State government in Arizona has never in its 107-year history collected more money than it did in fiscal year 2019, which ended June 30, according to preliminary tabulations by legislative budget analysts. That means the state is starting the new fiscal year with a large surplus of cash.
In a report published today on the state’s fiscal standing during June, analysts at the Joint Legislative Budget Committee noted that Arizona’s general fund – basically, the operating fund for much of state government – grew by 11.2% in the recently ended fiscal year. In all, the state collected $11.23 billion in revenues, mostly from taxes.
That puts general fund revenues more than $1.1 billion greater than in the prior fiscal year, a growth of 11.2%. A large portion of the year’s gains came late in the year, fueled by a large increase in individual income tax collections. The preliminary final numbers are nearly $350 million more than what JLBC analysts forecast in January.
The revenue collections also are far more than what legislators expected the state to collect when they approved a budget for the fiscal year 2020 in May.
Essentially, the state is starting this fiscal year with a surplus of some $243 million. The state also ended the 2019 fiscal year with $1.01 billion in cash. That doesn’t include the nearly $1 billion that is in the rainy day fund.
The 2019 revenue growth occurred across all categories, but was largest for individual income taxes, which grew by 10.2% and exceeded the January forecast by $163 million. Corporate income taxes also grew sharply – nearly 38% – and beat the forecast by $77 million.
Overall, sales taxes were up 6.5 percent over the prior year. Among sales taxes, the retail sector grew by 6.3 percent, its best performance since 2014, and contracting-related taxes were up 15.3%, the most since 2006. Additionally, restaurant and bar sales taxes grew by 6.2%.
“The broad-based growth in Sales Tax revenue is generally reflective of Arizona’s strong economic conditions,” JLBC analysts wrote. “The healthy growth rate in the Retail and Restaurant/Bar categories is likely related to higher levels of consumer confidence, while the significant growth in contracting collections reflects increased levels of building permitting and construction activity in the state.”