Appropriations Limit

State government appropriations cannot exceed a specified limit, measured as a share of personal income in Arizona. This constitutional limitation was passed in the late 1970s. Measuring appropriations as a percentage of personal income automatically adjusts for the effects of inflation, population growth, and per capita economic growth.

Some revenues, such as those deposited to the unemployment compensation fund, are excluded in the calculation of the appropriations limit. Effectively, the appropriations subject to this limit are greater than “total appropriations” from all funds but less than “total authorized spending.”

Appropriations are approved by the Arizona Legislature before the beginning of each fiscal year, but adjustments to appropriations can be made during the year. The data are reported for fiscal years; for example, fiscal year 2013 runs from July 1, 2012 through June 30, 2013.

By statute, appropriations and the appropriations limit are reported annually by the Arizona Joint Legislative Budget Committee (JLBC) in February. The appropriation figure for the coming fiscal year is a projection. Similarly, the personal income figure used to calculate the limit is a projection for the current and next fiscal years. In every year from 1980 through 2008, the JLBC’s projected personal income was lower than the actual figure; in their February report, the JLBC presents the original projections for prior years, not the actual figures. Thus, the JLBC’s report provides a history of the projected appropriations limit, not the actual amount of appropriations divided by actual personal income. Instead of showing this time series in Arizona Indicators, the limit was recalculated to reflect the actual personal income.