Tag Archives: Lee McPheters

phoenix

Arizona drops from Top 10 for job growth

We’re still slowly recovering from the staggering loss of jobs during the Great Recession, but some cities and states are rebounding faster than others. The job-growth numbers for the first three quarters of 2014 are now out. Research Professor Lee McPheters of the W. P. Carey School of Business at Arizona State University provides rankings and analysis of the winners and losers, based on the latest figures from the U.S. Bureau of Labor Statistics.

Top 10 cities and surrounding metro areas (1 million or more workers), for non-agricultural job growth — comparing January through September of this year to the same nine months last year:

Orlando, Fla. – up 3.7 percent
Houston – up 3.5 percent
Dallas – up 3.4 percent
Miami – up 3 percent
Portland, Ore. – up 2.9 percent
Riverside, Calif. – up 2.8 percent (tie)
Denver – up 2.8 percent
San Francisco – up 2.6 percent (tie)
Seattle – up 2.6 percent
10.  San Diego – up 2.4 percent

Top 10 states for non-agricultural job growth – comparing January through September of this year to the same nine months last year:

North Dakota – up 4.6 percent
Nevada – up 3.6 percent
Texas  – up 3.3 percent
Utah – up 3.1 percent
Florida – up 2.9 percent
Oregon – up 2.8 percent
Colorado – up 2.7 percent
Delaware – up 2.5 percent
California – up 2.2 percent (tie)
Washington – up 2.2 percent

Analysis:

The United States has added about 2.4 million jobs so far this year. The monthly average from January through September was 1.8-percent job growth nationwide. That pace is only slightly better than last year’s, when we saw an overall annual increase of 1.7 percent, so the recovery remains relatively slow.

On the state list, North Dakota has held the No. 1 spot every year since 2009, largely thanks to its oil and gas production. Nevada, Texas and Utah also topped 3-percent job growth this time, with Nevada’s economy receiving a big boost from building activity and impressive construction gains of more than 10 percent.

“Seven of the top 10 job-growth states so far this year are in the West,” says McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “Oregon and Delaware are new on the list this time, replacing Idaho and Arizona.”

Arizona actually fell out of the top 10 for the first time in two years. Even though it ranked No. 3 in health-care job growth and No. 5 in financial-activities job growth, the state has now dropped to No. 14 overall. Manufacturing, government and construction contributed to the decline.
The bottom 10 states so far this year are Michigan, Pennsylvania, Connecticut, Maryland, Illinois, Vermont, Virginia, New Jersey, New Mexico and last-place Alaska.  Five of these states were also on the bottom in 2013: Pennsylvania, Vermont, Virginia, New Mexico and Alaska.

McPheters notes very high interest in state economic performance right now because 30 governors are up for reelection, including those in top-10 states Nevada, Florida, Oregon, Colorado and California, as well as bottom-10 states Michigan, Pennsylvania, Connecticut, Illinois, Vermont, New Mexico and Alaska.

On the top 10 cities list, Orlando holds the No. 1 position with 3.7-percent job growth, double the national pace.

“Eight of the top large cities for job creation are in the West,” explains McPheters, “However, Florida also did well, with two cities on the list.”

Seven of the top 10 cities are clustered in Florida, Texas and California. They include Orlando, Miami, Houston, Dallas, San Francisco, San Diego and Riverside, Calif.

The greater Phoenix labor market dropped out of the top 10, as its rate of job growth slipped from 2.7 percent in 2013 to a more modest 2.2 percent during the first three quarters of this year. Phoenix is currently No. 12 among labor markets with 1 million or more workers.

Still, seven large labor markets have job creation below 1 percent: Chicago, Cleveland, Philadelphia, Kansas City, Pittsburgh, northern Virginia and lastly, Detroit.

The full rankings and other job-growth data from McPheters can be found at the W. P. Carey School of Business “Job Growth USA” website: www.wpcarey.asu.edu/jobgrowth. Use the “year to date” function for the current 2014 numbers.

Arizona Is Losing Economic Grounds To Other Southwestern States, 2008

Rebound for Arizona and U.S. Slows Down

Jobs, home prices and population growth are all slowly rebounding in Arizona. However, experts from the W. P. Carey School of Business at Arizona State University say we still have a long way to go, and the automatic federal budget cuts known as the sequester aren’t helping our momentum. The experts delivered their forecasts today at the annual Economic Outlook Luncheon sponsored by the Economic Club of Phoenix.

Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School, confirmed Arizona is once again a Top 15 growth state for both employment and population, but we’re not back to normal levels. From 1960 to 2007, we routinely ranked among the Top 5 states for both employment and population growth. In the rough years from 2008 to 2011, we dropped down to No. 48 and No. 14 in those areas.

“Last year, we finally bounced back to No. 8 for employment growth and No. 7 for population growth,” said McPheters. “However, the sequester and other factors have been clouding the economy here in recent months, and the year-over-year job-growth ranking issued this March dropped Arizona down to No. 13. The state will have to wait a couple more years for full recovery.”

Arizona added 48,900 jobs in 2012. The state is projected to add 61,000 jobs this year. The fastest-growing industries are construction, wholesale trade, information, state government and leisure/hospitality.

“Arizona has gained back 39 percent of the 314,000 jobs we lost in the recession,” explained McPheters. “However, that’s a pace well behind the nation as a whole, which has regained 67 percent of its 8.8 million lost jobs.”

In recent years, population growth in Arizona had dropped from the state’s typical 2- to 3-percent range to less than 1 percent. Finally last year we popped back up to 1.3 percent.

Personal income may also be coming back. The consensus of Arizona Blue Chip economists shows growth in this area of 3.7 percent in 2012, 5.1 percent expected in 2013, and 6 percent expected in 2014.

“The bottom line is that Arizona is doing better than most states, but this will still be the seventh year in a row of lean, subpar growth for us,” said McPheters.

Dennis Hoffman, economics professor and director of the L. William Seidman Research Institute at the W. P. Carey School of Business, reiterated that Arizona is recovering more slowly from this recession than from others in the past. However, we are coming back stronger than the nation as a whole in most areas of the economy. Hoffman expects the United States to see 2- to 3-percent gross-domestic-product (GDP) growth this year. That will likely include more moderate job growth and low inflation.

“The economy is plodding along, assisted by the real-estate and stock-market recoveries, low fuel prices and innovation in the business world,” said Hoffman. “Still, we face a lot of uncertainty from our national-debt crisis, political squabbling in Washington, economic difficulties in Europe and China, and changing demographics. One huge issue remains the problem of future funding for Social Security and Medicare.”

At the state level, Hoffman says we’re going to be strongly affected by the decisions still to be made this year on possible Medicaid expansion, the loss of the temporary sales tax, the potential taxing of online sales, and other big issues. For now, state revenue has been coming back with the rebounding economy.

When it comes to the housing market, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business, delivered good news about the recovery. Specifically, the median Phoenix-area home price was up a whopping 58 percent from a low of $111,000 in May 2011 to $175,000 this March. Foreclosures were down 60 percent just over the last year from March 2012 to March 2013, and Orr expects foreclosure rates to dip below long-term averages by the end of next year. Also, less than 5 percent of Arizona home loans (not already in foreclosure) are delinquent now.

However, we do face some problems in the housing market. For one thing, there’s a chronic shortage of homes for sale. Now that there’s no flood of cheap foreclosures and short sales coming onto the market, buyers are dependent mostly on normal resales and new-home sales.

“Higher prices would normally bring more ordinary home sellers into the market, but many are either locked into their homes because of negative equity, or they’re simply waiting for prices to go up more,” explained Orr. “As a result, some buyers are turning to new-home sales, but developers are reluctant to overbuild as much as they did at the market peak. Therefore, we may see about 50,000 to 60,000 new people being added to our local population this year, but only around 12,000 new single-family homes being built.”

Today’s Economic Outlook Luncheon was held at the JW Marriott Desert Ridge Resort & Spa in Phoenix. The Economic Club of Phoenix hosts this event every spring, as one of its opportunities for Valley business leaders and others to network and engage. The club was founded by a group of prominent business executives called the Dean’s Council of 100, in conjunction with the W. P. Carey School of Business. More information about the club can be found at www.wpcarey.asu.edu/ecp.

Today’s presentations will be posted at knowWPCarey, the business school’s online resource, at http://knowwpcarey.com.

economy

Arizona Could Hit Full Economic Recovery in 3 Years

We’re finally on the path to full economic recovery, and Arizona may get there in about three years. That’s the main message from experts who spoke today at the 49th Annual Economic Forecast Luncheon co-sponsored by Arizona State University’s W. P. Carey School of Business and JPMorgan Chase.

About 1,000 people attended the event at the Phoenix Convention Center, where economists painted a generally brighter picture for 2013.

“As of September, Arizona ranked fifth among states for job growth, and the Phoenix area was fourth among large metropolitan areas,” said Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “Arizona is expected to add 60,000 jobs in 2013, led by professional and business services, retail, hospitality and health care. We should finally dip below 8-percent unemployment in 2013 — down to 7.6 percent.”

