State of Arizona budget briefing materials for the fiscal year ...

              STATE OF ARIZONA
Janet Napolitano, Governor
Budget Briefing Materials
Fiscal Year 2006
January 2005
1. Historical Perspective – Governor Napolitano’s Fiscal Management
2. Guiding Principles
3. Sources and Uses of Funds
• Current Sources and Uses
4. The Economy and Revenue Estimates
• Economic Indicators
• Revenue Estimating Process
• General Fund Revenue Estimates Proposed
5. Efficiency Review Results
6. Expenditure Increase Description
7. Financing Strategies
8. Executive Initiatives
Section 1
Historical Perspective – Governor Napolitano’s Fiscal Management
1-2
Budget Stabilization Fund Balance
$13.1
$165.0
0
40
80
120
160
200
January 2003 FY 2005 Estimate
Millions $
1-3
General Fund Balance
-309.5
1.0
-967.0
143.8
360.4
-1200
-1000
-800
-600
-400
-200
0
200
400
600
Actual FY 03 Estimate FY 2003 Estimate FY 2004 Actual FY 2004 Estimated FY 2005
Millions $
1-4
Compound Annual Percent Change of GF Operating Appropriations in the First Three Years
7.57
5.03 5.07
0
1
2
3
4
5
6
7
8
Governor Symington Governor Hull Governor Napolitano
Percent
1-5
Compound Average Percentage Per Capita Growth in General Fund Operating Appropriations
2.69
4.75
1.46
0
1
2
3
4
5
Governor Symington Governor Hull Governor Napolitano
Percent
First 3 years in Office
1-6
General Fund Operating Appropriations as a Percent of Total Arizona Personal Income - 3
Year Average
4.81
5.25
4.26
0
1
2
3
4
5
6
Governor Symington Governor Hull Governor Napolitano
Percent
First 3 years in Office
1-7
Populations Served by Government Services
936.4
1,050.1
907.0
956.1
100.3
30.0 108.0
32.6
0
500
1,000
1,500
2,000
2,500
FY 2003 FY 2005 Est.
Thousands of People
AHCCCS K-12 Universities Prisons
Total = 1,973,694 Total = 2,146,760
Conclusion:
The General Fund budget is estimated to only increase by 4.92% above the
original FY 2003 budget; but the populations served have outpaced the growth of
the budget.
Net Increase in Caseload and Enrollment Populations
FY 2005 2,146,760
FY 2003 1,973,694
173,066
An increase of 8.77%
To put this in perspective, the original FY 2003 GF operating budget was $7.04 billion. The FY 2005 GF operating appropriation is $7.38 billion.
This is only 4.92% higher than the original FY 2003 general fund appropriated budget. Let’s look at some indicators of government services.
1-8
Arizona Compares favorably to other states in its level of State debt.
Moody's April 2004 publication ranked Arizona:
• 30th in the nation in net tax-supported debt per capita
• The mean per capita debt of the 50 states was $944 compared to Arizona's $591
• 27th in the nation in debt as a % of personal income
• The mean percent of personal income of the 50 states was 3.1% compared to Arizona's 2.3% of personal income
Net Tax-Supported Debt Per Capita
Rating
1 Connecticut $3,558 Aa3 1 Hawaii 10.4%
2 Massachusetts $3,333 Aa2 2 Massachusetts 8.5%
3 Hawaii $3,101 Aa3 3 Connecticut 8.4%
4 New York $2,420 A2 4 New York 6.7%
5 New Jersey $2,332 Aa2 5 New Jersey 5.9%
6 llinois $1,943 Aa3 6 llinois 5.8%
7 Delaware $1,800 Aaa 7 Delaware 5.6%
8 Washington $1,580 Aa1 8 Mississippi 5.2%
9 Rhode Island $1,385 Aa3 9 Washington 4.9%
10 Wisconsin $1,325 Aa3 10 Oregon 4.5%
11 Oregon $1,281 Aa3 11 Wisconsin 4.5%
12 Mississippi $1,169 Aa3 12 Rhode Island 4.4%
13 Kentucky $1,119 Aa2 * 13 Kentucky 4.4%
14 Maryland $1,077 Aaa 14 New Mexico 4.1%
15 California $1,060 Baa1 15 West Virginia 3.6%
16 Florida $1,023 Aa2 16 Utah 3.5%
17 Kansas $963 Aa1 * 17 Florida 3.5%
18 New Mexico $962 Aa1 18 Kansas 3.3%
19 Alaska $962 Aa2 19 California 3.2%
20 West Virginia $859 Aa3 20 Alaska 3.0%
21 Utah $846 Aaa 21 Maryland 3.0%
22 Georgia $827 Aaa 22 Georgia 2.9%
23 Ohio $806 Aa1 23 Ohio 2.7%
24 Vermont $724 Aa1 24 Louisiana 2.6%
25 Pennsylvania $711 Aa2 25 Vermont 2.5%
26 Minnesota $691 Aa1 26 South Carolina 2.4%
27 Michigan $670 Aa1 27 Arizona 2.3%
28 Louisiana $661 A1 28 Pennsylvania 2.2%
29 South Carolina $599 Aaa 29 Michigan 2.2%
30 Arizona $591 NGO ** 30 Minnesota 2.0%
31 Nevada $590 Aa2 31 North Carolina 2.0%
32 North Carolina $556 Aa1 32 Nevada 2.0%
33 Virginia $546 Aaa 33 Alabama 2.0%
34 Alabama $505 Aa3 34 Arkansas 1.8%
35 New Hampshire $496 Aa2 35 Maine 1.8%
36 Maine $492 Aa2 36 Virginia 1.7%
37 Missouri $461 Aaa 37 Missouri 1.6%
38 Arkansas $420 Aa2 38 New Hampshire 1.5%
39 Indiana $361 Aa1 * 39 Indiana 1.3%
40 Oklahoma $315 Aa3 40 Montana 1.3%
41 Montana $311 Aa3 41 Oklahoma 1.2%
42 Colorado $307 NGO ** 42 South Dakota 0.9%
43 South Dakota $254 NGO ** 43 Colorado 0.9%
44 Wyoming $250 NGO ** 44 North Dakota 0.9%
45 North Dakota $235 Aa3 * 45 Wyoming 0.8%
46 Texas $220 Aa1 46 Tennessee 0.8%
47 Tennessee $220 Aa2 47 Texas 0.8%
48 Iowa $139 Aa1 * 48 Iowa 0.5%
49 Idaho $115 Aa3 49 Idaho 0.5%
50 Nebraska $43 NGO ** 50 Nebraska 0.1%
MEAN: $944 MEAN: 3.1%
MEDIAN: $701 MEDIAN: 2.4%
Puerto Rico $5,558 Baa1 Puerto Rico 51.2% ***
* Issuer Rating (No G.O. Debt)
** No general Obligation Debt
*** ***
Puerto Rico population is 2003 estimate. Puerto Rico population is 2003 estimate.
944.28 0.03052
This figure is not included in any total,
average, or median calculations but is
provided for comparison purposes only.
This figure is not included in any total,
average, or median calculations but is
provided for comparison purposes only.
