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Own-Source Revenues

Description: 

Own-source revenues are those raised directly by state and local governments; federal government funds are excluded. An annual time series of state and local government revenues 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 2010 ran from July 1, 2009 through June 30, 2010. 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” revenues of state and local governments are collected; publicly run utilities, liquor stores, and insurance trust programs, such as employee retirement systems, are excluded.

In order to compare revenues over time, the effects of inflation, population growth, and per capita economic growth must be considered. Reporting revenues 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.

Data Source: 

Revenues are reported by the U.S. Department of Commerce, Census Bureau http://www.census.gov/govs/estimate/. 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.

Data Quality Comments: 

The Census Bureau did not release state and local government finance data by state for fiscal years 2001 and 2003; interpolated figures for these years are shown in the charts. In noncensus years, the Census Bureau data are subject to sampling error. In all years, the data are subject to misreporting by state and local governments and to misunderstandings between the Census Bureau and state and local governments regarding the differing accounting systems used.

Some of the inputs to the calculation of personal income by state are estimated. Personal income estimates are subject to revision. Personal income is a comprehensive measure of the economy but has conceptual limitations when employed to adjust public revenues and expenditures.

iconOwn-Source Revenues by Type Per $1,000 of Personal Income, Arizona State and Local Governments

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Visualization Notes:

Several categories of own-source revenues are used by state and local governments. The general sales tax and the property tax provide the most revenue in Arizona. Property tax collections relative to the size of the economy fell during the mid-1990s due to tax rate reductions, then held nearly steady from fiscal years (FYs) 1997 through 2008. The increase in the late 2000s resulted from the large increase in home values during the mid-2000s (changes in property tax payments lag behind changes in market values). Property tax collections per $1,000 of personal income dropped back to the 1997-to-2008 range in FY 2012.

Fluctuations in the general sales tax collections relative to personal income are due to cyclical factors. Increases in FYs 2011 and 2012 were due to the temporary tax rate increase. Individual income tax collections also are cyclical; in addition, they have fallen over time relative to the size of the economy due to a series of tax rate reductions. The increases in FYs 2011 and 2012 reflect the recovery from the recession. Revenues from other taxes also have declined over time relative to the size of the economy. In contrast, collections from fees have increased since FY 2006, in large part due to substantial increases in university tuition.

iconOwn-Source Revenues by Type Per $1,000 of Personal Income as a Percentage of the National Average, Arizona State and Local Governments

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Visualization Notes:

The revenue structure used by state and local governments in Arizona is considerably different from the national average. Since fiscal year (FY) 2000, revenues per $1,000 of personal income have been above the U.S. average only from the general sales tax (other than a spike in “other” revenues in FYs 2008 and 2009). Apart from the declines in the ratio to the national average in FYs 2008 and 2009 that reflect the much more severe recession in Arizona, state and local governments in Arizona have become increasingly reliant on the sales tax. In contrast, the reliance on the other major revenue source, the property tax, has decreased. Arizona’s property tax collections relative to the size of the economy fell from roughly 10 percent above the national average in the early 1990s to approximately 10 percent below since FY 2004. Collections from most of the other revenue sources also have fallen further below the national average, though the turn in the economic cycle pushed most of the ratios higher in FYs 2011 and 2012.

Data Source

Revenues are reported by the U.S. Department of Commerce, Census Bureau http://www.census.gov/govs/estimate/. 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.