Arizona

State Budget Practice Report Cards and Budget Resource Guide

When Arizona’s real personal income growth exceeds its seven-year average in a given calendar year, excess revenues generated by the expansion help determine how much money should be transferred to the state’s Budget Stabilization Fund. This linkage to revenue volatility, a key recommendation in the Volcker Alliance’s recent working paper, Rainy Day Fund Strategies: A Call to Action, is a major reason Arizona is one of only eighteen states to receive a top average grade of A for 2017 through 2019 in the reserve funds category. The state also features strong policies governing rainy day fund use and replenishment. 

In contrast, Arizona posted a D average, the second-lowest mark possible, in the legacy costs category, which includes public worker pensions and retirement health care. Its pension funding level was 64 percent in 2018, about 6 percentage points below the total for all states.

Arizona averaged a C in budget maneuvers. One reason was the state’s willingness to defer recurring expenditures to achieve budgetary balance, including pushing $930 million in budgeted general fund spending for school district payments to fiscal 2020 from fiscal 2019.

In the transparency category, Arizona averaged a B. Like all but five states, it did not disclose deferred infrastructure maintenance costs.

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Act, which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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