McPheters added, as long as the national economy doesn’t drag us down, Arizona may see 2.5-percent growth in its employment rate next year. The state had 2-percent growth this year. Despite the jump, Arizona has gained back less than a third of the jobs it lost during the recession. McPheters believes it will take another three years to return to pre-recession employment levels.

In 2013, McPheters expects improved 5-percent growth in personal income, up from just 4 percent this year. He projects retail sales will go up 6 percent, from 5 percent this year. He expects Arizona’s population to rise 1.5 percent, and he believes single-family housing permits will shoot up a whopping 50 percent, with the local housing market now on the mend.

Both McPheters and Beth Ann Bovino, deputy chief economist at Standard & Poor’s, hinged their forecasts on whether the national economy can really pull forward; otherwise, Arizona will go down, too. The biggest question out there is whether Congress can avoid the “fiscal cliff” – where automatic spending cuts would kick in, just as various tax cuts expire. Bovino says that could plunge the United States back into recession and push national unemployment back above 9 percent by the end of the year.

“If we can avoid the fiscal cliff, then it looks like the economy could finally be in a self-sustaining recovery,” said Bovino. “We expect this year’s gross domestic product (GDP) to hit 2.1 percent, stronger than previously projected. For 2013, we’re looking at about 2.3 percent. Reports also show a stronger jobs market and signs that households are willing to buy big items, such as cars and homes.”

Bovino adds the U.S. unemployment rate was at 7.9 percent in October, and she sees signs more people are joining the workforce and getting jobs. However, she says the labor participation rate is still near a 30-year low, meaning more people will still be coming back to the workforce to look for jobs, keeping the unemployment rate low for a quite a while. Despite this, Bovino expects the national unemployment rate to drop to 7.6 percent next year.

She also has a good outlook for the national housing market, with housing starts already up 45 percent this September over last September. Bovino referenced a report that 1.3 million homes rose above water – with the value going higher than what was owed – in the first half of this year alone. She expects residential construction to go up almost 19 percent in 2013.

In the financial sector, Anthony Chan, chief economist for private wealth management at JPMorgan Chase & Co., says corporations remain flush with cash. They’re waiting for some clarity on where the market will go as a result of the fiscal-cliff situation and other factors.

“U.S. corporations are reluctant to go through global mergers and acquisitions or make big investments until they have a clearer picture,” said Chan. “Corporations are keeping high cash balances, in order to deal with the uncertainty. They’re making near-record profits in some cases, and many values on the stock market look good. However, everyone’s waiting to see what will happen.”

He said high-yield investments, such as bonds, and gold remain relatively attractive. The U.S. dollar keeps falling against currencies from emerging markets, as monetary agencies work through different strategies of dealing with the rough economy.

In the local housing market, Elliott D. Pollack, chief executive officer of Scottsdale-based economic and real estate consulting firm Elliott D. Pollack and Company, also drew some conclusions.

“Even though about 40 percent of Arizona homeowners are underwater on their mortgages, we’re starting to see a recovery,” said Pollack. “The single-family-home and apartment markets look great. Industrial real estate has improved quite a bit. Only office and retail have quite a way to go.”

Pollack adds new residential foreclosure notices are down almost 70 percent from the peak in 2008. Phoenix-area home prices are up more than 35 percent over last year. New-home sales are also doing well, with 67 percent of the local subdivisions active today projected to be sold out in less than a year. Builders are going to have to work to meet the demand, with less land and labor available.

Pollack sees a strong rental presence, with about 22 percent of local single-family homes being used as rentals right now. That’s up from less than 12 percent just a decade ago. Landlords appear to be buying up many single-family homes, and more people are moving to the area.

“In the absence of a fiscal cliff, things should continue to improve over the next several years,” said Pollack. “By 2015, things should be normalized. As I like to say, we’re only one decent population-flow year away from the issue being resolved.”

More details and analysis from the event, including the presentation slides, are available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com.

economy

2013 Economic Forecasts for U.S. & Arizona

Arizona’s economy improved somewhat this year, but what can we expect in 2013? Top experts on the U.S. and Arizona economies will deliver their forecasts for the state, nation, stock market and housing market at the Valley’s largest and most trusted economic-forecasting event on Dec. 5.

The 49th Annual Economic Forecast Luncheon is co-sponsored by the Department of Economics at Arizona State University’s W. P. Carey School of Business and JPMorgan Chase. About 1,000 people are expected to attend the event at the Phoenix Convention Center.

