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Appropriations Limit

Description: 

State government appropriations cannot exceed a specified limit, measured as a share of personal income in Arizona. This constitutional limitation was passed in the late 1970s. Measuring appropriations as a percentage of personal income automatically adjusts for the effects of inflation, population growth, and per capita economic growth.

Some revenues, such as those deposited to the unemployment compensation fund, are excluded in the calculation of the appropriations limit. Effectively, the appropriations subject to this limit are greater than “total appropriations” from all funds but less than “total authorized spending.”

Appropriations are approved by the Arizona Legislature before the beginning of each fiscal year, but adjustments to appropriations can be made during the year. The data are reported for fiscal years; for example, fiscal year 2013 runs from July 1, 2012 through June 30, 2013.

By statute, appropriations and the appropriations limit are reported annually by the Arizona Joint Legislative Budget Committee (JLBC) in February. The appropriation figure for the coming fiscal year is a projection. Similarly, the personal income figure used to calculate the limit is a projection for the current and next fiscal years. In every year from 1980 through 2008, the JLBC’s projected personal income was lower than the actual figure; in their February report, the JLBC presents the original projections for prior years, not the actual figures. Thus, the JLBC’s report provides a history of the projected appropriations limit, not the actual amount of appropriations divided by actual personal income. Instead of showing this time series in Arizona Indicators, the limit was recalculated to reflect the actual personal income.

Data Source: 

The appropriations limit and three versions of appropriations — the amount bound by the limit, total appropriations, and general fund appropriations — are reported annually by the Arizona Joint Legislative Budget Committee (JLBC) http://www.azleg.state.az.us/jlbc.htm. The expenditure data for the general fund and for all funds are taken from the Appropriations Report; when released late in a fiscal year, the report includes revised appropriations for the current fiscal year and appropriations for the following fiscal year. The Appropriations Report is released several weeks after the budget has been passed by the Legislature and approved by the Governor.

Personal income is estimated quarterly by state by the U. S. Department of Commerce, Bureau of Economic Analysis http://www.bea.gov/regional/index.htm. It is released about three months after the end of the quarter; revisions to estimates for prior quarters are made every quarter.

Data Quality Comments: 

Because of differences by state in accounting systems, the JLBC data are not comparable to those of any other state.

Some of the inputs to the calculation of personal income by state are estimated. Personal income estimates are subject to revision. The personal income figure used in the calculation of the appropriations limit for the latest fiscal year is projected. Personal income is a comprehensive measure of the economy but has conceptual limitations when employed to adjust public revenues and expenditures.

iconAppropriations and Appropriations Limit as a Percentage of Personal Income, Arizona State Government

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Visualization Notes:

The appropriations limitation went into effect at the end of the 1970s. Due to shifts in program responsibility between federal, state, and local governments, the original appropriations limit of 7 percent of personal income has risen to 7.41 percent. For appropriations subject to the limit as a percentage of personal income, some cyclicality is seen, but the trend has been down. The percentage has been less than 6 percent since fiscal year (FY) 2009. The projected figure for FY 2016 is near the all-time low.

Similar down trends as a share of personal income are seen for total appropriations from all funds and for general fund appropriations. The former peaked at 5.94 percent in fiscal year 1992 but has been less than 5 percent since FY 2010. The latter peaked at 5.21 percent in FY 1992 and has been less than 4 percent since FY 2009. Each is at a record low for FY 2016.

Data Source

The appropriations limit and three versions of appropriations — the amount bound by the limit, total appropriations, and general fund appropriations — are reported annually by the Arizona Joint Legislative Budget Committee (JLBC) http://www.azleg.state.az.us/jlbc.htm. The expenditure data for the general fund and for all funds are taken from the Appropriations Report; when released late in a fiscal year, the report includes revised appropriations for the current fiscal year and appropriations for the following fiscal year. The Appropriations Report is released several weeks after the budget has been passed by the Legislature and approved by the Governor.

Personal income is estimated quarterly by state by the U. S. Department of Commerce, Bureau of Economic Analysis http://www.bea.gov/regional/index.htm. It is released about three months after the end of the quarter; revisions to estimates for prior quarters are made every quarter.