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Public Finance

Taxes and public-sector expenditures are economic development factors that contribute to the competitiveness of a region. In addition, with Arizona’s public universities partially supported by the State of Arizona, the fiscal resources and health of state government is of importance to the universities.

University Economist Reports

Declines Relative to the Nation in Arizona's Government Finance, Educational Attainment, and Economic Performance, January 2020
An update and extension to the September 2018 paper "The Relationship Between Government Finance, Educational Attainment, and Economic Performance," this paper concentrates on Arizona relative to the national average.

Modernization of Arizona's Sales Tax, May 2018
This paper is an extension to the January 2018 paper "Options for Raising State Government Revenue in Arizona." It examines options for modernizing Arizona's sales and use taxes, primarily with the goal of ensuring that sales tax revenues keep pace with economic growth. 

Options for Raising State Government Revenue in Arizona, January 2018
This paper examines a number of possible sources of additional state government revenue. By revenue source, it compares Arizona's combined state and local government finances to the nation and to other states, examines changes over time in state government finances, rates Arizona's fiscal system relative to a set of fiscal system guiding principles, and reviews the recommendations made by an Arizona citizens' group in 2003.

The Financing of Public Education in Arizona: Update, August 2017
Updates two 2016 reports that addressed the funding of public higher education and elementary and secondary education in Arizona, relative to the nation and other states. Expenditures of K-12 education also are updated.

The Social Security and Medicare Programs: Issues and Possible Solutions, February 2017
This paper examines financial and other issues facing the Social Security and Medicare programs. It discusses a wide range of options that have been proposed by numerous organizations across the political spectrum to resolve the issues. An evaluation of the proposals is not included, but an estimate of the financial impact is provided when available.

Tax Reductions in Arizona: Effects on Economic Growth and Government Revenue, October 2016
Provides a conceptual summary of supply-side economic theory and the Laffer Curve. Reviews the tax burden in Arizona and nearly 25 years of tax reductions passed by the Arizona Legislature. Examines the effects of these tax reductions on economic performance and public revenue.

The Financing of Public Higher Education in Arizona, October 2016
Revenues for higher education in Arizona are examined by source. Comparisons to other states and the nation are included, along with a historical perspective.

Arizona’s Income Taxes: A Comparison With Other States and a Policy Discussion of Potential Tax Reforms, July 2016
This report examines Arizona’s individual and corporate income taxes, making comparisons to other states. Conceptual issues are discussed, including the economic criteria for evaluating taxes. The link between income taxes and economic growth is explored. States without an individual income tax are compared on a number of measures to states levying a flat income tax and to states using graduated tax rates.

The Financing of Public Elementary and Secondary Education in Arizona, July 2016
Revenues for, and expenditures of, K-12 education in Arizona are examined over time and compared to other states. The analysis extends through fiscal year 2014.

A Summary of the October 2015 Special Legislative Session on Education Finance, November 2015
Summarizes the provisions of the legislation and provides context for an analysis of the provisions.

Government Revenues and Expenditures in Arizona, July 2015
Examines Arizona state government finance over time for the general fund and for the aggregation of all funds; also reviews total authorized spending. Compares Arizona to other states on combined state and local government finance. In addition, takes a more detailed look at public support, per student, for K-12 education and for higher education.

Higher Education Funding in Arizona and Utah, May 2015
Compares public support for universities and for all of higher education in Arizona and Utah. Examines various data sources and definitions of funding.

Ensuring That Arizona State Government's Budget Stabilization Fund Serves Its Purpose, June 2012
Simulates the functioning of the budget stabilization fund under differing specifications and presents recommendations to improve the operation of the fund.

Creating Jobs in Arizona by Building and Renovating Physical Infrastructure, October 2011
Following an analysis of economic conditions, this paper examines actions that can be taken by state governments to stimulate the economy. The only action that results in a significant near-term effect is to accelerate spending on physical infrastructure that has already been identified as needed.

Capital Gains in Arizona and the Effect on State Government General Fund Revenues, July 2011
Reviews the cyclicality of capital gains and the impact of these fluctuations on general fund revenues. Includes a short-term forecast of capital gains.

Tax and Expenditure Limitation Proposals in Arizona, March 2011
Analyzes several proposals to create a new state government revenue or expenditure limit in Arizona, and compares the proposals to Colorado's TABOR.

Arizona Constitution: Specified Duties of State Government, November 2010
Functions of state government that are specified in the Arizona Constitution are examined in this paper. A decades-long history of state government funding for these functions is analyzed. Particular attention is given to education, which is discussed in the most detail in the Constitution.

Roadmap to Arizona's Economic Recovery: A Package to Create Jobs, Improve the State's Economic Competitiveness, and Balance the Budget, January 2010
A plan to balance the state government's budget in the near term and longer term, to create jobs in the near term, and to improve the state's economic competitiveness in the longer term.

     Addendum: Revenue Forecast Details, March 2010
     Discusses the baseline revenue forecast used in Roadmap to Arizona's Economic Recovery: A Package to      Create Jobs, Improve the State's Economic Competitiveness, and Balance the Budget.

The Tax Burden in Arizona, May 2009
A review of studies that assess the tax burden by state. The tax burden of individuals is contrasted to the business tax burden.

A Summary of the Arizona State Government Fiscal Situation, March 2009
A summary of five reports -- the three volumes of Public Finance in Arizona, Education Funding in Arizona: Constitutional Requirement and the Empirical Record, and The Economic Effects of Government Spending Reductions Relative to Other Options. New and updated material are included.