Net Tax-Supported Debt
as a % of 2002 Personal Income
1-9
Source: Moody's Investors Service
2004 State Debt Medians
April 2004
1-10
After Governor Napolitano's fiscal team met with both major credit rating agencies in January 2004, they improved
Arizona's ratings as follows:
Debt Ratings
Rating Service/ Prior to Meetings After Meetings
Debt Type 2003 2004
Moody's
Certificates of Participation A1 Negative Outlook A1 Stable Outlook
State Issuer Credit No Rating Aa3 Stable Outlook
S & P
Certificates of Participation AA Negative Outlook AA Stable Outlook
State Issuer Credit No Rating AA Stable Outlook
Section 2
Guiding Principles
2-1
GUIDING PRINCIPLES FOR THE FY 2006 BUDGET
1. Construct a fiscally responsible balanced budget that does not raise taxes.
2. Develop a budget that reflects a commitment to education, strengthening families, economic development, and
natural resources.
3. With few exceptions, limit operating budgets to enrollment and caseload growth.
4. With the recovering economy, recognize that investments in human capital are necessary to equip our children
to compete in their chosen occupation in the twenty-first century knowledge-based economy.
5. Develop a budget that reflects the enhanced performance and efficiency of State agencies, and that
encourages agencies to reduce costs while maintaining or enhancing services
Section 3
Sources and Uses of Funds
STATE OF ARIZONA
SOURCES AND USES OF FUNDS
GENERAL FUND
( In Thousands)
FY2005 FY2006
FY2004 Executive Executive
Actuals Recommendation Recommendation
SOURCES OF FUNDS
Balance Forward 192,185.0 360,388.9 143,819.4
Base Revenues 6,827,599.8 7,698,019.4 8,078,740.0
Urban Revenue Sharing (365,065.0) (373,074.2) (417,315.3)
Adjusted Revenues 6,462,534.8 7,324,945.2 7,661,424.7
Enacted Fund Transfers 54,500.0 35,234.5 0.0
Qwest Settlement 9,047.0 0.0 0.0
Tax Amnesty Revenues 65,253.1 0.0 0.0
Federal Cash Assistance 87,265.9 0.0 0.0
Judicial Collections 5,389.3 2,106.7 0.0
VLT Transfer 118,000.0 0.0
Proposed Fund Transfers 25,000.0
DOR Revenue Generating Program 11,398.3
Lottery Revenues Distribution Change 3,000.0
TOTAL SOURCES OF FUNDS 6,876,175.1 7,840,675.3 7,844,642.4
USES OF FUNDS
Operating Budgets 6,537,900.9 7,208,016.8 7,795,559.3
Operating Budget Supplementals 91,728.0 0.0
Voluntary Full Day Kindergarten 0.0 16,900.0
Ladewig Settlement /1 134,280.4 0.0
Deficiency Corrections 100,000.0 0.0
School Building Maintenance & Renovation /2 70,000.0 0.0
Military Base Preservation 5,000.0 5,000.0
Employer Related Expense Increases 0.0 30,758.5
Employee Health Insurance 0.0 18,045.6
Transfer to Budget Stabilization Fund 165,000.0 0.0
Employee Retirement Adjustment 0.0 24,155.9
Federal Revenue Maximization 0.0 (16,100.0) (25,000.0)
Total Operating Budgets 6,537,900.9 7,757,925.2 7,865,419.3
Capital Outlay Appropriations 0.0 0.0 0.0
Administrative Adjustments 38,692.7 23,000.0 23,000.0
Revertments (60,807.4) (84,069.3) (51,169.3)
USES OF FUNDS 6,515,786.2 7,696,855.9 7,837,250.0
ENDING BALANCE 360,388.9 143,819.4 7,392.4
TOTAL USES OF FUNDS 6,876,175.1 7,840,675.3 7,844,642.4
/1 The FY2006 Executive Recommendation presumes the financing of the FY2006 Ladewig payment.
/2 The FY2006 Executive proposes establishing conditional appropriations of $70.7million for School Building Maintenance & Renovation,
and $22.0 million for funding provided by Maricopa County for adult probation.
3-1
Section 4
The Economy and Revenue Estimates
4-1
Economic Indicators – Calendar Years 2004 and 2005
I. National – Positive
• Current year (2004) real GDP growth exceeds 4%; slowing to still-respectable 3.5% GDP growth for 2005
• Productivity growth has been strong-US firms competitive and ready to hire
• On top of 2.2 million new jobs in 2004, employment should grow by 1.7% in 2005
• Inflation should stay under control-firms are confident the Federal Reserve’s determination to control inflation
• Interest rates, though rising slightly, stay relatively low-benefits home buyers; commercial properties
• Business spending rises driven by need to replace Y2K computer equipment
• Consumer spending will grow modestly in 2005
• Falling dollar increases foreign tourism to US
• Possibility that exports will gain on imports – lower trade deficit
II National – Risks
• Uncertainty about terrorism – business investment could drop after another large-scale incident
• Weak economies of trading partners; imports of US goods may not increase as expected despite boost from weaker dollar
• Weak dollar could trigger pullout of foreign money from US investments-leads to rapid interest rate growth-weakens US economy
III Arizona – Positive
• Population growth of 2.8% in 2004 will be sustained in 2005; immigration/inflows still strong
• Employment growth of 2.6% in 2004 will continue to accelerate to about 3.4% in 2005; does well in comparison to rest of nation
• Personal income growth of 6.9% in 2004 will benefit from improving employment picture and will grow to 7.4% in 2005
• Tourism benefits from increased business spending and weak dollar
• Arizona exports its goods and services mostly to Asia, which is performing better than Europe
• Commercial real estate ready to take off after weakness due to recession and weak recovery
IV Arizona - Risks
• U.S. economy will underperform vs. expectations
• Falling home affordability and interest rate increases could lead to dropoff in residential home demand-hurts construction sector
• Weaknesses of trading partners – reduce imports especially computers and software where Arizona is weighted
Executive Branch
Revenue Estimating Process
Active Participants
• ASU College of Business
• Department of Economic Security
• Department of Revenue
• OSPB
General Parameters/Process
• Agree on a set of economic inputs (e.g., GDP, Personal Income, Employment)
• Each participant runs inputs through their own models
• Different models give different results
• Round table discussion
- National Economy
- Arizona Economy
- Sales (Transaction Privilege) Tax
- Individual Income Tax
- Corporate Income Tax
• No directed ranges or parameters
• Total independence in forecasting
Blending of the Forecasts
• OSPB Staff blends forecasts and derives recommended position
• Ultimate forecast may not represent any one participant’s position
Other Revenue Categories
• Dependent upon discussions with the analysts inside administering agencies
• Example: Department of Insurance projections for Insurance Premium Tax
4-2
FY2005 and FY 2006 Revenue Forecasts
General Fund
(Dollars in Millions)
(1) (2) (3) (4) (5) (6) (7)
Prelim FY04 Actual Budget Current Current Est. FY05 Current Current Est. FY06
Actuals % Change from Basis (Dec-04) Est. % Change from Est. % Change from
FY04 FY03 Act. FY 2005 FY 2005 FY04 FY 2006 Current FY 05
Individual Income $2,306.1 9.8% $2,455.8 $2,656.0 15.2% * $2,834.0 6.7% *
Corporate Income 476.0 22.2% 525.0 670.0 ** 40.8% 630.0 -6.0%
General Property 40.9 21.6 28.1 27.7
Sales (TPT) 3,294.8 8.6% 3,501.4 3,589.0 8.9% 3,865.0 7.7%
Luxury 61.1 65.0 65.0 60.0
Insurance Premium 307.2 354.5 347.0 362.6
Estate 38.8 20.1 40.0 0.0
Other 1.4 10.4 1.4 0.6
TOTAL TAXES $6,526.4 9.8% $6,953.7 $7,396.5 13.3% $7,779.9 5.2%
NON-TAX REVENUES
LF & P, SS, Misc and Alt Fuels $113.2 $111.9 $111.9 $126.0
Interest 12.2 13.2 22.2 25.0
Lottery 31.7 31.0 31.0 31.0
