Arizona’s economy showed more signs of recovery in November, the fourth consecutive month of year-to-year growth in state revenue.
That’s good news for lawmakers, who face hundreds of millions of dollars in budget shortfalls in this fiscal year alone, which ends June 30.
But the report by the Joint Legislative Budget Committee also includes cause for caution.
November revenue collections grew by nearly 18 percent compared to last year, but the JLBC said this growth might have “overestimated” underlying economic activity.
First, the dollar amount of corporate income tax refunds was extraordinarily high last year. They aren’t nearly as large this year, so the revenue loss to the state is significantly less.
Also, individual withholding tax payments increased, but JLBC noted the increase wasn’t accompanied by an expected level of job and wage growth. The committee said it’s difficult to interpret growth because Arizona recently changed its withholding tax table, which means individuals could potentially see larger refunds when they file their returns in April. If that happens, it would result in less actual revenue for the state.
Still, there are clear signs of stability.
The state’s operating balance at the end of November was $488 million. In contrast, during the same period last year, the state was operating on more than $500 million of borrowed money.
The balance at the end of the 2010 fiscal year was still negative, but the $5.7 million shortfall was a remarkable improvement over the ending fiscal year 2009 budget, which was short by $481.7 million.
There’s more cause for optimism.
November also saw a modest 0.5 percent growth in jobs compared to October.
The state has added 24,900 jobs, a one percent net gain, since November 2009. In fact, that figure beat the national average net gain of 0.6 percent.
This suggests that recovery in Arizona is “strengthening,” JLBC said.
Meanwhile, the state’s unemployment rate also fell to 9.4 percent from 9.5 percent during November. In contrast, the national jobless rate actually increased to 9.8 percent from 9.6 percent during the same period.