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.
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 2017 through 2019. 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.