Transfers & Reimbursements 10.9 24.9 24.9 25.0
TOTAL NON-TAX REVENUES $168.0 $181.0 $190.0 $207.0
TAX AND NON-TAX REVENUES $6,694.4 9.6% $7,134.8 $7,586.6 13.3% $7,986.9 5.3%
Disproportionate Share $133.2 $111.4 $111.4 $91.8
BASE REVENUES $6,827.6 9.6% $7,246.2 $7,698.0 12.7% $8,078.7 4.9%
URS ($365.1) ($373.1) ($373.1) ($417.3)
NET BASE REVENUES 6,462.5 11.4% 6,873.1 7,324.9 13.3% 7,661.4 4.6%
FY04 Amnesty-Ongoing 4 .0
TOTAL ONGOING REVENUES 6,462.5 11.4% 6,877.1 7,324.9 13.3% 7,661.4 4.6%
FY05 Legislated Changes-One-time+ 221.5 238.1 155.3 0.0
TOTAL ALL REVENUES 6,684.0 7.2% 7,115.2 7,480.3 11.9% 7,661.4 2.4%
Column Calculation: (1)/FY03 Actual (4)/(1) (6)/(4)
+Budget Basis FY05 includes $76 million withholding fix, $44.1 million fund transfers, and $118 million VLT transfer. Current FY05 lowers fund
transfers by $6.4 million to reflect reduced estimated revenues from judicial collections and shifts $76 million for the withholding fix to Individual Income Tax.
*Without the $76 million withholding fix in Individual Income Tax, the IIT forecast increases by 11.9% in FY05 and 9.8% in FY06.
**Current Corporate FY05 estimate includes $4.0 million of ongoing Tax Amnesty revenues
1/12/2005
10:42 AM
Revenue Estimates-FY05 and FY06.xls
4-3
General Fund Revenues
Net of URS
with January 2005 Projections
(Dollars in Millions)
4-4
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY 1985
FY 1986
FY 1987
FY 1988
FY 1989
FY 1990
FY 1991
FY 1992
FY 1993
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
FY 2002
FY 2003
FY 2004
FY 2005 Est.
FY 2006 Est.
millions $
5,801.0
6,462.5
7,324.9
7,661.4
4-5
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500 FY 1985
FY 1986
FY 1987
FY 1988
FY 1989
FY 1990
FY 1991
FY 1992
FY 1993
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
FY 2002
FY 2003
FY 2004
FY 2005 Est.
FY 2006 Est.
($ Millions)
FY 05 15.2%*
FY 06 6.7%
Individual Income Tax Revenues
2,099.7
2,306.1
2,656.0
*excluding the $76 million withholding fix, the FY05 growth rate is 11.9% and FY06 growth is 9.8%
2,834.0
4-6
$0
$100
$200
$300
$400
$500
$600
$700 FY 1985
FY 1986
FY 1987
FY 1988
FY 1989
FY 1990
FY 1991
FY 1992
FY 1993
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
FY 2002
FY 2003
FY 2004
FY 2005 Est.
FY 2006 Est.
($ Millions)
FY 05 40.8%
FY 06 -6.0%
Corporate Income Tax Revenues
389.4
670.0
476.0
630.0
4-7
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
FY 1985
FY 1986
FY 1987
FY 1988
FY 1989
FY 1990
FY 1991
FY 1992
FY 1993
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
FY 2002
FY 2003
FY 2004
FY 2005 Est.
FY 2006 Est.
($ Millions)
FY 05 8.9%
FY 06 7.7%
Transaction Privilege and Use Tax Revenues
3,033.9
3,294.8
3,589.0
3,865.0
Comparison-JLBC and OSPB Revenue Forecasts vs Actual Revenues 1/12/2005
JLBC
Forecast
OSPB
Forecast
Actual/FY05
Consensus
Difference
Actual-JLBC
Difference
Actual-OSPB
Pct Diff.
Actual-
JLBC
Pct Diff.
Actual-
OSPB
FY 2003* 5,521.8 5 ,676.3 5,801.0 279.2 124.7 5.1% 2.2%
FY 2004* 5,585.4 5 ,889.6 6,462.5 877.1 572.9 15.7% 9.7%
FY 2005** 6,739.9 6 ,757.3 6,877.1 137.2 119.8 2.0% 1.8%
*Source: JLBC Chairman's and OSPB FY04 budget recommendations; Actual-GAO Annual
Financial Report, modified for OSPB format
**Source: JLBC and OSPB from FY05 budget recommendations; Actual-Agreed forecast from FY05
Appropriations Report
4-8
Section 5
Efficiency Review Results
FY 2006 Efficiency Review Initiatives
ALL FUNDS
All figures in thousands of dollars
Efficiency
Initiative
Savings
Statewide Initiatives
Energy Conservation ............................................................................................................................................... 714.0
Fleet Consolidation ...............................................................................................................................................6,381.4
Leasing/Space Utilization.......................................................................................................................................1,543.0
Statewide E-Procurement.....................................................................................................................................45,000.0
Employee Benefits ..............................................................................................................................................25,000.0
Total for Statewide Initiatives 78,638.4
Agency Request Agency Request Efficiency
Prior to Efficiency Post Efficiency Initiative
Initiatives Initiatives Savings
Agency Initiatives
Arizona Department of Administration................................. 749,439.2 ............................. 749,414.3 .............................24.9
Arizona Department of Agriculture ........................................ 24,352.2 ............................... 24,148.9 ........................... 203.3
Automobile Theft Authority ....................................................4,582.1 .................................4,550.1 .............................32.0
Board of Behavioral Health Examiners .....................................1,374.3 .................................1,373.3 .............................. 1.0
Department of Commerce..................................................... 38,013.6 ............................... 37,963.5 .............................50.1
Department of Corrections.................................................. 910,297.9 ............................. 900,453.0 .........................9,844.9
Department of Economic Security .....................................3,199,924.3 ...........................3,181,640.6 .......................18,283.7
Department of Emergency Services and Military Affairs............ 77,549.1 ............................... 77,541.1 .............................. 8.0
Governor’s Office for Equal Opportunity ................................... 295.0 ................................... 288.9 .............................. 6.1
Arizona Game & Fish Department......................................... 71,569.0 ............................... 70,387.7 .........................1,181.3
Department of Gaming......................................................... 69,814.0 ............................... 69,742.2 .............................71.8
Arizona Health Care Cost Containment System ...................6,946,457.5 ...........................6,868,171.8 .......................78,285.7
Department of Health Services ..........................................1,620,374.3 ...........................1,613,972.1 .........................6,402.2
Arizona Department of Housing............................................ 92,656.0 ............................... 92,548.7 ........................... 107.3
Department of Insurance ...................................................... 26,355.4 ............................... 26,328.0 .............................27.4
Department of Juvenile Corrections ....................................... 84,590.8 ............................... 84,228.7 ........................... 362.1
State Land Department ......................................................... 35,259.5 ............................... 35,222.5 .............................37.0
Department of Liquor Licenses and Control..............................3,590.3 .................................3,576.5 .............................13.8
