐Going General Fund Budget

Education (K‐12)

Medicaid

Prisons

Higher Education

Other State Workers

Debt Service

Other

TOTAL

(FY ’13 $ in Millions)

$    3,496.9

2,054.1

999.9

739.1

420.2

316.4

582.3       

$     8,608.9

K‐1240%

Medicaid23%

Prisons12%

Higher Ed.9%

Debt Service4%

Other7%

Other State Workers

5%

Includes $20 M of capital spending.1/

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K‐12 Remains Single Largest General Fund Function‐ Supplemented with $2.3 B in Local Property Taxes

9% of K‐12 Budget is Property Tax Relief

1,060,000 students in public schools

$(260) M in current formula suspensions 

Other$34

Homeowner's  Rebate$303

K‐12 Formula$3,161

FY ’13 GF = $3.50 B

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Acute$1.2 B

ALTCS$162 M

DHS Beh. Hlth.$398 M

DES Dev. Dis.$314 M

Medicaid Spending of $2.1 B Occurs in 3 Agencies‐ Draws Down $6 B in Federal Matching $

Medicaid enrollment is 1.3 M – generally below Federal Poverty Level

AHCCCS = Acute Care and Elderly Long Term Care

DHS = Behavioral Health

DES = Developmental Disabilities

AHCCCS

FY ‘13 Medicaid GF = $2.05 B

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General Fund Debt Service Will Cost $316 M In FY ’13‐ Equivalent to 7th Largest Budget Unit

Operating$84

Capital$63

K12 School Facilities$169

State has $8.2 B in outstanding debt and lease‐purchases

General Fund share is $3.7 B

FY 13 Debt Service =$ 316 M

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The State Shares $1.5 B With Local Governments

Does not show up as spending – represents revenue diversion

15% of income tax to cities

20% of base sales tax to cities/counties

HURF $ also go to locals

State Shared Revenue in Millions

$685$424

$1,172

$1,028

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

FY '08 FY '12

15% of Income Tax 20% of Sales Tax

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FY ’14 – FY ’16 Baseline Spending Estimates‐ Funding Formulas and Other Requirements

K‐12 Formula

Medicaid Regular Formula (prior to expansion)

ADC Operating – phase‐in of approved beds

Technical Revertment Change

Debt Service

Other

Total (excludes Capital and Rainy Day Fund)

FY ’14 Above FY ’13

71

(4)

9

59

20

(6)

149

FY ’15 Above FY ’14

68

119

19

‐‐

‐‐

(4)

202

FY ’16 Above FY ’15

94

129

7

‐‐

‐‐

3

233

$ in M

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Mandatory Federal Medicaid Expansion Costs

Children covered to 133% of poverty

Higher enrollment by current eligibles

FY ‘14$69 M

FY ’15$170 M

* Baseline assumes childless adult coverage remains frozen

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Childless Adult Coverage is Optional 

Option 1: 133% FPL adult coverage (the fed maximum)‐ Feds pay 85% below FPL and 100% above FPL

‐ Long term match rate will be 90%

Option 2: 100% FPL adult coverage‐ If 85% federal match‐ If 66% federal match

’15 AboveBaseline

$135 M

$135 M$478 M

FPL = Federal Poverty Level ($11,200 for a single person at 100%)

Alternate Scenario assumes Option 2 at 85% match

What Is the Current Status of the Budget?

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Developing Budget Estimates

Legislature required to provide 3‐year estimates in annual budget bill

Two factors influence long term estimates:• The rate of recovery of the economy

• Optional federal health care expansion

JLBC has developed 2 scenarios• Baseline: consensus revenues and funding formulas

• Alternate: modify baseline estimates

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Two Budget Scenarios

Baseline: average 6% revenue growth and no optional Medicaid expansion• FY ‘14 balance of $368 M declines to a $(67) M 

FY ’16 shortfall

Alternate: lower revenue growth and higher spending• $(411) M shortfall in ’15 and $(583) M in ‘16

