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ECONOMIST EXPECTS A GOOD YEAR
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K-12 school repairs and other capital projects, and
debt repayments. He pointed out that during the Great HELPING
Recession the state mortgaged several of its buildings.
Other possible uses for the unexpected revenue include
infusing the Budget Stabilization Fund, commonly SCHOOLS
known as the rainy day fund, and buying down the $930
million in the K-12 rollover.
Schimpp raised a troubling question that always
looms over economic forecasts: Is Arizona prepared for FOCUS ON
the next recession? Standard and Poor’s says Arizona
is at moderate risk in a possible recession – about 35
percent ready, Schimpp said. WHAT
“ e next recession will be shallower than the last one
– it will be milder,” he said.
Another looming issue is whether the state addresses
federal tax conformity. If the state takes no action to MATTERS
conform to several 2018 changes in federal tax law, that
could generate $133 million to $236 million in additional
revenue for the state treasury. That means Arizona MOST
residents would pay more in state taxes.
Schimpp said the forecast does not address the U.S.
Supreme Court ruling in the Wayfair case allowing states
to tax online out-of-state transactions under certain
conditions. DELIVERING COMFORT AND
If enacted, Schimpp said, that could generate at least
$85 million, and perhaps more. UNIQUE FINANCIAL SOLUTIONS
In addition, Arizona’s economic forecast does not THROUGH PERSONALIZED
address U.S. Supreme Court ruling that opens the
door to legal sports betting, Schimpp said. e ruling TECHNOLOGY.
legalizes the estimated $150 billion in illegal wagers on
professional and amateur sports that Americans make
every year.  Energy efficiency
Also not taken into consideration is pending litigation,
including a lawsuit challenging the tax on rental cars.  Facility modernization
“And,” Schimpp added, “of course, K-12 capital  Improved environment
expenses, which could be $2 billion.”
Schimpp tossed out some encouraging statistics,  Renewable energy
such as: Arizona ranks 6th in economic momentum;
personal income is up 5.6 percent; population  Self-funding resolutions
increased 1.6 percent; employment rose 2.9 percent; but
unemployment ranks 44th. Sales tax growth in 2018 was
6.2 percent, the highest since 2006, before the recession
hit.
Individual income taxes in 2018 rose 10 percent
fueled by the hot stock market that generated capital
gains, Schimpp said.

DEREK VAN ZIJLL | 480.272.3414

CLIMATEC.COM

12 THE EDGE | WINTER 2019