Arizona State Lottery Commission ....................................... 451,568.1 ............................. 451,561.1 .............................. 7.0
Department of Public Safety................................................ 228,548.6 ............................. 228,300.2 ........................... 248.4
Arizona Department of Racing ................................................4,967.2 .................................4,841.1 ........................... 126.1
Department of Real Estate ......................................................3,599.8 .................................3,599.3 .............................. 0.5
Registrar of Contractors ........................................................ 15,274.5 ............................... 15,194.2 .............................80.3
Residential Utility Consumer Office..........................................1,178.8 .................................1,168.2 .............................10.6
Department of Revenue........................................................ 68,346.3 ............................... 67,623.3 ........................... 723.0
School Facilities Board........................................................ 748,092.0 ............................. 747,950.6 ........................... 141.4
Office of Tourism................................................................ 31,942.3 ............................... 31,503.2 ........................... 439.1
Department of Transportation...........................................2,631,156.7 ...........................2,629,892.3 .........................1,264.4
Department of Veterans’ Services........................................... 15,150.2 ............................... 15,143.0 .............................. 7.2
Department of Water Resources ............................................ 36,457.0 ............................... 36,456.5 .............................. 0.5
Department of Weights and Measures.......................................2,874.0 .................................2,808.1 .............................65.9
Total for Agency Initiatives 18,195,650.0 18,077,593.0 118,057.0
Total for FY 2006 - All Initiatives for All Agencies and Statewide 196,695.4
5-1
Efficiency Review Initiatives - Five-Year Summary
ALL FUNDS
All figures in thousands of dollars
2004 Actual 2005 Est. 2006 Est. 2007 Est. 2008 Est. Total
Statewide Initiatives
Energy Conservation.................................... 224.2......... 365.0......... 714.0......... 714.0......... 714.0....... 2,731.2
Fleet Consolidation.........................................0.0............0.0....... 6,381.4....... 4,324.6....... 4,324.6...... 15,030.6
Leasing/Space Utilization..................................0.0....... 1,543.0....... 1,543.0....... 1,743.0....... 1,743.0....... 6,572.0
Statewide E-Procurement..................................0.0....... 1,200.0......45,000.0......45,000.0......45,000.0.....136,200.0
Employee Benefits .........................................0.0............0.0......25,000.0......48,000.0......59,000.0.....132,000.0
Total for Statewide Initiatives 224.2 3,108.0 78,638.4 99,781.6 110,781.6 292,533.8
Total for Agency-Specific Initiatives 34,553.8 78,175.5 118,057.0 143,282.3 174,360.6 548,429.2
Total for All Initiatives 34,778.0 81,283.5 196,695.4 243,063.9 285,142.2 840,963.0
5-2
EXAMPLES OF EFFICIENCY REVIEW SAVINGS
1. Value in Procurement. By consolidating the purchasing of materials used by all state
agencies, the state’s purchasing power can be brought to bear, resulting in lower
prices. Just recently, a contract was completed that requires all state agencies to
purchase office supplies from a common supplier.
FY 2005 Estimated Savings - $ 1-2 million
This project will be expanded into other areas such as Information Technology
procurement. We are anticipating FY 2006 savings of $ 45 million.
2. Self Insurance. Moving to a self-funded Employee Health Insurance Program is
expected to save the State $ 25 million in FY 2006.
3. Office of Tourism. By making better use of electronic communications and the Internet,
the Office of Tourism expects to save in mailing and printing costs when tourists seek
information about the State. Also, staffing in the Call Center can be redeployed to
other functions.
The Office of Tourism expects FY 2006 savings of $ 400,000 - $ 500,000 in FY 2006.
4. Department of Economic Security Use of Consultants. DES is requiring all new
contracts and contract amendments to be reviewed by the Chief Procurement Officer
for a determination as to whether a consultant is actually required. Further, all contracts
will include a “transfer of knowledge” requirement such that DES personnel will in most
cases be able to undertake these projects in the future without consultants.
FY 2005 Estimated Savings - $ 2.7 million
DES expects savings of $ 2.7 million in FY 2006 from using this approach.
5. Department of Juvenile Corrections. DJC is now ensuring that when a young person is
hospitalized, it draws down Title XIX funds to the extent possible.
FY 2005 Estimated Savings - $ 250,000
DJC expects FY 2006 savings of $ 362,100 due to this and other efficiencies.
6. Arizona Health Care Cost Containment System. AHCCCS is attempting to finalize a
contract that will allow its members to receive favorable pricing on a blood clotting drug
for those with bleeding disorders. A conservative estimate of the savings is 10%.
FY 2005 Estimated Savings - $ 1.5 million
AHCCCS expects FY 2006 savings of $ 1.7 million. 5-3
Section 6
Expenditure Increase Description
6-1
FY 2006 General Fund Executive Budget
Recommendation
AHCCCS
Corrections
Economic Security
Education
All Other
School Facilities Board
Community Colleges
Health Services
Universities and Regents
AHCCCS
Corrections
Economic Security
Education
School Facilities Board
Community Colleges
Health Services
Universities and Regents
All Other
$994,121.8
691,518.3
696,131.8
3,315,465.2
76,354.5
152,325.7
482,010.9
823,310.6
586,220.5
Total $7,817,459.3
These figures do not include estimated increases to health insurance costs, employer related expenses or employee retirement
adjustment.
6-2
Caseload & Enrollment Populations
513,833
601,418
787,595
936,431 954,626
1,050,089 1,089,991
828,627
851,090
878,920
907,010 931,204
956,148
984,847
111,845
26,157
26,772
28,203
29,995
31,258
32,570
33,873
92,214
92,725
96,603
100,258 102,461
107,953
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2000 2001 2002 2003 2004 2005 approp. 2006 rec.
Population
AHCCCS Caseload K-12 Enrollment University Enrollment Inmate population
*FY2006 AHCCCS total excludes technical transfers to the DES and DHS budgets totaling $82.1 million to allow for year-to-year comparisons. The actual Executive recommendation for
AHCCCS' budget is $994,121,800. 6-3
General Fund Appropriations for Caseload &
Enrollment
493,682.0 528,927.4 534,070.8 590,944.0 679,335.1 860,921.3 1,075,337.8
2,393,892.0 2,465,830.1 2,612,982.3 2,599,492.2
2,957,037.0
3,184,039.5
3,315,465.2
757,204.2
780,260.3
773,375.8 746,787.0
746,924.3
794,568.3
823,310.6
568,354.8
587,913.7
550,224.8 579,765.4
604,686.5
629,113.9
691,518.3
-
1,000,000.0
2,000,000.0
3,000,000.0
4,000,000.0
5,000,000.0
6,000,000.0
7,000,000.0
2000 2001 2002 2003 2004 2005 approp. 2006 rec.
