JLBC forecast details healthy economic growth in Arizona

One constant feather in Arizona’s cap in the last few years is its booming economy. From tech startups popping up in every co-working space to increased consumer confidence and a thriving construction industry, Arizona is expected to continue on a path of economic growth.

What’s more, revenues are growing and forecasts remain sunny. That same story is projected to continue as the latest Joint Legislative Budget Committee report forecasts strong continued growth in state revenues.

In fact, thanks to a growing economy, the report indicates that Arizona will have more than $1.1 billion at the end of the next fiscal year—that’s a whopping $900 million more than what was originally anticipated.

This summer, state revenue rose to its highest historical level, topping $10.1 billion, surpassing the previous record high from 2007 at $9.63 billion. This was due in part to healthy income and sales taxes, which combined brought in more than $6 billion, a record for the state.

“We’ve been working on regulatory issues and a fairly competitive tax code, and we have a lot of coordination between state and local entities,” notes Jim Rounds, an economic consultant in Phoenix. “We’re also on the front end of creating jobs in terms of value and quality, more specifically it’s the higher-wage jobs that are contributing.”

The new report, which was presented during October 11 Finance Advisory Committee meeting, touts that strong economic growth has “substantially improved the state’s fiscal condition” and the state is expected to have a one-time balance of $900 million in 2020. Combine this with a $200 million-plus General Fund structural balance, pushing the state past that $1.1 billion mark noted above.

The forecast also points out a steady 6 percent growth through 2019 with a tapering off to 4 percent in 2020 moving forward.

“This growth is different from mid-2000s. That was a lot of speculation then. You ended up seeing increases in the state budget, which went up 65 percent in just a few years,” says Rounds, pointing out Arizona’s place in the Great Recession from 10 years ago. “We’re collecting extra revenue, but we’re not going through crazy periods of low-wage growth. We’re building a strong foundation. We’ll be more resilient in the downturn.”

The state is pushing onward, notched at 6th in the country in terms of economic momentum, spearheaded by a growing population and a healthy employment outlook. With more population and jobs comes more income, and with that comes more consumer confidence. State revenues have experienced a solid growth because of this, giving way to a higher year-over-year General Fund balance and nearly a quarter of a million jobs created since 2015.

Here are some other key takeaways:

• Housing: Single-family housing construction continues to see an increase including a 15.1 percent boost compared to a year ago, putting nearly 30,000 permits in place.

• Employment: In July, nearly 21,000 unemployment claims were filed throughout the state–that’s a 4.5 percent drop from the same month last year. 
• Tourism: Phoenix Sky Harbor Airport saw an increase in ridership at its July marker, getting a modest 2.3 percent bump compared to July 2017.