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The Caveats

1) We have limited ability to predict the future

2) A 3 year forecast comes with risks – a 1% change would affect balance by $500 M in the third year

3) Through FY ’16, ongoing spending exceeds ongoing revenue

4) The FY ‘14 balance may result in demands for new tax cuts and spending, which would increase ‘16 shortfall

5) Budget continues $632 M of temporary formula suspensions (Appendix A) and $1.2 B of “rollovers”

6) Arizona has one of the lowest state credit ratings

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FY ’14 – ’16 Budget Projections‐ $450 M Rainy Day Fund Available to Offset Shortfalls

$66 M$368 M$676 MBalance Forward

$(67) M$66 M$368 MEnding Balance

$9.4 B$9.1 B$8.7 BSpending

$9.2 B$8.8 B$8.4 BRevenues

‘16‘15‘14Baseline

$0 M$227 M$676 MBalance Forward

$(583) M$(411) M$227 MEnding Balance

$9.5 B$9.3 B$8.8 BSpending

$9.0 B$8.6 B$8.4 BRevenues

‘16‘15‘14Alternate

Budget ProcessBudget Process

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What Information Will Be Availableon the Upcoming Budget?

The Governor will release a budget proposal shortly after the Regular Session convenes

The JLBC will release an updated estimate of baseline shortfall under existing statutory formulas and technical adjustments

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State Mine Inspector

FY 2011

ACTUAL FY 2012

ESTIMATE FY 2013

BASELINE OPERATING BUDGET Full Time Equivalent Positions 14.0 14.0 14.0 Personal Services 430,200 446,900 446,900 Employee Related Expenditures 200,700 197,300 197,300 Professional and Outside Services 28,300 12,800 12,800 Travel - In State 64,200 89,000 89,000 Travel - Out of State 5,500 20,000 20,000 Other Operating Expenditures 155,900 225,000 225,000 Equipment 52,200 6,500 6,500 OPERATING SUBTOTAL 937,000 997,500 997,500

SPECIAL LINE ITEMS Abandoned Mines Safety Fund Deposit 167,600 188,300 188,300Aggregate Mined Land Reclamation 24,400 112,500 112,500 AGENCY TOTAL 1,129,000 1,298,300 1/ 1,298,300

FUND SOURCES General Fund 1,104,600 1,185,800 1,185,800Other Appropriated Funds Aggregate Mining Reclamation Fund 24,400 112,500 112,500 SUBTOTAL - Other Appropriated Funds 24,400 112,500 112,500 SUBTOTAL - Appropriated Funds 1,129,000 1,298,300 1,298,300

Other Non-Appropriated Funds 15,300 169,000 169,000Federal Funds 439,700 283,200 283,200TOTAL - ALL SOURCES 1,584,000 1,750,500 1,750,500

AGENCY DESCRIPTION — The State Mine Inspector is an elected constitutional officer. The office inspects the health conditions and safety of mining operations, investigates mining accidents, identifies abandoned mines, and conducts safety certification classes for mine employees. Operating Budget The Baseline includes $997,500 and 14 FTE Positions from the General Fund in FY 2013 for the operating budget. These amounts are unchanged from FY 2012. Abandoned Mines Safety Fund Deposit The Baseline includes $188,300 from the General Fund in FY 2013 for the Abandoned Mines Safety Fund Deposit Special Line Item. This amount is unchanged from FY 2012. Monies in this line item are used to pay contractors for costs to fill, plug, or fence abandoned mines. These monies are also used to pay administrative salaries and other costs. In addition to General Fund appropriations, deposits can be made into the Abandoned Mines Safety Fund from sources such as intergovernmental agreements and donations.

Aggregate Mined Land Reclamation The Baseline includes $112,500 from the Aggregate Mining Reclamation Fund in FY 2013 for the Aggregate Mined Land Reclamation Special Line Item. This amount is unchanged from FY 2012. Monies in this line item are used to review legally required plans to reclaim land damaged by aggregated mining and ensure compliance with those plans. Aggregate mining is a process whereby earth moving equipment is used to mine an area close to the surface for crushed rock or stone, granite, and sand. Aggregate Mining Reclamation Fund revenues come from fees paid by owners or operators of aggregate mining sites upon submitting a reclamation plan.

