DALLAS — Arizona lawmakers preparing for their 2015 session face troublesome revenue forecasts after the state's income fell below budget projections for seven straight months through October.
Revenues for the 2014 fiscal year were $86 million below the forecast, while those for 2015 are already $72 million shy of forecast, according to a presentation by the Joint Legislative Budget Committee staff.
Those figures add a further challenge to overcoming an anticipated $520 million deficit in the fiscal year ending June 30 and a potential $1 billion shortfall in the 2016 fiscal year that begins July 1.
According to the Joint Legislative Budget Committee staff, October revenue collections totaled nearly $712 million, or about $7 million below the forecast amount.
General fund collections so far in the current fiscal year are 3.6% above those for the same period last year but nearly $72 million below the forecast.
Arizona revenue growth has "slowed considerably" in recent months, according to the report. Individual and corporate income-tax revenue in particular are below projections.
The shortfall projection includes an additional $336 million a year the courts have ordered the state to pay public and charter schools after determining Arizona did not fully cover inflation effects during the recession.
Republican leaders are appealing the court order in hopes of delaying payments.
Democratic State Sen. Steve Farley said in a monthly report from his office that Arizona could recover $12 billion of lost revenue by closing tax loopholes. The Republican-controlled Legislature in recent years has cut taxes, particularly corporate tax exemptions.
Arizona has nearly 200 exemptions to its sales tax, ranging from groceries to 4-inch pipes used to transport water, gas, oil or coal slurry, according to state officials. Farley has pushed legislation to end some of the exemptions.
Farley's estimate that $12 billion could be recovered stems from a 2013 report produced by the Arizona Department of Revenue that details tax expenditures.
"We can finally tackle the revenue hemorrhaging from more than $12 billion in special-interest tax loopholes currently in our sales-tax code, like the infamous 4-inch pipe exemption," Farley wrote in his Nov. 6 report.
