In the August 1, 2008 CSA Update:
JLBC FY08 Wrap-Up: Painful Year for State Revenues
A report released yesterday by the Joint Legislative Budget Committee (JLBC) continues to cast shadows over state revenues. According to the report, state revenue collections in June were $78 million below those collected only one year ago; for all of FY08, state general fund revenue collections were $356.4 million below their forecasted levels. The shortfall was created by a decrease in all major tax categories: state corporate income taxes dropped by 20.1 percent for the year, individual income taxes dropped by 9.1 percent, and sales taxes dropped by 2.3 percent. (Note: this is the first year that state sales tax revenues have decreased since 1981, when a sales tax on food was eliminated.)
The impact on the FY08 state budget, however, was lessened by lower-than-expected spending by state agencies. Agencies were expected to revert $85 million in unspent appropriations, but instead left an excess of $189 million. In part, this is likely due to leftover FY08 bills that will be paid early in FY09, but the excess revertments did help lessen the blow of the total FY08 shortfall. An estimated $118 million will remain in the state's Budget Stabilization Fund for use in FY09.
State Budget Impacts Continue to Appear
The FY09 state budget enacted in June contained some obvious impacts to county governments, and additional cost shifts are being unveiled as implementation of the budget legislation begins. The following items will increase costs to county governments through additional fees or fund sweeps that were authorized in the state budget.
DPS Crime Lab to Implement Fees
Local law enforcement officials are taking a second look at their adopted budgets in light of a budget provision that will shift costs of the state crime lab to local entities. The crime lab, which was created by the Department of Public Safety (DPS) enabling statutes in 1968, provides criminal analysis services to law enforcement across the state. The lab has never charged for the services it was created to provide, but in FY09 was authorized to raise fees up to $7.8 million in order to cover a budget cut of that same amount.
The legislation that was enacted simply provides the authority to raise fees, and does not specify the method by which DPS should do so. Therefore, DPS officials are meeting with law enforcement representatives to evaluate several implementation options. One plan would have required all law enforcement entities within a county to coordinate on how to cover the total county portion of the budget costs, but the plan was dismissed when it became obvious the idea would generate significant complications.
It is likely that DPS will charge local entities prorated amounts based on their usage of the lab in FY08. Some law enforcement offices object to paying based on last year's costs and have concerns about the accuracy of the FY08 information, but DPS believes the implementation policy could help prevent negative impacts on criminal justice analysis that would be likely if officers had to weigh budget concerns for every item they need evaluated in order to prosecute a crime.
DPS has until the end of September to obtain input and implement the new fee; they anticipate local law enforcement will receive the first bill around September 26, when the legislation (HB 2462) becomes effective.
Visit the following links for news coverage on this issue from around the state:
"DPS charging crime lab fees," The Arizona Republic
"Budget cut makes crime lab charge for many services," The Arizona Daily Star
Budget Cuts Hit Local Public Health Funding
Significant cuts from the Department of Health Services' (DHS) budget caused agency budget changes that will directly impact the operations of county health departments. The following cuts relate to services local health departments provide in cooperation with DHS:
-
$330,300 for County Nutrition Programs was suspended, eliminating nutritional education for low-income third grade students;
-
$1.5 million was suspended for Community Health Centers;
-
$114,900 cut from county prenatal services will result in a 10 percent cut to each county health department's maternal and child health services;
-
$200,000 was cut from county tuberculosis provider care and control, which will reduce state assistance for county anti-TB activities;
-
$200,000 will be cut from four counties, who received the funding for general public health activities.
Additional Agency Fee Increases Likely
Interactions with other state agencies may continue to become more expensive as other entities enact their authority to increase fees. The State Land Department has announced a
new fee schedule that will apply to numerous activities on state trust lands.
The Arizona Department of Agriculture, Arizona Department of Environmental Quality and the Radiation Regulatory Agency were also authorized to increase fees in order to generate specific levels of revenues that were cut from their budgets.
