The Associated Press
The Associated Press
PHOENIX – State government is beginning its fiscal year with sobering fiscal results carrying over from the year that ended June 30 and gloominess among economists.
Legislative budget analysts reported Friday that revenue was down from the same month in the prior year for the 10th straight month.
The Joint Legislative Budget Committee staff’s monthly report said July’s tax collections of $639 million were 7 percent below July 2007 and $89 million below the amount expected last month.
Because of the revenue slump, Arizona had to significantly scale back its budget for the fiscal year that ended June 30 and lawmakers struggled for months to come up with a new, smaller budget for the year that began July 1.
The analysts said they would need several months of results in the new fiscal year before they would try to revise revenue forecasts.
Private and government economists surveyed by Arizona State University’s W.P. Carey School of Business scaled back their projections for 2008.
“Although there are scattered signs that the economy may be close to bottoming out, there is little optimism about an actual upturn in key Arizona indicators during the second half of this year,” Associate Dean Lee McPheters wrote in an Arizona Blue Chip Economic Forecast released Friday.
Sales tax revenue is the single biggest revenue source and the budget staff report said it was down by 9.3 percent from July 2007 due to factors that included high gasoline prices and the housing market’s collapse.
“While gas prices have slowly begun to decrease, the relatively high price levels may continue to impact retail sales negatively,” legislative budget analyst Hans Olafsson said.
Corporate income tax, the smallest of the three major revenue sources, was down 31 percent from July 2007. Individual income tax was down 1 percent from a year earlier.