My Annual Mockery of Arizona Budget Games

If it's June, it must be time for me to mock Arizona budget games.  To save re-writing the old post over and over, here is what I wrote several years ago.

In May of this year I got a form from the Arizona Department of Revenue that said my company was now large enough to make estimated sales tax pre-payments.  Some states do this when you are large enough - they don't like you holding their sales tax money a whole month until the reporting deadline, they want their cash in hand.  Its a pain, so I sighed, but we did it.  We prepaid estimated full-month June sales tax in mid-June as required, rather than in mid-July when the payment would normally be due.  Note that we still have to fill out all the sales tax reports in July, so paperwork is doubled, not to mention the extra work to reconcile between the estimate and actual results.

So this month, I was looking for the July pre-payment form.  I figured the July pre-payment must be due soon, so I called the Department of Revenue and asked where my form was.  They said there was no form for July.  The pre-payment is only one time.  I said, "its only for June?" and they said yes.  You can see the blank form online is hard-coded for June.

Then it dawned on me:  Arizona is on a June 30 fiscal year.  The entire point of this exercise is to pull July revenues into June to artificially inflate the prior fiscal year financials.  Wow - all those pious government workers artificially manipulating results just like an evil old corporation.  Because there is absolutely no other reason to do this for just one month.  The time value of money gained is dwarfed by the costs of changing your payment processing approach for just one month, and is certainly dwarfed if you consider the extra taxpayer effort required (which of course the government never does).

But it's even worse!  Because, in effect, this only worked one time -- the first time.  The first time they did this, they helped the fiscal year.  But now, pulling forward July this year just offsets losing the July revenues from last year.  So politicians have saddled us with a tax process that costs the government more money and the taxpayer more time and has no benefit beyond generating a slightly more positive press release about the budget for some politician several years ago (whatever year this was first implemented).

  • LarryG

    any consolation.. they do this in Virginia also... luckily I am a schmuck not a business owner who has to put up with this foolishness.

  • Sam L.

    And now...It's TRADITION!

  • http://steamboatdreaming.blogspot.com Dan Hill

    The single most effective reform of government budgeting would be to move to accrual accounting. Apart from stopping this sort of nonsense it would mean explicitly accounting for future liabilities like pensions. For those who think this is not practical, the New Zealand government has been publishing accrual accounts for some years...

  • Lisa

    Colorado did Arizona one better - several years ago the state began delaying the last June paycheck of all state employees until July. Now if you are paid monthly that probably isn't a big deal but if you are paid every other week that can work out to an almost 2 week delay. It also caused havoc for everyone with automated payments planned around the deposit of their paycheck. And yes, it only made a difference to expenses once.

  • LarryG

    re: accrual accounting and future liabilities. Well, in Va, they do a pretty detailed analysis of the pensions and actually come up with a number - the additional money needed to make up for investment performance shortfalls. This year, it got pushed onto employees but ultimately Va is going to do what the Feds and many corps did years ago - move to a defined contribution system. Then it will be up to employees to figure their future pension liabilities, eh?

  • bradley13

    Simply: governments should be subject to precisely the same accounting standards as any other large organization. Otherwise, they play stupid shell-games with our money.

    Of course, companies can be stupid too. "Meet this month's sales figures." "Gotta meet the quarterly targets". Too many managers don't see the long-term picture.

  • Matt

    @bradley13

    I partly disagree with you. Far more managers than you think can see the long-term picture. The problem is that their incentives (set by the board of directors) are all based on short term performance. It's not that they can't see the long term picture, but if the board dosen't care about it, why should they.

    It's all about perverse inscentives.

  • marco73

    I work in a company where we have payroll in almost all 50 states, and some territories.
    We have to grind out piles of paperwork for various states to collect piddly amounts of state taxes by June 30, then adjust the hell out of everything for July payroll.
    I'm sure there is an army of bureaucrats in each state, filing all that paper away.
    Luckily this year, June 30 is a Saturday, so we don't have to split up the taxes on single paychecks.

  • bob

    FYI: Your link to the form doesn't work.