Expenditures

An annual time series of state and local government expenditures produced by the U.S. Census Bureau goes back to fiscal year 1961, but the focus in Arizona Indicators is the period since the early 1990s. The data are reported for fiscal years; for example, fiscal year 2008 ran from July 1, 2007 through June 30, 2008. The latest data typically lag two-to-three years behind.

The government finance data are collected from a census of all governments in years ending in ‘2’ and ‘7.’ In the other years, information is collected from each state government and from a sample of local governments. Only “general” expenditures of state and local governments are collected; publicly run utilities, liquor stores, and insurance trust programs, such as employee retirement systems, are excluded.

Total expenditures are divided into two categories: capital outlays (for the construction of buildings and for the purchase of land and equipment) and noncapital expenditures (such as the compensation of employees and the purchase of supplies, materials, and contractual services). Capital outlays largely are made in response to a growing population and may not benefit other residents, so the noncapital figure generally is the more meaningful measure.

In order to compare expenditures over time, the effects of inflation, population growth, and per capita economic growth must be considered. Reporting expenditures per $1,000 of personal income automatically adjusts for all three factors. The fiscal year average (the average of the four quarters of the fiscal year) of personal income is used to standardize the public finance data.