PROJECTArizona

State Fiscal Briefs

May 2022

Looking for Arizona data related to the pandemic? We have health, economic, and fiscal data on our new tool, How the COVID-19 Pandemic is Transforming State Budgets.

Arizona’s budget basics

According to the National Association of State Budget Officers (NASBO), Arizona’s total expenditures in fiscal year (FY) 2021 were $45.1 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Arizona’s combined state and local direct general expenditures were $52.9 billion in FY 2019 (the most recent year census data were available), or $7,251 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,161.

Arizona’s largest spending areas per capita were public welfare ($2,181) and elementary and secondary education ($1,313). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Arizona’s combined state and local general revenues were $59.0 billion in FY 2019, or $8,094 per capita. National per capita general revenues were $10,563. Arizona uses all major state and local taxes. After federal transfers, Arizona’s largest sources of per capita revenue were general sales taxes ($1,639) and property taxes ($1,148).

Arizona’s politics

Governor Doug Ducey, a Republican, was elected in 2018 with 56 percent of the vote. The next gubernatorial election is in 2022.

Republicans control both the House of Representatives (31 Republicans to 29 Democrats) and Senate (16 Republicans to 13 Democrats). Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in Arizona. The entire legislature is up for election in 2022 because both representatives and senators serve two-year terms.

Arizona’s budget institutions, rules, and constraints

Arizona uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit into the following year. Arizona limits spending growth based on personal income growth with a binding rule that requires a legislative supermajority or a vote of the people to override it. A supermajority is similarly required for any legislation that increases taxes or revenues. Arizona also places limits on the total authorized debt the state can incur but not on debt service.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Arizona’s current budget

Governor Ducey released his FY 2023 budget proposal and gave his state of the state address in January 2022.

Arizona enacted its FY 2022 budget in June 2021. The enacted budget included $12.8 billion in general fund spending. According to the governor, Arizona also passed a large individual income tax cut—that reduced the state’s top tax rate from 8 percent to 4.5 percent, among other changes—in June 2021.

Under the American Rescue Plan, Arizona will receive $4.2 billion in direct state fiscal aid and $2.4 billion in local government aid from the federal government. As of January 2022, Arizona had spent part of its state ARP funds on refilling its unemployment insurance trust fund, K-12 education, workforce development, and broadband expansion.

According to NASBO, Arizona’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

  • FY 2021: $11.5 billion/$45.1 billion

  • FY 2020: $11.2 billion/$40.8 billion

  • FY 2019: $10.7 billion/$38.7 billion

For more on Arizona’s budget, see