Arizona breaks general fund revenue record

In recent weeks news has pointed to great economic numbers coming out of a number of states as well as the country as a whole. Last week, President Donald Trump addressed the media from the White House Rose Garden touting strong economic growth in the United States. The economy grew at a 4.1 percent annual rate in the second quarter, the strongest climb in about four years with the help of soybean exports.

That same kind of quality news can be said about Arizona with a recent JLBC report detailing how the state recorded the most annual revenue ever during the fiscal year. Analysts looked at numbers coming out from the end of this past June showing Arizona’s main budget account totaling just over $10 billion during the 2017-2018 fiscal year. This eclipses the biggest-ever pull from the state in 2007 when it recorded more than $9 billion in general fund revenue.

“Arizona’s economy is booming,” said Governor Ducey in a statement. “Digging ourselves out from the impacts of the great recession was not easy, but our state is back on the right track.”

This is huge for Arizona and a nod to the strong and growing economy. It’s also turned out to be a story of revival and survival, with the state coming back strong from the previous economic recession. In terms of annual revenue, Arizona is the comeback kid.

“It was a painful climb back because of the nature of the downturn,” says Jim Rounds, an economist and president of Rounds Consulting Firm. “The economic expansion took a while to develop, but we worked hard to set up policies that would grow the economy.”

The Great Recession kinked the state’s revenues and necessitated a huge cutback in state spending. Budget analysts are saying the 2017-2018 fiscal year ending balance is now projected to be around $430 million. The significance? It more than doubles the $205 million projected amount when the Legislature approved the budget.

Arizona is moving toward growing businesses from within while also attracting major companies, like Oracle. And with that comes better jobs, better opportunities and more economic growth and stability. According to Rounds, some of that has to do with the business cycle at play. “You see movement from normal jobs to higher wage jobs…The state is partnering with cities and landing higher quality businesses, and income growth is growing,” he adds.

While the news about the revenue is a much-needed congratulations for years of climbing back inch by inch, the question now is how will Arizona utilize these funds? When we hit $9 billion in 2007, the country was about to tumble down into the biggest economic disaster in decades. The key is not letting the budget escalate back to levels similar to 2004-2007, notes Rounds, when the budget grew by 65 percent, and also finding balance between taxing and spending.

“People saw growth and said we could spend the money, even though it was temporary. And even though this news will make the 2020 economic plan more comfortable in terms of money, we still have to be careful. We have to figure out how to balance economic inputs.”