* * *

FORMAT — Operating Lump Sum with Special Line Items by Agency

FOOTNOTES Standard Footnotes All Aggregate Mining Reclamation Fund receipts received by the State Mine Inspector in excess of $112,500 in FY 2013 are appropriated to the Aggregate Mined Land Reclamation line item. Before the expenditure of any Aggregate Mining Reclamation Fund receipts in excess of $112,500 in FY 2013, the State Mine Inspector shall report the intended use of the monies to the Joint Legislative Budget Committee.

SUMMARY OF FUNDS FY 2011 Actual

FY 2012 Estimate

Abandoned Mines Safety (MIA2408/A.R.S. § 27-131) Non-Appropriated

Source of Revenue: Gifts, grants and contributions. The Legislature may appropriate matching monies. Purpose of Fund: To locate, inventory, classify and eliminate public safety hazards at abandoned mines. Funds Expended 15,300 169,000 Year-End Fund Balance 169,000 0 Aggregate Mining Reclamation Fund (MIA2511/A.R.S. § 27-1233) Appropriated

Source of Revenue: Fees collected from exploration and aggregate mining operations. Purpose of Fund: To review aggregate mined land reclamation plans and to enforce compliance with the plans. Funds Expended 24,400 112,500 Year-End Fund Balance 146,900 72,300 Federal Education and Training Fund (MIA2400/A.R.S. § 27-123) Non-Appropriated

Source of Revenue: Fees for education and training of mine employees required under federal regulation. Purpose of Fund: To provide mine safety training to mine employees in Arizona. All mine employees are required under federal regulations to receive initial and annual refresher safety training. Funds Expended 58,500 53,900 Year-End Fund Balance 30,100 29,300 Federal Grants (MIA2000/A.R.S. § 27-105) Non-Appropriated

Source of Revenue: Federal grants from the U.S. Department of Labor, Mine Safety and Health Administration and the Department of Interior, Bureau of Land Management (BLM). Purpose of Fund: To provide mine safety training to mine employees in Arizona. All mine employees are required under federal regulations to receive initial and annual refresher safety training. The state provides a 20% in-kind match. The BLM grant is for an inventory of abandoned mines on BLM lands. Funds Expended 381,200 229,300 Year-End Fund Balance 9,800 59,200 IGA and ISA Fund (MIA2500/A.R.S. § 35-142) Non-Appropriated

Source of Revenue: Monies received through agreements with other state agencies. Purpose of Fund: To aid state agencies in securing abandoned mines on their properties. Funds Expended 0 0 Year-End Fund Balance 0 0

JLBC Baseline Provides Line Item Detail on Individual Agencies

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What Does A Budget Adoption Include?

Number of personnel

Funding level by year

Budget format – detailed lines or lump sum

Footnotes – sets conditions on spending or requires reports

Statutory changes if related to budget (BRB’s –Budget Reconciliation Bills)

JLBC – Member and Staff Role

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What is the Joint LegislativeBudget Committee?

8 members from each house

Chairmanship rotates between 2 Appropriations Committee Chairmen

Committee has 177 statutory responsibilities

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

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What is the JLBC Staff Role?

21‐person non‐partisan staff that provides assistance on fiscal issues• Includes analysts assigned to review the budgets of over 

100 state agencies

• Includes economists responsible for revenue forecasts

Develops baseline estimates released at beginning of session

Provides briefing materials and analysis for JLBC and JCCR committees

Responds to information requests from all legislators

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JLBC Staff Develops Cost Estimates of Bills

