PHOENIX – Thanks to the improving economy, the state's rainy day fund is on the rebound after being virtually drained because of the state's budget woes and the alternative fuel subsidy fiasco.
Revenue figures released Tuesday indicate that the state will deposit at least $22 million into the Budget Stabilization Fund because tax collections during the just-ended 2003-2004 fiscal year exceeded budgeted amounts.
Also, additional dollars will go into the rainy day fund if tax collections in the fiscal year that began last week are above projections during the first six months.
Legislative budget analysts reported previously that tax collections in the 2003-2004 fiscal year were high enough to trigger additional spending for school building work ($65 million), state employee health insurance ($23 million), child care subsidies ($5 million) and law enforcement communications ($3 million) as well as deposits of $6 million into the rainy day fund.
On Tuesday, Gov.
Janet Napolitano said preliminary figures for tax collections through June 30 will trigger $16.8 million of additional deposits into the rainy day fund.
The revenue figures released Tuesday showed $6.49 billion for 2003-2004, a 12 percent increase over the year before, with most of the difference attributed to higher sales and income tax revenue.
"Our economy is definitely coming back," Napolitano said.
"I'm glad to report that we're able to put at least some money in there should it begin to rain again."
When it was established in 1990 by the Legislature in reaction to the state's last major economic slump, the rainy day fund was envisioned as a way to help the state avoid painful fiscal retrenchings.
An Arizona Town Hall report issued in October 2003 called the fund "a fundamental tool for planning and managing" the state's finances but said it had been abused by lawmakers and was too small to provide the desired evening-out during economic hard times.
The rainy day fund peaked at approximately $400 million in 2001.
But then lawmakers used it to prop up spending levels in the face of the two-year revenue slump during the economic downturn.
Most recently, lawmakers took the last unencumbered $8 million in the fund to help balance the 2004-2005 budget.
And the fund was a convenient source of cash in recent years for lawmakers to pay for building a new state mental hospital and to cover approximately $130 million of unexpected costs from subsidies for alternative fuel vehicles in 2000.