Abbreviated Version of a Summary of the Arizona State Government Fiscal Situation, March 2009
Formatted as a PowerPoint presentation.

The Economic Effects of Government Spending Reductions Relative to Other Options, February 2009
Presents the results of economic modeling of the effects of spending reductions and tax increases in Arizona in order to resolve the Arizona state general fund budget deficit.

Education Funding in Arizona: Constitutional Requirement and the Empirical Record, January 2009
An examination of public funding for elementary and secondary education and higher education in Arizona from historical and interstate perspectives, in light of the funding mandate expressed in the Arizona Constitution. An evaluation of public education in Arizona is included.

A Response to the Goldwater Institute's Proposals for Closing the State Government Budget Deficit, December 2008
Illustrates the consequences of the spending reductions recommended by the Goldwater Institute to close the budget deficit, and discusses the philosophy embodied in the recommendations.

Public Finance in Arizona, December 2008
A series of three reports that discuss government finance in Arizona.

Volume I: Facts
Analyses of Arizona state government finance, using data of the Arizona Joint Legislative Budget Committee, and of the combined finances of all state and local governments within Arizona, using data of the U.S. Census Bureau. A historical perspective is provided for both datasets. For combined state and local government finance, comparisons are made to other states and to the national average. In addition, other measures of the tax burden by state are examined.

Volume II: Concepts and Issues
Addresses the conceptual and empirical relationships between taxes, government revenue, and economic growth. Also discusses current issues specific to Arizona state government finance. This is a revised version of the report “Tax Reductions, the Economy, and the Deficit in the Arizona State Government General Fund,” incorporating new and updated material.

Volume III: Options for Managing the Arizona State General Fund
Presents options and offers recommendations for managing the Arizona state government general fund. The near-term budget deficit is addressed as well as ways to prevent budget deficits from recurring every time economic growth slows.

Tax Reductions, the Economy and the Deficit in the Arizona State Government General Fund, November 2008
The effects of the tax law changes implemented in Arizona since the early 1990s, the relationship between taxes and economic growth, and the current state government budget deficit are discussed.

Tax Law Changes in Arizona Since 1989 and the Impact on Government Revenues and Economic Growth, June 2008
Using data from the Joint Legislative Budget Committee, an analysis of the change in state government revenues and the relationship of such tax law changes and subsequent economic growth.

Public Investment Using Debt Financing and the Effect on Economic Activity: Perspectives for the State of Arizona, January 2008
A discussion of the use of long-term debt by governments to finance long-lasting infrastructure projects, including an empirical analysis of the relationship between debt burdens and economic growth.

Changes in State Government Spending Compared to Changes in Income in Arizona Since 1990, March 2007
Using data from the Joint Legislative Budget Committee, an analysis of the change in state government expenditures and gains in income.

A Brief Analysis of Issues Associated With Debt Financing for the State of Arizona “Students First” School Capital Funding System, March 2007
Compares the existing system of financing the construction of new schools through current expenditures from the general fund with the alternative of using long-term debt financing.

Taxpayer's Bill of Rights, February 2005
Examines efforts to limit the growth of state and local governments through tax and expenditure limitations, analyzing the effect of such a measure in Colorado, and discussing possible effects of a similar measure in Arizona.

Related Articles and Reports

Tax Handbook, Arizona Joint Legislative Budget Committee

50-State Property Tax Comparison Study, Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence

Comparison of Individual Income Tax Burdens by State, Minnesota Center for Fiscal Excellence

Total State and Local Business Taxes, Council on State Taxation

Tax Rates and Tax Burdens in the District of Columbia -- A Nationwide Comparison, Government of the District of Columbia

K-12 Funding Cuts Contributing to Inadequate Teacher Pay, Center on Budget and Policy Priorities, September 2018

The Teacher Pay Penalty Has Hit a New High, Economic Policy Institute, September 2018

Funding PreK-12 Education, 110th Arizona Town Hall, November 2017

Financing Arizona's Future, 109th Arizona Town Hall, September 2016

Assessing Fiscal Capacities of States, Urban Institute, March 2016

Annual State-Local Tax Burden Ranking, Tax Foundation, January 2016

Arizona's Eroding Sales Tax Base, University of Arizona, Economic and Business Research Center, June 2014

Arizona's General Fund Operating Expenditure Trends, 1979-2013, University of Arizona, Economic and Business Research Center, November 2013

Arizona General Fund Tax Revenues: An Historical Perspective, University of Arizona, Economic and Business Research Center, November 2013

The Effects of Tax Reductions in Arizona: Significantly Reduced Government Revenue and No Apparent Impact on Economic Growth, Grand Canyon Institute, February 2013

Structurally Unbalanced: Cyclical and Structural Deficits in Arizona, Arizona State University, Morrison Institute for Public Policy, January 2011

Improving the Fiscal System of Arizona State Government, Arizona State University, L. William Seidman Research Institute, prepared for the Arizona School Boards Association, May 2010

Riding the Fiscal Roller Coaster: Government Revenue in Arizona, 95th Arizona Town Hall, November 2009

A Fiscal Tool Box, Arizona Citizens Finance Review Commission, 2003

Related Links

Arizona Joint Legislative Budget Committee

Arizona Office of Strategic Planning and Budgeting

Arizona Tax Research Association

Center on Budget and Policy Priorities

National Association of State Budget Officers

National Conference of State Legislatures

U.S. Department of Commerce, Census Bureau, Government Finance