Fiscal Note

BILL # HB 2711 TITLE: tax incentives; biodiesel; ethanol 85

SPONSOR: Boone STATUS: As Amended by House ENV

PREPARED BY: Tim Everill

FISCAL ANALYSIS Description The strike everything amendment to this bill provides that after January 1, 2007, real and personal property and improvements used specifically to produce ethanol or 100% biodiesel fuels are to be classified as Class 6 property for property tax purposes rather than Class 1. Estimated Impact The bill would not have a fiscal impact relative to the current revenue base as there are no existing biodiesel or ethanol fuel production facilities in the state. There is a facility being constructed so the bill would result in future foregone increases in net assessed value (NAV). The foregone increases in NAV would have reduced the state’s K-12 education formula cost. Analysis As noted above, there are currently no biodiesel or ethanol fuel production facilities located in the state. However, construction has begun on an ethanol fuel production facility located near the city of Maricopa. The plant’s owner indicates that the plant will cost approximately $62 million to build, and that construction will be completed by February 2007. Based on the construction schedule, the plant would enter the property tax rolls in TY 2009, providing an increase in statewide NAV. However, assuming that under current statute, biodiesel or ethanol fuel production facilities would be classified as Class 1 (commercial) property, this bill would result in less of an increase in statewide NAV in TY 2009, as Class 1 property would be assessed at 23% of its full cash value in TY 2009, and Class 6 property is assessed at 5%. The dollar impact of the reduced assessment ratio for this property on FY 2010 property tax revenue cannot be determined. It is difficult to estimate the assessed value of commercial property based on the initial construction cost of the facility. While this bill may result in some foregone increase in statewide NAV, it should be noted that the provisions of this bill may provide an incentive for further construction and expansion of biodiesel and ethanol production facilities in the state, resulting in further increases in NAV. Local Government Impact This bill would result in foregone property tax revenues for local governments in FY 2010 and beyond.

11/23/10

Cost estimates are known as “Fiscal Notes”

Members can request a note on their own bills or other members’bills

Goal is a 18‐day turnaround

PREPARED BY: Tim Everill

STATUS: As Amended by House ENVSPONSOR: Boone

TITLE: tax incentives; biodiesel; ethanol 85BILL # HB 2711

FISCAL ANALYSIS

DescriptionThe strike everything amendment to this bill provides that after January 1, 2007, real and personal property and improvements used specifically to produce ethanol or 100% biodiesel fuels are to be classified as Class 6 property for property tax purposes rather than Class 1.

Estimated ImpactThe bill would not have a fiscal impact relative to the current revenue base as there are no existing biodiesel or ethanol fuel production facilities in the state.  There is a facility being constructed so the bill would result in future foregone increases in net assessed value (NAV).  The foregone increases in NAV would have reduced the state’s K‐12 education formula cost.

AnalysisAs noted above, there are currently no biodiesel or ethanol fuel production facilities located in the state.  However, construction has begun on an ethanol fuel production facility located near the city of Maricopa.  The plant’s owner indicates that the plant will cost approximately $62 million to build, and that construction will be completed by February 2007.

Based on the construction schedule, the plant would enter the property tax rolls in TY 2009, providing an increase in statewide NAV.  However, assuming that under current statute, biodiesel or ethanol fuel production facilities would be classified as Class 1 (commercial) property, this bill would result in less of an increase in statewide NAV in TY 2009, as Class 1 property would be assessed at 23% of its full cash value in TY 2009, and Class 6 property is assessed at 5%.  The dollar impact of the reduced assessment ratio for this property on FY 2010 property tax revenue cannot be determined.  It is difficult to estimate the assessed value of commercial property based on the initial construction cost of the facility.

While this bill may result in some foregone increase in statewide NAV, it should be noted that the provisions of this bill may provide an incentive for further construction and expansion of biodiesel and ethanol production facilities in the state, resulting in further increases in NAV.

Local Government ImpactThis bill would result in foregone property tax revenues for local governments in FY 2010 and beyond

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JLBC Staff Updates Members Monthly on Fiscal Issues

Publishes Monthly Fiscal Highlights with updates on general budget issues, revenue collections,  spending, and state agency reports

JLBC - Monthly Fiscal Highlights November 2012

Summary

Table of Contents

1716 W. Adams Phoenix, AZ 85007 Phone: (602) 926-5491 Fax: (602) 926-5416

www.azleg.gov/jlbc.htm

This report has been prepared for the Arizona Legislature by the Joint Legislative Budget Committee Staff on November 20, 2012.