Dollars (In Thousands)
AHCCCS Appropriations & Exec. Rec.* K-12 Appropriations & Rec.
Universities /Regents Appropriations & Exec. Rec. Corrections Appropriations & Exec. Rec.
$5.0 billion
$5.5 billion
9.6% increase
$5.9 billion
8.0% increase
Agency
FY 2005
Appropriation
Standard
Adjustments
FY 2005
Appropriation
Net of Standard
Adjustments
Population,
Enrollment, or
Caseload
Requirements
Statutory, Court,
Other Mandated
Obligations Good Business
Employee
Retirement
Adjustment
Executive
Initiatives
FY 2006
Executive
Recommendation
Dept. of Education 3,184,039,500 (18,307,200) 3,165,732,300 125,026,100 472,400 334,400 - 23,900,000 3,315,465,200
AHCCCS 860,921,300 (113,123,200) 747,798,100 242,353,900 - - - 3,969,800 994,121,800
Dept. of Corrections 629,113,900 (11,795,600) 617,318,300 54,108,700 - - - 20,091,300 691,518,300
Dept. of Economic Security 606,123,800 38,768,200 644,892,000 24,323,200 - 259,500 - 26,657,100 696,131,800
Dept. of Health Services 367,491,900 47,348,900 414,840,800 65,403,800 - 444,800 - 1,321,500 482,010,900
Arizona State Univ.-Main Campus 2 82,510,500 (298,700) 282,211,800 10,767,000 - - - 1 ,500,000 294,478,800
Univ. of Arizona-Main Campus 2 78,843,000 1 ,116,100 279,959,100 1,133,000 - - - 6 ,500,000 287,592,100
School Facilities Board 218,616,100 ( 170,007,000) 48,609,100 - 2 7,745,400 - - - 76,354,500
Community Colleges 143,940,000 (325,000) 143,615,000 8,710,700 - - - - 152,325,700
Northern Arizona Univ. 1 17,440,500 976,600 118,417,100 618,000 3 ,000,000 - - 500,000 122,535,100
Dept. of Juvenile Corrections 69,092,000 (5,218,700) 63,873,300 (3,021,300) 6 ,674,800 - - 976,000 68,502,800
Dept. of Revenue 62,846,500 837,000 63,683,500 - - 1 40,300 - (11,398,300) 52,425,500
Dept. of Administration 24,134,800 (33,800) 24,101,000 - - 268,100 - 555,500 24,924,600
Attorney General - Dept. of Law 23,448,500 (32,000) 23,416,500 - - 540,700 - 1 ,346,400 25,303,600
State Land Department 17,600,100 (78,200) 17,521,900 - - - - 7 ,740,900 25,262,800
Dept. of Water Resources 14,198,900 154,700 14,353,600 - - - - 3 ,965,300 18,318,900
Board of Regents 7,611,000 1 4,100 7,625,100 - - 6 15,900 - 2 ,251,200 10,492,200
Arts 3,818,200 1 9,900 3,838,100 - - - - 500,000 4,338,100
All Other Agencies 471,226,300 20,285,400 491,511,700 0 1,876,800 1 ,997,000 - (0) 495,385,500
All Agency Impact - 18,045,600 18,045,600 - - - 24,155,900 - 42,201,500
7,383,016,800 ( 191,652,900) 7,191,363,900 529,423,100 3 9,769,400 4 ,600,700 24,155,900 90,376,700 7 ,879,689,700
Percent of growth over base 7.4% 0.6% 0.1% 0.3% 1.3% 9.6%
FY 2006 Executive Recommendation: Expenditure Growth Breakdown
6-4
Table 2-3 General Fund Operating Budgets Summary
FY 2005
Approp
FY 2005
Supp
FY 2005
Exec Rec
FY 2006
Issues
FY 2006
Exec Rec
FY 2007
Issues
FY 2007
Exec Rec
ArDizAona Department of Administration 24,134.8 0.0 24,134.8 789.8 24,924.6 0.0 0.0
HOGffiAce of Administrative Hearings 1,104.2 0.0 1,104.2 1.9 1,106.1 1.9 1,106.1
ArHizAona Department of Agriculture 10,337.6 0.0 10,337.6 176.5 10,514.1 164.2 10,501.8
ArXizAona State University - East Campus 13,040.2 0.0 13,040.2 0.0 13,040.2 0.0 0.0
ArSizAona State University - Main Campus 282,510.5 0.0 282,510.5 11,968.3 294,478.8 0.0 0.0
ArWizAona State University - West Campus 40,323.1 0.0 40,323.1 0.0 40,323.1 0.0 0.0
AHrUizAona Commission on the Arts 3,818.2 0.0 3,818.2 519.9 4,338.1 500.9 4,319.1
AtGtoArney General - Department of Law 23,448.5 0.0 23,448.5 1,855.1 25,303.6 2,871.6 26,320.1
AuUdAitor General 11,747.5 0.0 11,747.5 0.0 11,747.5 0.0 11,747.5
BStDaAte Banking Department 2,891.7 0.0 2,891.7 276.1 3,167.8 321.4 3,213.1
DMeMpAartment of Building and Fire Safety 3,278.4 0.0 3,278.4 15.9 3,294.3 22.2 3,300.6
SCtSaAte Board for Charter Schools 702.7 0.0 702.7 325.2 1,027.9 11.4 714.1
EDPepAartment of Commerce 8,864.5 0.0 8,864.5 -292.9 8,571.6 -292.9 8,571.6
ACrMizAona Community Colleges 143,940.0 0.0 143,940.0 8,385.7 152,325.7 0.0 0.0
CCorAporation Commission 4,953.4 0.0 4,953.4 18.2 4,971.6 19.2 4,972.6
DCepAartment of Corrections 629,113.9 18,315.3 647,429.2 62,404.4 691,518.3 0.0 0.0
JACrizAona Criminal Justice Commission 1,302.0 0.0 1,302.0 0.0 1,302.0 0.0 1,302.0
ASrDizAona State Schools for the Deaf and the Blind 14,636.2 400.4 15,036.6 630.0 15,266.2 684.2 15,320.4
DeEpAartment of Economic Security 606,123.8 0.0 606,123.8 90,008.0 696,131.8 0.0 0.0
EDDepAartment of Education 3,184,039.5 0.0 3,184,039.5 131,425.7 3,315,465.2 0.0 0.0
DMeApAartment of Emergency Services and Military
Affairs
12,015.0 0.0 12,015.0 590.5 12,605.5 590.5 12,605.5
EDVepAartment of Environmental Quality 23,142.1 0.0 23,142.1 168.8 23,310.9 168.8 23,310.9
AGFoAvernor's Office for Equal Opportunity 220.9 0.0 220.9 0.5 221.4 0.5 221.4
EStQaAte Board of Equalization 556.7 0.0 556.7 61.2 617.9 428.4 985.1
BPoPaArd of Executive Clemency 913.3 0.0 913.3 112.4 1,025.7 130.3 1,043.6
AGrSizAona Geological Survey 796.7 0.0 796.7 0.0 796.7 0.0 796.7
GOVffiAce of the Governor 6,127.7 0.0 6,127.7 60.4 6,188.1 60.4 6,188.1
AHrCizAona Health Care Cost Containment System 860,921.3 51,696.9 912,618.2 133,200.5 994,121.8 0.0 0.0
