This is a summary of several reports related to government finance in Arizona that have been produced by the Office of the University Economist since December 2008. Some new information has been added in an attempt to provide a complete picture. The format of this report is a brief summary by issue, sometimes accompanied by a table or chart. References are provided to the report and the page number where additional detail can be found.

Volume I: Facts
Analyses of Arizona state government finance, using data of the Arizona Joint Legislative Budget Committee, and of the combined finances of all state and local governments within Arizona, using data of the U.S. Census Bureau. A historical perspective is provided for both datasets. For combined state and local government finance, comparisons are made to other states and to the national average. In addition, other measures of the tax burden by state are examined.

Volume II: Concepts and Issues
Addresses the conceptual and empirical relationships between taxes, government revenue, and economic growth. Also discusses current issues specific to Arizona state government finance. This is a revised version of the report "Tax Reductions, the Economy, and the Deficit in the Arizona State Government General Fund," incorporating new and updated material.

Volume III: Options for Managing the Arizona State General Fund
Presents options and offers recommendations for managing the Arizona state government general fund. The near-term budget deficit is addressed as well as ways to prevent budget deficits from recurring every time economic growth slows.

The Phoenix metropolitan area is new by national standards, having developed primarily since World War II and particularly since 1970. However, settlement patterns were established in the 1800s, in part due to topographic features such as water courses and mountains. The war effort during World War II stimulated the growth of the Valley. After the war, a combination of events led to much faster growth. These included the desire of ex-servicemen stationed in the area during the war to return; improvements in air conditioning; charter government in Phoenix, which allowed a small pro-growth business group to gain power; and
aerospace and electronics firms siting facilities, in part because of the federal government’s designation of Fort Huachuca as the principal proving ground for electronic defense equipment. The modern period began around 1970, when a maturing metro area coincided with the baby-boom generation reaching adulthood. The result was even more rapid growth that has continued to the current time. Rapid growth of the Phoenix metro area is expected to continue for at least the next 50 years. Land and water availability should not restrict growth until after the current population of nearly three million exceeds seven million in 2050.

Public finance—taxes and other revenues collected by government and the expenditure of those revenues—always has been somewhat controversial because of wide philosophical differences among residents regarding the role that government should play in providing public services and in collecting taxes and fees from its residents. Recently, public finance in Arizona has become a prominent public issue due to the need to resolve the deficits that afflict state government and most county and municipal governments in Arizona.

The purpose of this paper is to provide background information on trends and possible future changes in urban structure and lifestyles important for planning the development of a parcel of Arizona state trust land known as Superstition Vistas (SV). This parcel, which is located just south of the Superstition Mountains in Pinal County, has an area of 275 square miles—enough land to provide housing for 900,000 new Phoenix metro-area residents at current population densities.

The aspects of future urban living discussed in this paper are those important for land-use planning—density, neighborhood design, transportation demand, etc. Very little attention will be given to the interior of homes. Also, since the SV parcel is currently undeveloped, emphasis will be placed on changes in urban structure that can be accomplished in greenfield developments rather than the in-fill of urban cores.

Arizonans have been divided in their feelings about growth and what to do about it, especially during the past two decades. To complicate matters, the debate over the best responses to growth has been drawn along overly simplistic lines—the economy versus the environment. Arizonans who follow the myriad issues related to urban growth closely are becoming convinced that the discussion needs to be recast in a new light.

Scholar Leo Marx coined the phrase “the machine in the garden” in 1964 to describe the relationship between nature and technology. Considering much of the writing about Arizona’s growth, it seemed an apt title for this volume of Arizona Policy Choices. "The Machine in the Garden" presents growth policy choices for Arizona along a continuum: Yesterday’s Growth—the policies that have been used in the past; Today’s Growth—the “smarter” approaches from around the country; and Tomorrow’s Growth—cutting edge thinking about the economy and experiments in urbanism and governance.

This publication offers comparative data and analysis on 10 public policy issues. With its scope and detail, "How Arizona Compares" will be of interest to many throughout Arizona and strives to encourage leaders and residents to discuss and move ahead on the state's most pressing public policy issues. The intent is for this publication to be studied and used for dialogue and action. The following sections are included: (1) Polishing the 48th Star; (2) Inside "How Arizona Compares"; (3) Arizona's Land and People; (4) Crime and Punishment; (5) Health and Health Care; (6) Education; (7) Business Futures; (8) Families and Incomes; (9) Signal Measures on Hot Topics; (10) Government; (11) Arts and Culture; (12) Housing; (13) Transportation; and (14) Environment. A list of selected sources is appended.

Arizona is emerging from one of the worst state budget crises in the nation. Entering 2003, its projected deficit, measured as a percentage of the general fund, was the fifth largest in the country.1 The state had slashed spending in 2002 in the face of a $900 million deficit, but still faced a $400 million shortfall for fiscal year 2003 and an estimated $1 billion deficit in fiscal 2004. Although improved revenues have reduced the anticipated gap, fundamental underlying problems remain concerning the ability of lawmakers to control the budget. Some observers consider this a revenue problem, others a spending problem. Our concern in this paper is whether state lawmakers have enough control over either revenue or spending.