October General Fund revenue collections totaled $662.7 million. Excluding one-time revenue adjustments, October collections were 2.6% above the prior year. The growth in October revenues was largely the result of the growth of Individual Income Taxes. This category grew by 5% compared to the prior year, due mostly to technical timing issues related to withholding collections. The number of work days in a given month can have a significant impact on receipts. In terms of the current month, October 2012 had 2 more of these processing days than in 2011, which artificially increased collections. October General Fund collections were $11.7 million above the enacted May budget forecast. Year-to-date, revenues are 3.1% higher than last year and are $2.3 million above the budget forecast. The two best "real-time" measures of Arizona revenues are sales tax collections and income tax withholding. They both reflect the current sluggish, slow-growth nature of the Arizona economy. For first one-third of the fiscal year,

sales tax collections are up 3.7% and withholding has increased 4.0%. In comparison to revenue of $662.7 million, October 2012 General Fund spending was $500.7 million, or $42 million above last year. October expenditures were greater than last year primarily due to Department of Education spending and increased payroll costs caused by: 1) An additional pay period in the month and 2) The employee retention payments which began in October 2012. Fiscal year-to-date, General Fund revenues of $3.0 billion have been offset by $4.3 billion in spending. The state’s fiscal health can also be measured by the operating fund balance. The state pays its bills out of the operating fund balance, which consists of the General Fund and certain dedicated funds. As of mid-November 2012, the operating balance is $1.2 billion. In addition, the state has $451.5 million in Budget Stabilization Fund reserves, which represents an original $450 million deposited as part of the FY 2013 budget plus $1.5 million of interest earned.

“Year-to-date,

revenues are

3.1% higher than

last year and are

$2.3 million

above the

budget

forecast.” Summary.................................................................. 1

October Revenues ................................................. 2

Economic Indicators.............................................. 4

Summary of Recent Agency Reports

• ADOA – Management Software Report ........ 7

• AHCCCS – Immigration Status.......................... 7

• ACA – Arizona Competes Fund Report.......... 7

• DES – TANF Diversion Report ............................. 7

• ADE – Budget Status Report ..............................7

• ADE – K-12 Expenditure Limit Report................7

• DHS – Arnold v. Sarn Report ..............................7

• JLBC – County Flexible Revenue Report.........8

• Supreme Court – Automation Projects ...........8

October Spending ..................................................9

Tracking Arizona’s Recovery ............ Appendix A

GlossaryGlossary

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GLOSSARY OF TERMS

ADMAverage daily membership, a method of counting K‐12 students which adjust for absences and withdrawals.

AppropriationMoney that is budgeted for a state agency or program.

ASRSThe Arizona State Retirement System, of which most state employees are members.

BRBBudget Reconciliation bill, it is commonly pronounced as “burb”.  These series of bills include statutory changes necessary to enact the budget.  They do not typically include appropriations.

Ending BalanceThe amount of money a budget leaves unspent.

ERE – Employee related expenditures.  This represents the state’s share of the cost of employee benefits (i.e., health, life anddental).

ExecutiveRefers to the governor. (Usage: “The Executive budget was released.”)

Feed BillThe general appropriations bill provides the annual funding level for each state agency in a single bill.

Fiscal NoteThe JLBC Staff’s estimate of the fiscal impact of a bill. (Usage: “Does this bill have a fiscal note?”)

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Fiscal YearThe state budget year, which runs from July 1 to June 30.

Footnote – Narrative statements in the General Appropriation Act that establish conditions for expenditures, reporting requirements, and legislative intent.

Formula SpendingFunding levels for state programs that are mandated by voter‐approved ballot measures or other state law.  These formulas define eligibility for a program and may also determine the spending per person.

FTE PositionsState employment is measured by Full‐Time Equivalent (FTE) Positions.

