Trussell: State success in adverse times

Posted 11/30/20

Why is Arizona thriving despite the adversity we are facing? Great public policy.

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Trussell: State success in adverse times


I recently had the opportunity to hear from the Richard Stavneak, director of the Joint Legislative Budget Committee, followed by revered economist Jim Rounds at the Arizona Tax Research Association’s highly anticipated annual Economic Outlook Conference and was pleasantly surprised to learn that Arizona is in better position economically than the rest of the country.

So why is Arizona thriving despite the adversity we are facing?

Great public policy.

Despite an unexpected pandemic, Arizona was prepared for a fiscal downturn we didn’t see coming. The state had approximately $1 billion in the rainy-day fund. That said, one might argue that most of this year would qualify as a “rainy day.”

If you look back, the state also identified sustainable funding sources for vital services such as education. Over the last half decade, Arizona has also increased dollars for priorities, while ensuring those programs are sustainable.

In fact, in FY 2004-08 Arizona experienced an 11% average spending growth compared with FY 2016-20 when we saw only a 4.5% average spending growth in the state. Fiscal foresight and restraint played a key role in why Arizona is not suffering like other parts of the country.

Since the pandemic began, state revenue collections have been much higher (20%) than anticipated and as many states consider drastic budget cuts, Arizona ended the most recent fiscal year with a $370 million surplus. Instead of cutting, Arizona is investing in key areas like K-12 by infusing an additional $440M for education in addition to funding already allocated in the FY 2021 budget. That’s impressive given the current circumstances.

While recent years have seen significant investments in specific areas of the state’s budget that are important to Arizonans, much of these expenditures were wisely handled with one-time spending, to avoid encumbering future legislatures with fiscal obligations.

When it came time to pass the “skinny budget,” in May of this year, much of the previous one-time spending was not included. There was not a fight that legislators were cutting programs, as would have been the case if these expenditures were made ongoing. It is also notable that it was resolved by a bipartisan effort.

Arizona can and must continue to implement great public policy in a fiscally responsible manner to remain prosperous going forward. As many states implemented harmful lockdowns and are considering it again, Arizona has largely taken a commonsense approach.

Critical industries like construction and manufacturing were allowed to continue operating safely, small business have remained nimble and creative in order to stay viable and Arizona businesses in general has remained resilient under one of the most adverse situations our state has ever experienced.

Arizona’s unemployment continues to remain below the national average and the state has regained 95% of the jobs that were lost during the spring months of 2020. Further, Arizona is in the top 5 in the nation for year over year job growth largely due to the Governor’s “Open for Business” policies.

Arizona’s housing market is one of the fastest growing in the nation. We must continue to remain vigilant and fiscally responsible. Arizona is obviously doing something right to be in this great position.

Steve Trussell became the Executive Director of the Arizona Rock Products Association in 2007. He was also made the Director of the Arizona Mining Association in October of 2017.