Arizona

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.

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 2018 Volcker Alliance report, Truth and Integrity in State Budgeting: Preventing the Next Fiscal Crisis 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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