FTSEPronounced “footsie”, it stands for full‐time student equivalent.  Community college enrollment is measured by FTSE’s.

General FundThe portion of state revenues that are not dedicated for a specific purpose.  The money primarily comes from sales, individual income and corporate income tax.

HURFHighway User Revenue Fund, which is used primarily for state transportation projects.  The money primarily comes from gas taxes and license fees.

JLBCMay reference two entities, either the Joint Legislative Budget Committee itself, or the committee staff.  The JLBC is a 16 member committee responsible for oversight of all facets of the state budget.  Non‐partisan JLBC staff members assist the committee in fulfilling its duties.

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JCCRJoint Committee on Capital Review is a 14 member committee responsible for oversight of capital projects.  The JLBC Staff also provides support to this committee.

Line‐item VetoA veto that strikes only an appropriation but allows the remainder of the bill to become law.

Lump SumAn appropriation format where an agency is given a single amount of funding, which it can spend across line items without further legislative review.

Matching fundsMoney given to the state by the federal government contingent upon state funding for a program.  (Usage: “The state receives three‐to‐one matching funds for this appropriation.”)

One‐timeRefers either to revenues or expenditures, and denotes budget items that will only have an impact for one fiscal year.

OngoingRefers either to revenues or expenditures.  Ongoing items – sometimes called permanent – are expected to impact budgets for several years, if not indefinitely.

OSPBThe Governor’s Office of Strategic Planning and Budgeting.

Prop 105Proposition 105 was an initiative passed by voters in 1998.  The Legislature may only modify voter‐approved ballot measures if it furthers the purpose of the initiative and 75% of each house approves the change.

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Prop 108Proposition 108 was an initiative passed by voters in 1992.  It requires a two‐thirds vote in both chambers to approve any legislation that increases state revenues.

Rainy Day FundTechnically called the Budget Stabilization Fund, it is essentially the state’s savings account.  Statute limits the balance of the fund to 7 percent of total General Fund Revenues

SLISpecial Line Item, which delineates funds apart from normal agency operating expenditures for monies involved with programs that provide benefits to individuals or contracted services.

Structural ShortfallWhen the state budget has more permanent spending than permanent revenue in a given year. (Usage: “Funding that program will create a structural shortfall in three years”)

SupplementalAn appropriation that adds funding to an agency’s existing current fiscal year budget.  (Usage: “The Legislature approved a supplemental for the Department of Corrections.”)

Title 19Refers to the title of the federal legislation that authorizes Medicaid, indigent health services.

TriggerA spending provision in the budget that will not occur unless revenues reach a specified level.

90/10 – Pronounced “ninety‐ten”, it is a regulatory board funded by user fees, with 90 percent of revenues retained by the board and 10 percent being transferred to the General Fund.

Source: Arizona Capitol Times and JLBC Staff

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Appendix: Funding Formula Suspensions

$912,600Restoration to CompetencyDepartment of Health Services$2,670,300SVP

$125,210,700Subtotal

$15,656,000Charter School Additional Assistance$50,864,800Capital Outlay Revenue Limit (CORL)

$97,630,700

$27,580,000

$632,342,700

$100,000,000

$532,342,7006,106,400

$260,141,900

$8,000,000$1,100,000$4,849,100

$158,120,700$23,920,900

FY 2013 Cost         If Funded

Statutory Funding Formula Suspensions*

Building RenewalUniversities

* Excludes AHCCCS suspensions.

Building RenewalDepartment of AdministrationNon‐Statutory Formula Suspensions

Total

New School Construction (If enrollment returns to pre‐recession level)

Future Year Cost – School Facilities Board

SubtotalFinancial Aid TrustUniversitiesBuilding RenewalSchool Facilities Board

WQARFDepartment of Environmental QualityGovernor’s Emergency FundDepartment of Emergency & Military AffairsFund JTEDs at 91%

Soft‐Capital FormulaDepartment of EducationCapital State Aid SuspensionCommunity College

FormulaAgency