State Budget Practice Report Cards and Budget Resource Guide
Although it received an average mark of D for its handling of legacy costs for fiscal 2016 through 2018, Arizona was not an outlier. Twenty-two states were graded D or worse for their funding of public employee pensions and other postemployment benefits (OPEB), principally health care. Like many others, Arizona did not make the full actuarially determined contributions for OPEB in 2016, 2017, or 2018. It also had a pension funding ratio of 63 percent as of 2017, over five percentage points below the total for all states.
The state posted a three-year average of B in budget forecasting. While Arizona got credit for making multiyear revenue and expenditure forecasts, as well as for providing a rationale for revenue projections, its estimates were not always on the nose. In 2017, the final year of a multiyear corporate tax reform plan, receipts were about a third less than what had been estimated and budgeted.
Arizona earned a B average in transparency. Its online disclosure of data was particularly strong, though it lacked data on deferred infrastructure replacement costs. The state makes it easy for online users to find past budgets, supplemental information, and budget briefs, which present summarized revenue and expenditure information, along with charts.
The consolidated website for budget information helps users track monthly spending, provides links to five-year strategic plans, and describes the impact of court cases on the state budget. It also contains revenue projection updates, such as a budget director’s memo from April 2018 noting that fiscal 2018 revenues beat estimates by $262 million.
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 found here contain grades of the state's budgetary practices during the fiscal years of 2016 through 2018. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eight US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.