Past President Jim Erickson led the meeting

Jill Benza - District 5510 Assistant Governor


John Arnold
Governor’s Office - Director of Strategic Planning and Budgeting

John immediately plunged us into the world of Arizona’s financial predicament and in only a few minutes gave us an understanding of how dire Arizona’s situation is … and how difficult it is to balance the state’s budget.
Housing - John first pointed out a large factor influencing our economy - the housing sector.  Graphic representation of the “bubble” is certainly dramatic.  Over the last ten years housing prices have soared … then went through a precipitous fall. The Phoenix area has been hit worse than most other cities. 
Jobs – Next John showed a graphic look at the tremendous drop in jobs. We are down twelve percent below peak employment in Arizona … a much greater loss than for the national average. Job losses during other downturns shown on the same chart were dwarfed by the present unprecedented situation.
Taxable Spending – Our present economic conditions have had a tremendous influence in the way individuals and businesses spend money. Instead of buying taxable goods like cars and televisions we are spending a larger proportion on things that are not taxed. Taxable spending is down from an average of over 35% to only 23.5%. This change in our spending pattern directly equates to less revenue going into the state’s general fund.
Balancing the Budget - Due to the more than three billion dollar shortfall of revenues, the state has had to take a twofold approach to balancing the budget. First, additional funds are being achieved through taxes – Prop 100 – and by borrowing 2.2 billion dollars. On the spending side the state is making major budgeted spending reductions affecting all sectors of the state’s economy.
  • Universities – reduced by 47%
  • Community Colleges – reduced by 71%
  • K-12 pupil expenditures – reduced by 18%
  • Child care – reduced by 37% - affects 18,000 children
  • Benefits to 19,000 families on cash assistance - cut from 60 months to 24 months.
  • Medicaid benefits to certain populations - reduced
  • State employee headcount – reduced by 12.9%
  • Funding for Tourism, Parks, Environmental Quality, Arts, Water Resources, Mines and Minerals is being eliminated or significantly reduced.
Arizona has brought expenditures down to 2005 levels.  These cuts have been painful but we are now positioned for the time when individuals and businesses get back to normal spending patterns that will equate to higher state revenues.