Spending on Social Welfare Programs in Rich and Poor States. Final Report.. Arizona

07/01/2004

Population (July 2003): 5.6 Million

Total State Expenditures - SFY 2002: $18,983 Million (US Total: $1,073,816 Million)

TANF Expenditures - SFY 2002 (% of total): 0.7% (US: 1.3%)

Medicaid Expenditures - SFY 2002 (% of total): 19% (US: 20.8%)

(Source: U.S. Department of Commerce, Census Bureau and NASBO 2002 State Expenditure Report)

Arizona's per capita personal income is lower than the national average, although higher than any of the other five states in the case study. As noted earlier, in 1995 and 2001, Arizona, while not in the bottom quartile, was in the second to bottom quartile when ranking states using this measure. Data from the state's Joint Legislative Budget Committee indicate that 95 percent of Arizona's state revenue comes from sales, personal income, and corporate taxes. The state relies heavily on sales tax with 52 percent of its revenue in 2003 coming from this source. The committee is projecting revenue from the three taxes to continue to recover in 2004 and 2005 after either declines or declining growth from 1999 to 2002. Information from the Center on Budget and Policy Priorities suggests that Arizona faces a significant budget deficit of approximately $1.1 billion for SFY 2005.

Arizona's overall poverty rate is higher than the national average. Arizona's rapid growth in population from 1995 to 2003, over one million new citizens or a 25 percent increase, has put pressure on the state budget by increasing need from all government services. The state has also experienced an increase in cash assistance and Medicaid caseloads. Arizona's cash assistance caseload increased 53 percent from January 2001 to June 2003, compared to a 5 percent decline for all states. Medicaid caseload has also increased due to an expansion in eligibility from a voter-driven initiative discussed below.

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