DECADES

ARIZONA
INDICATORS

WHAT THE TRENDS TELL US

Public Finance

Declining State Government General Fund Revenue
By Tom Rex
Associate Director, Center for Competitiveness and Prosperity Research
W. P. Carey School of Business
Arizona State University

Q: What were the most interesting and important trends in Arizona’s public finance that

occurred in the previous decade? What is the significance of these trends and what insights can
we apply to the new decade?

A: While a number of interesting trends have been present in Arizona’s public finance over

the last decade, by far the most important has been the decline in state government general fund
revenue. This trend actually started in the mid-1990s, when the first of many tax reductions
was implemented. The numerous tax cuts that have been made over the last 15+ years have
substantially reduced revenue to the general fund.
In addition, the tax reductions have had the effect of greatly narrowing the tax base. The general
fund has become highly dependent on the sales tax, but its narrow base translates into ever
slowing revenues as consumer spending shifts to untaxed goods purchased over the Internet and
to untaxed services.
Revenues and Expenditures Per $1,000 of Personal Income, Arizona State
Government General Fund
Last Updated: 12/29/2010

$55
$50

Arizona Indicators is
an online information
resource and analysis
tool that centralizes data
about the state and its
communities. Arizona
Indicators presents
interactive visualizations,
clear data descriptions,
and public opinion data
in a broad range of
content areas.

This project is made
possible by generous
support from the Arizona
Community Foundation
and Arizona State
University.

For more information,
contact Andrea Whitsett
at (602) 496-0217 or
andrea.whitsett@asu.edu.

$45

Arizona Indicators is
a project of Morrison
Institute for Public Policy.

$40
$35

20
11

20
09

20
07

20
05

20
03

20
01

19
99

19
97

19
95

19
93

19
91

19
89

19
87

19
85

19
83

$25

19
81

$30

19
79

Historically, the general fund
received revenues equal to
nearly $50 per $1,000 of
personal income. The current
figure is less than $30. While
the long, deep economic
recession has caused a
significant cyclical drop in
revenue, projections indicate
that revenue during the next
economic expansion may rise
back only to near $36 per
$1,000 of personal income:
28 percent lower than the
historical norm.

DECADES
VOLUME 1 / ISSUE 4
JANUARY 2010
arizonaindicators.org

Fiscal Year
Ongoing Revenues

Ongoing Expenditures

With falling revenues, the
Source: Arizona Joint Legislative Budget Committee; U.S. Dept of Commerce, BEA
public programs receiving
funding from the general fund are being pinched—hard. Ninety-five percent of the general fund
appropriations go to just three purposes: education, health and welfare, and public safety. Funding
per $1,000 of personal income already has fallen considerably for health and welfare and higher
education. In contrast, funding has increased for the correctional system.

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