DHeSpAartment of Health Services - Primary 367,491.9 23,015.4 390,507.3 114,519.0 482,010.9 0.0 0.0
AHrIAizona Historical Society 3,462.1 0.0 3,462.1 43.9 3,506.0 43.9 3,506.0
HOouAse of Representatives 11,955.5 0.0 11,955.5 0.0 11,955.5 0.0 11,955.5
IAArAizona Commission of Indian Affairs 205.1 0.0 205.1 0.1 205.2 0.1 205.2
IDDeApartment of Insurance 6,393.6 0.0 6,393.6 39.8 6,433.4 40.1 6,433.7
JLoiAnt Legislative Budget Committee 2,201.1 0.0 2,201.1 0.0 2,201.1 0.0 2,201.1
JCuOdUiciary 114,302.6 0.0 114,302.6 0.0 114,302.6 0.0 0.0
DeJApartment of Juvenile Corrections 69,092.0 -500.0 68,592.0 -589.2 68,502.8 0.0 0.0
LSDtaAte Land Department 17,600.1 0.0 17,600.1 7,662.7 25,262.8 5,735.1 23,335.2
LaWwA Enforcement Merit System Council 58.3 0.0 58.3 10.9 69.2 8.2 66.5
LCegAislative Council 4,628.4 0.0 4,628.4 0.0 4,628.4 0.0 4,628.4
LAArizAona State Library, Archives & Public Records 6,724.1 0.0 6,724.1 0.0 6,724.1 0.0 6,724.1
LDLeApartment of Liquor Licenses and Control 2,813.7 0.0 2,813.7 13.6 2,827.3 13.6 2,827.3
SMtIaAte Mine Inspector 1,116.2 0.0 1,116.2 20.3 1,136.5 20.3 1,136.5
DMeNpAartment of Mines and Mineral Resources 658.4 0.0 658.4 122.0 780.4 122.0 780.4
ANrSizAona Navigable Stream Adjudication
Commission
160.7 0.0 160.7 0.0 160.7 -160.7 0.0
NoArAthern Arizona University 117,440.5 0.0 117,440.5 5,094.6 122,535.1 0.0 0.0
BStNaAte Board of Nursing 136.4 0.0 136.4 25.0 161.4 25.0 161.4
IOBSAHA Review Board 4.8 0.0 4.8 0.0 4.8 0.0 4.8
PStRaAte Parks Board 22,380.5 0.0 22,380.5 9.0 22,389.5 9.0 22,389.5
PeBrAsonnel Board 338.3 0.0 338.3 0.0 338.3 0.0 338.3
6-5
FY 2005
Approp
FY 2005
Supp
FY 2005
Exec Rec
FY 2006
Issues
FY 2006
Exec Rec
FY 2007
Issues
FY 2007
Exec Rec
APrIAizona Pioneers' Home 3,197.8 -1,200.0 1,997.8 -3,197.8 0.0 -3,197.8 0.0
PCEomAmission for Postsecondary Education 1,391.3 0.0 1,391.3 0.0 1,391.3 0.0 1,391.3
PHreAscott Historical Society of Arizona 639.1 0.0 639.1 7.7 646.8 7.7 646.8
PDSepAartment of Public Safety 31,839.0 0.0 31,839.0 -3,665.2 28,173.8 -758.4 31,080.6
ARrCizAona Department of Racing 2,504.8 0.0 2,504.8 26.6 2,531.4 29.2 2,534.0
AREadAiation Regulatory Agency 1,557.2 0.0 1,557.2 59.7 1,616.9 48.9 1,606.1
ARrPizAona Rangers' Pension 12.6 0.0 12.6 0.2 12.8 0.4 13.0
DReEpAartment of Real Estate 3,208.4 0.0 3,208.4 274.6 3,483.0 274.6 3,483.0
ABrRizAona Board of Regents 7,611.0 0.0 7,611.0 2,881.2 10,492.2 0.0 0.0
DReVpAartment of Revenue 62,846.5 0.0 62,846.5 977.3 63,823.8 969.4 63,815.9
SFchAool Facilities Board 218,616.1 0.0 218,616.1 -142,261.6 76,354.5 0.0 0.0
SDTeApartment of State - Secretary of State 7,149.9 0.0 7,149.9 -4,122.3 3,027.6 -722.3 6,427.6
SeNnAate 6,841.5 0.0 6,841.5 0.0 6,841.5 0.0 6,841.5
GOSovPernor's Office of Strategic Planning and
Budgeting
1,721.4 0.0 1,721.4 204.4 1,925.8 204.4 1,925.8
TSXtaAte Board of Tax Appeals 278.7 0.0 278.7 0.1 278.8 0.9 279.6
TAOrizAona Office of Tourism 11,609.2 0.0 11,609.2 1,343.1 12,952.3 2,213.5 13,822.7
DTepAartment of Transportation 71.7 0.0 71.7 0.0 71.7 0.0 0.0
TSRtaAte Treasurer 5,411.2 0.0 5,411.2 -148.9 5,262.3 -298.9 5,112.3
CULoAmmission on Uniform State Laws 52.3 0.0 52.3 0.3 52.6 0.5 52.8
UHniAversity of Arizona - Health Sciences Center 54,849.1 0.0 54,849.1 0.0 54,849.1 0.0 0.0
UAniAversity of Arizona - Main Campus 278,843.0 0.0 278,843.0 8,749.1 287,592.1 0.0 0.0
VDSepAartment of Veterans' Services 2,261.7 0.0 2,261.7 3.4 2,265.1 4.0 2,265.7
DWeCpAartment of Water Resources 14,198.9 0.0 14,198.9 4,120.0 18,318.9 4,120.0 18,318.9
DWeMpAartment of Weights and Measures 1,466.9 0.0 1,466.9 185.5 1,652.4 99.3 1,566.2
General Fund Operating Total 7,382,348.0 91,728.0 7,474,076.0 435,111.3 7,817,459.3 14,535.0 384,418.0
6-6
BUDGET IN A FLASH
Water Management Research Initiatives in Partnership with Universities 1.5 Full Funding of Child Care for Low-Income Working People 21.0
Three Additional Inmate Fire Crews 0.8 Child Care Licensure 0.5
Land Resource Management, Education, and Revenue Enhancement 7.2 Licensing Staff - New Surveyors 0.4
Restoration of Full Funding for Water Department 4.1 Increased Funding for Child Protective Services Staffing 5.7
DOC Employees Pay Plan 14.5 Outreach for KidsCare Program 4.0
Van Pools for Correctional Officers in Remote Locations 1.5 Health Care Funding for Parents of KidsCare Children 1.4
Implementation of Phase 1 of Blue Ribbon Panel Recommendations 3.8 Rural Hospital Support 2.5
Attorney General Pay Parity Plan 1.3 Folic Acid Distribution 0.8
Additional Funds for Youth Correctional Officers 1.0 Phoenix Medical School 6.0
Procurement Activities 0.1 Voluntary Full-Day Kindergarten 2nd Year Funding 16.9
Initiation of Self-Support for Health Care Group (4.0) AIMS Intervention "AIMing to Pass the Test" 5.0
Pay Parity for General Accounting Office Staff 0.5 Additional Funding for the Early Childhood Block Grant Program 2.0
Net Savings Generated through Enhanced Revenue Enforcement Activities (11.4) Board of Regents - Doubling of University Scholarships 2.3
Funding for the Arts 0.5
FY05 App. FY06 Rec. FY06-FY05 FY04 Act. FY05 Est. FY06 Rec.
