Arizona received overall B grades in transparency, legacy costs, and budget forecasting—three of the five categories evaluated by the Volcker Alliance for fiscal 2015 through 2017. In reserve funds, the state earned straight A’s, but its use of one-time actions to balance revenues against expenditures resulted in C marks in budget maneuvers for each year.
Arizona’s grade in budget forecasting might have been higher if the state had adopted consensus revenue estimating. This technique may not make predictions more accurate but can provide the state with a single number on which to build a spending plan. In contrast to a single estimate built on inputs from multiple sources, the Governor’s Office of Strategic Planning and Budgeting and the Joint Legislative Budget Committee produce revenue estimates independently. Moreover, the governor and legislature are not bound by their forecasts and may use other estimates in the budget, according to the committee’s Arizona Budget Process report.
The C grades for budget maneuvers from fiscal 2015 through 2017 relate to deferring recurring expenditures and shifting costs and revenues. For example, in 2015, Arizona moved to counties part of its commitment to pay for institutionalization costs for certain individuals. This was one of several adjustments of expenditures it made between levels of government that year.
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 2015 through 2017. 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 eleven 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.