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.

June 2021
Compares the funding of public education in Arizona to the nation and other states. For per student state and local government funding for public education—elementary, secondary, and higher education combined—to reach the national average in Arizona, additional state and local government revenue of more than $5 billion is needed, even after considering Arizona’s below-average cost of living.
May 2018
Considers options for modernizing Arizona’s sales and use taxes, primarily with the goal of ensuring that sales tax revenues keep pace with economic growth. Sales and use tax collections as a share of personal income have declined significantly in Arizona and in other states for decades—a major issue for Arizona state government’s general fund, which is heavily dependent on sales and use tax revenue.
January 2018
Examines a number of possible sources of additional state government revenue. Public revenue and spending in Arizona in recent years has been substantially below both the national average and the state’s historical norm.
August 2017
Addresses the funding of public higher education and elementary and secondary education in Arizona, relative to the nation and other states. Relative to higher education, per student state and local government funding for public elementary and secondary education in Arizona has been further below the national average, but has not decreased as much in recent years.
February 2017
Reviews financial and other issues facing the Social Security and Medicare programs, reviewing a wide range of options that have been proposed by numerous organizations across the political spectrum to resolve the issues. Trust funds of each program are expected to be depleted before 2035.
October 2016
Summarizes supply-side economic theory and the Laffer Curve, reviews the tax burden in Arizona after nearly 25 years of tax reductions passed by the Arizona Legislature, and examines the effects of these tax reductions on economic performance and public revenue. Empirical evidence indicates that economic performance in Arizona has not been stronger since the tax cuts went into effect and that public revenue has fallen substantially.
October 2016
Investigates revenues for higher education in Arizona by source, with comparisons made to other states and the nation. Public support for higher education—the combination of universities and community colleges—is quite low in Arizona and lower than the historical norm.
July 2016
Examines Arizona’s individual and corporate income taxes, making comparisons to other states. Individual and corporate income tax rates have both been lowered several times in Arizona since the early 1990s, and various other modifications made to the income taxes—such as the creation of new tax credits—also have reduced the revenue received by state government from these taxes.
November 2015
Summarizes the provisions of the legislation and provides context for an analysis of the provisions. The legislative package will last 10 years, with additional funding for elementary and secondary education increasing from an estimated $299 million in fiscal year 2016 to $400 million in FY 2025.
July 2015
Examines Arizona state government finance over time and compares Arizona state and local government finance to other states. Government spending in Arizona per $1,000 of personal income has dropped since fiscal year 1992 regardless of whether spending is measured by the state government general fund, total state appropriations, total state authorized spending, or the combination of all state and local government spending.
May 2015
Compares public support for universities and for all of higher education in Arizona and Utah. Public support in Arizona fell from higher than in Utah in the early 2000s to less in 2014.
June 2012
Simulates the functioning of the budget stabilization fund under differing specifications and presents recommendations to improve the operation of the fund. In each of the two recessions since the creation of the budget stabilization fund, the balance in the fund has been insufficient to meet the needs, forcing substantial reductions in expenditures to be made in order to balance the budget.
July 2011
Reviews the cyclicality of capital gains and the impact of these fluctuations on general fund revenues. Capital gains are highly cyclical, but during periods of high capital gains, the increase in general fund revenue has not been perceived to be transitory; instead, permanent tax reductions and spending increases have been made.
March 2011
Assesses several proposals to create a new state government revenue or expenditure limit in Arizona, and compares the proposals to Colorado’s limit. Arizona already has a limit, adopted in the late 1970s, that constrains state government appropriations to a percentage of the state’s personal income.
November 2010
Looks at the functions of state government that are specified in the Arizona Constitution. Generally, the Constitution does not delineate specific duties of state government. The Constitution is much more explicit regarding the provision of public education, and the funding for education, than it is for any other state government duty.
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.
January 2010
Presents 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. Arizonans face the twin problems of recovering from a deep and long economic recession and dealing with significant fiscal imbalances in state and local governments.
May 2009
Assesses the tax burden by state, specifically looking at individual tax burdens versus business tax burdens. The overall tax burden in Arizona is lower than in most states, and lower than it was in the past, the result of a very low tax burden for individuals and a moderate tax burden for businesses.
March 2009
Summarizes and updates 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.
January 2009
Considers 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. The purpose of this paper is to provide insight as to whether existing legislative appropriations for public education meet the requirements of the Arizona Constitution.
December 2008
Analyzes 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.
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

State and Local Tax Burdens, Calendar Year 2022, Tax Foundation, April 2022

Impact of State Higher Education Finance on Attainment, Urban Institute, July 2021

Investigating the Impacts of State Higher Education Appropriations and Financial Aid, State Higher Education Executive Officers Association, May 2021

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

State Higher Education Funding Cuts Have Pushed Costs to Students, Worsened Inequality, Center on Budget and Policy Priorities, October 2019

Unkept Promises: State Cuts to Higher Education Threaten Access and Equity, Center on Budget and Policy Priorities, October 2018

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

Funding Down, Tuition Up , Center on Budget and Policy Priorities, August 2016

Assessing Fiscal Capacities of States, Urban Institute, March 2016

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

Arizona’s Education Financing/Elementary and Secondary Education: 2002-2011, Arizona State University, Morrison Institute for Public Policy, December 2013

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

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