Agriculture 10.3 10.5 0.2 Balance Forward 192,185.0 360,388.9 143,819.4
Arizona State University - Main Campus 282.5 294.5 12.0 Adjusted Revenues 6,462,534.8 7,324,945.2 7,661,424.7
Arizona State University - West Campus 40.3 40.3 0.0 Enacted Fund Transfers 54,500.0 35,234.5 0.0
Community Colleges 143.9 152.3 8.4 Qwest Settlement 9,047.0 0.0 0.0
Corrections 629.1 691.5 62.4 Tax Amnesty Revenues 65,253.1 0.0 0.0
Economic Security 606.1 696.1 90.0 Federal Cash Assistance 87,265.9 0.0 0.0
Education 3,184.0 3,315.5 131.4 Judicial Collections 5,389.3 2,106.7 0.0
Emergency Services and Military Affairs 12.0 12.6 0.6 VLT Transfer 0.0 118,000.0 0.0
Health Care Cost Containment System 860.9 994.1 133.2 Proposed Fund Transfers 0.0 0.0 25,000.0
Health Services 367.5 482.0 114.5 DOR Revenue Generating Program 0.0 0.0 11,398.3
Juvenile Corrections 69.1 68.5 (0.6) Lottery Revenues Distribution Change 0.0 0.0 3,000.0
Land Department 17.6 25.3 7.7 SOURCES OF FUNDS TOTAL 6,876,175.1 7,840,675.3 7,844,642.4
Pioneers' Home 3.2 0.0 (3.2)
Revenue 62.8 63.8 1.0 Operating Budgets 6,537,900.9 7,208,016.8 7,795,559.3
School Facilities Board 218.6 76.4 (142.3) Operating Budget Supplementals 0.0 91,728.0 0.0
Treasurer 5.4 5.3 (0.1) Voluntary Full-Day Kindergarten 0.0 0.0 16,900.0
University of Arizona - Health Sciences Center 54.8 54.8 0.0 Ladewig Settlement 0.0 134,280.4 0.0
University of Arizona - Main Campus 278.8 287.6 8.7 Deficiency Corrections 0.0 100,000.0 0.0
Veterans' Services 2.3 2.3 1.7 School Building Maintainence & Renovation 0.0 70,000.0 0.0
All Others 533.5 544.1 11.2 Military Base Preservation 0.0 5,000.0 5,000.0
TOTAL $7,383.0 $7,817.5 $435.1 Employee Related Expense Increases 0.0 0.0 30,758.5
Employee Health Insurance 0.0 0.0 18,045.6
DCA - Second Phase of Kingman Prison 4,415.8 Transfer to Budget Stabilization Fund 0.0 165,000.0 0.0
DCA - Prison Construction & Operations Fund Shortfall 4,050.0 Employee Retirement Adjustment 0.0 0.0 24,155.9
DCA - Correctional Officer Pay 2,049.5 Federal Revenue Maximization 0.0 (16,100.0) (25,000.0)
DCA - Compensatory Time Pay 7,800.0 Total Operating Budgets 6,537,900.9 7,757,925.2 7,865,419.3
DJA - Decreased Juvenile Population (500.0)
AHCCCS - Proposition 204 Services 12,390.6 Administrative Adjustments 38,692.7 23,000.0 23,000.0
AHCCCS - Acute Care Medicare Premiums 1,669.6 Revertments (60,807.4) (84,069.3) (51,169.3)
AHCCCS - Acute Care Reinsurance 6,895.1 Uses of Funds 6,515,786.2 7,696,855.9 7,837,250.0
AHCCCS - Acute Care Capitation 30,741.6
DHS - Behavioral Health Services - Title XIX 23,015.4 Ending Balance 360,388.9 143,819.4 7,392.4
Pioneer's Home - Fund Transfer (1,200.0)
Deaf & Blind - Telecommunications Tax Fund Reduction 400.4 USES OF FUNDS TOTAL 6,876,175.1 7,840,675.3 7,844,642.4
TOTAL $91,728.0
Executive Initiatives in FY 2006 (in millions)
% of Total State Spending
General Fund Spending by Category of Government:
Operating Budgets (in millions) Sources and Uses (in thousands)
FY 2005 Supplementals (in thousands)
60% 61% 61% 62% 59% 59%
58% 59% 55% 57% 57%
20% 19% 20% 23%
21%
22%
22%
24%
26% 25%
28%
9%
9% 10%
11%
11%
11%
12%
12% 12% 11% 11%
8%
7% 8%
7%
7%
8%
8%
8%
8%
8%
8%
.0
.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Billions
Education Health and Welfare Protection and Safety General Government
6-7
Preparing Lands for Lease or Sale 2.5 Children's Services 10.8
Increase Revenue Generating Capabilities 0.6 Adoption Services 5.6
Increase Mineral Revenue 0.2 Permanent Guardianship 1.2
Retention of Water Rights 1.9 Child Protective Services Staffing 5.7
Dam Safety 0.8 Child Care 21.0
Fire Management 0.3 Long-Term Care - Developmentally Disabled 18.7
Three Additional Inmate Fire Crews 0.4 Reverse One-Time Funding Shift in the Division of Dev. Dis. 3.0
Streambed Research 1.0 Eligibility Worker Transfer from AHCCCS 35.3
Other Issues (0.0) TANF Cash assistance Caseload Deadline (12.0)
TOTAL $7.7 Other Issues 0.7
TOTAL $90.0
Water Conservation and Drought Management 1.5
Cost Recovery & Fund Alignment Measure (0.9) Decreased Juvenile Population (3.0)
Technical Staff for Hydrology & Groundwater Programs 0.9 YCO Salary Increase 1.0
Restore General Fund Appropriation 1.8 CRIPA 6.7
Additional Funding for Rural Water Studies 0.7 Other Issues (5.2)
Other Issues 0.2 TOTAL ($0.6)
TOTAL $4.1
Child Care Licensure 0.5
Annualize Beds Originally Funded in FY05 53.3 Licensing Staff - New Surveyors 0.4
Marginal Cost of Population Growth 0.8 Foster Care Licensure - Transfer to DES (0.1)
Van Pool 1.5 Folic Acid Distribution 0.8
Blue Ribbon Panel Recommendations 3.8 Children's Rehabilitative Services -Title XIX 1.8
Three Additional Inmate Fire Crews 0.4 Children's Rehabilitative Services - State Only 0.9
Correctional Officer Pay 14.5 Breast & Cervical Cancer - Growth Demand 0.2
Other Issues (11.8) Behavioral Health Services - Title XIX 62.5
TOTAL $62.4 Shift Tobacco Settlement Monies to AHCCCS 46.8
Other Issues 0.7
DES Admin - Base Modification (35.3) TOTAL $114.5
Acute Care Disproportionate Share (6.1)
Acute Care Medicare Premiums 6.9 Basic State Aid 119.5
Acute Care Reinsurance 8.3 Additional State Aid 2.0
Acute Care Fee for Service 13.1 AIMS Blended Test Surplus (2.7)
Acute Care Capitation 100.3 Special Education Fund 3.5
Arizona Long Term Care System 32.3 Early Childhood Block Grant 2.0
Health Care Group Services (4.0) Full Day Kindergarten - 2 Year Implementation 16.9
CHIP Premiums/Outreach 4.0 Full Day Kindergarten Administration 0.2
DHS Tobacco/GF Switch (46.8) AIMS Intervention "AIMing to Pass the Test" 5.0
Kids Care Parents Program 1.5 SAIS Implementation and Support 0.3
SAVE Fund 2.5 HB2010 (Flores v. State) Expired Appropriations (15.6)
Other Issues 56.5 Other Issues 0.4
TOTAL $133.2 TOTAL $131.4
Change in FY 2006 General Fund Spending
