State revenues continue downward slide

It sounds like a broken record, but state revenue collections, while up compared to last July, were $24.5 million less than expected.

And July, the first month of the new fiscal year, started in the hole because instead of carrying over an estimated $529 million from last year, the state started the new budget year with just $303 million in the bank.

“I’m truly concerned,” said Rep. Bob Robson, who represents Ahwatukee Foothills and the western half of Chandler in Legislative District 20.

Normally $303 million would be a plump safety cushion, but the governor and lawmakers assumed that they would have the full carryover amount, and have plans to spend $528 million in the coming months.

“This would result in a fiscal year 2008 shortfall unless other areas of the budget perform better than expected,” according to a report by the Joint Legislative Budget Committee.

Robson said that lawmakers are concerned over the potential of a half-billion deficit by June 30, the end of the current fiscal year.

“The speaker of the house has sent a letter to the governor, about a week or 10 days ago, expressing concern and asking her to make her agency heads aware, and potentially look at avenues to keep the shortfall from being as severe as it potentially could come,” Robson said.

July revenues were mostly disappointing, with sales tax $27.2 million less than expected and corporate income tax down $6.9 million.

The only bright spot was individual income tax collections, $8.7 million more than expected, but even that might have been a technical glitch, resulting from the timing of withholding recipes.

Home construction and real estate have been a potent engine in the Arizona economy, but with home sales down in July 11.8 percent from June and down 21.9 percent from the same time last year, many economists are waiting for the market to bottom out.

Robson thinks that home construction may have flattened out and stabilized, but in Ahwatukee Foothills the real estate bust has resulted in frozen or declining prices, with the average price of a new home falling from $633,755 in the second quarter of 2006 to $625,150 in 2007, according to the Arizona State University Real Estate Center. The average price of home resale’s also dropped from $376,500 in 2006 to $351,700 in the second quarter of 2007.

The good news is that while double-digit growth appears to be over for at least a few years, Arizona continues to grow and bankruptcies, while up, are the fourth lowest in the country.

“The economy is not necessarily floundering severely, its just not as robust,” as it was, Robson said.

Doug Murphy can be reached at (480) 898-7914 or dmurphy@aztrib.com.