Department of Health Services
Department of Education
Water Resources
AHCCCS
MAJOR CHANGES IN FY 2006 GENERAL FUND BUDGETS (in millions)
Land Department Department of Economic Security
Department of Corrections
Department of Juvenile Corrections
$301
$1,018
$2,188
$355
$3,861
$438
$1,196
$3,420
$673
$5,726
$518
$1,481
$3,876
$709
$6,586
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
General Government
Health and Welfare
Education
Protection and Safety
Total Category of Government
Millions
1994 1999 2004
6-8
Section 7
Financing Strategies
7-1
FINANCING STRATEGIES
FY 2006
New School Construction – Recommend an additional $ 300.7 million in lease-to-own authority for this
purpose in FY 2006. Certificates of Participation would be issued, with debt service payable from the
General Fund, beginning in FY 2007.
$ 300.7
million
Ladewig Settlement – Recommend the sale-leaseback of approximately $ 58.4 million in State
buildings in order to make the FY 2006 payments under this settlement. The Department of Revenue
estimates that the amount for payments, attorneys’ fees, and administrative expenses will not exceed
$58.4 million in FY 2006. The first debt service payment on this amount would not be due until FY 2007. $ 58.4 million
Section 8
Executive Initiatives
EXECUTIVE INITIATIVES
FY 2006
Initiative Amount
Strengthening Families – 1) Full funding of Child Care for low-income working people ($ 22.6 million total funds; $ 21.0 million
General Funds plus $ 1.5 million TANF); 2) Additional funding for domestic violence shelters ($ 1.5 million from TANF); 3) Bringing
funding for the Healthy Families Program to $ 20 million ($ 3.3 million from TANF; $ 2.2 million from other non-General Fund
sources); 4) Adding funding for Child Care licensing activities ($ .5 million); 5) Additional funding for Childrens’ Protective Services
staffing ($ 11.6 million total funds: $ 6.0 million TANF plus $ 5.7 million General Funds)
$ 27.2 million – GF
$ 41.7 million - TF
Improving Access to Health Care – 1) Funding for an Outreach Program for KidsCare ($ 4.0 million); 2) Extension of health care
funding for low-income parents of children covered under AHCCCS ($ 1.4 million); 3) Funding to help keep rural hospitals
functioning ($ 2.5 million); 4) Maintaining monies available for Folic Acid Distribution ($ .8 million); 5) Additional funding for the
University Health Sciences Center and ASU that will lead to a beginning Medical School class in Phoenix in July, 2006 ($ 7.0
million)
$ 15.7 million – GF
$ 15.7 million – TF
Enhancing Educational Opportunities – 1) Incremental funding for the second year of implementation of Voluntary Full-Day
Kindergarten ($ 16.9 million); 2) Continuation of support for assistance to students in passing the AIMS Test ($ 5.0 million); 3)
Additional funding for the Early Childhood Block Grant Program for pre-school programs ($ 2 million); 4) Double the amount of
funding devoted to university student scholarships ($ 2.3 million); 5) Provide funding for the arts ($ .5 million).
$ 26.7 million – GF
$ 26.7 million - TF
Land and Water Management: 1) Water management research initiatives at the 3 state universities ($ 1.5 million); 2) Adding 3
more inmate fire crews in the Departments of Corrections and Land for a total of 15 ($ .8 million); 3) Additional Land Department
funding for better resource management and to enhance revenues to land trust beneficiaries, including education ($ 7.2 million); 4)
Restore full funding to the Department of Water Resources ($ 5.0 million, including .9 million fee authorization).
$ 13.6 million – GF
$ 14.5 million - TF
Enhancing Economic Opportunity – 1) Allocating resources from the Tourism Fund to establish a Rural Tourism Development
Grant Program ($.5 million); 2) Allocating resources from the Commerce and Economic Development Fund to provide additional
resources for Rural Economic Development ($.2 million); 3) Phasing in the following tax credits beginning with the 2007 Tax Year: a
Technology Tax Credit ($ 4.0 million); an enhanced R&D University Tax Credit ($ 2.9 million); 4) Reducing the assessment ratio on
small business personal property from 25% to 1%; 5) Reducing the assessment ratio on the personal property of manufacturers
from 25% to 13%.
0 – GF
0 – TF
Promoting Public Safety – 1) Providing additional monies to begin correcting the inadequate pay of Department of Corrections
employees ($ 14.5 million); 2) Providing additional funding to make it easier for Correctional Officers to work at prisons remote from
their residences through expanded van pools ($ 1.4 million); 3) Providing funds to implement Phase One of the recommendations of
the Blue Ribbon Panel on Arizona’s Prisons ($ 3.8 million); 4) Funding year 2 of a five-year salary increase for DPS officers ($ 3.0
million – HURF monies); 5) Providing funds for an Attorney General’s Pay Parity Plan ($ 1.3 million); 6) Providing additional funds
for Youth Correctional Officers ($ 1.0 million).
$ 22.0 million – GF
$ 25.0 million – TF
Fiscal Management & Accountability – 1) Additional funding for DOA’s procurement activities that will allow the State to realize
savings in its own purchasing as well as to help small and disadvantaged businesses bid on state projects ($.1 million); 2) Making
Health Care Group self-supporting ($ 4.0 million savings); 3) Generating additional funds by funding enhanced enforcement
activities in the Department of Revenue ($ 11.4 million net savings through enhanced General Fund collections); 4) Adding staff to
the General Accounting Office for increased fiscal accountability ($.5 million).
($ 14.8) million – GF
($ 14.8) million – TF
TOTAL EXECUTIVE INITIATIVES $ 90.4 million – GF
$ 108.8 million - TF
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