“Arizona’s economic forecasters are patting themselves on the back, since their projections made a year ago appear to be accurate for 2012; the state seems certain to record about 2-percent job growth, and we are seeing the beginning of a housing comeback,” says Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “However, 2013 is a different story. A huge cloud of uncertainty is caused, not only by questions about what the next Congress will do, but also about how the overall U.S. economy will react to recession in Europe and slower growth in China. Though the national economy always has some impact on Arizona, until housing and population growth really pick up, the state seems destined to closely follow the national business cycle. If the U.S. economy contracts, then Arizona’s economy will, too. That’s the major risk we’re watching.”

Presentations will include forecasts on:

* Arizona and the regional economy from McPheters, who is also editor of the prestigious Arizona and Western Blue Chip Economic Forecast publications.
* The U.S. economy from Beth Ann Bovino, deputy chief economist at Standard & Poor’s, a widely quoted media expert with two decades of financial experience, including a position at the Federal Reserve.
* The financial sector from Anthony Chan, chief economist for private wealth management at JPMorgan Chase & Co., who served as an economist at the Federal Reserve Bank of New York, appears monthly on CNBC and is a member of the Reuters, Bloomberg and Dow Jones weekly economic indicator panels.
* Real estate and construction from Elliott D. Pollack, chief executive officer of Elliott D. Pollack and Company, a highly regarded Scottsdale-based economic and real estate consulting firm.

The 49th Annual Economic Forecast Luncheon will be held in the Phoenix Convention Center’s West Ballroom on Wednesday, Dec. 5 from 11:15 a.m. to 1:30 p.m. Admission is $90 per person. Proceeds are used to support student scholarships, faculty research, and other academic and professional activities in the Department of Economics at the W. P. Carey School of Business.

For more information, including registration details, go to www.wpcarey.asu.edu/efl or call (480) 965-3531.

Phoenix Turnaround

Visioning A Turnaround Of The Valley Of The Sun

The Arizona Chapter of the Turnaround Management Association is pleased to announce Visioning a Turnaround of the Valley of the Sun: How Phoenix Can Become a Model Metropolitan Area. This unique program will cover how state government, local governments and the private sector all play a vital role.  The panel will be moderated by Barry Broome, President and CEO of Greater Phoenix Economic Council  and the esteemed panelists include:

  • Lee McPheters, Director/Research Professor, ASU JP Morgan Chase Economic Outlook Center
  • Senator Steve Pierce, Arizona State Senate
  • Councilwoman Lisa Borowsky, City of Scottsdale

The program will examine the 5 Steps of a Turnaround and is for anyone who wants to better understand what a turnaround is and the steps that need to be followed, which include:  Situation Analysis, Management Change, Emergency Action, Restructuring Execution and Returning to Normal: Institutionalizing  improvements and strategies for long term prosperity.

The program will be held on Thursday, August 23, 2012, from 4:30 PM – 7:00 PM at the Viad Building, Arizona Room located at  1850 N. Central Avenue in Phoenix. For more information please contact Jenny Morales at 623. 581.3597. Register at www.arizona.turnaround.org.

recovery sign

ASU Experts: Economy Rebounds, But Is Still Years From Full Recovery

Despite positive growth, full economic recovery is still two years away for the nation and at least three years away for Arizona. That message was delivered today by top economists from the W. P. Carey School of Business at Arizona State University. The experts spoke at the annual Economic Outlook Luncheon sponsored by the Economic Club of Phoenix.

“Arizona lost 314,000 jobs during the recession, and we’ve only added back around 25 percent of those,” explained Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “We’ll probably pick up about 48,000 jobs this year in the state, but it will be three to four years until we can expect to see full recovery.”

McPheters says Phoenix is on its way to a significant rebound, having ranked No. 4 among the nation’s large cities for total job growth from March 2011 to March 2012. Arizona is already back to its position as a Top 10 job-growth state, ranking No. 8 for the same time period. Health care and hospitality are two of the fields doing relatively well in the recovery here.

“Arizona’s recovery will be slow, but it appears sustainable as long as the U.S. economy stays on track,” said McPheters. “Businesses should plan now for long-term improvement.”

Nationally, McPheters says the country has already gained back 40 percent of the 8.9 million jobs it lost during the recession.

However, Robert Mittelstaedt, dean and professor of management at the W. P. Carey School of Business, said, “Many experts are still looking at the national-debt situation as an issue. April was the first time since September 2008 that we’ve had a monthly surplus, and that is not likely to be repeated anytime soon.”

Mittelstaedt points out that the recent peak for the U.S. deficit was 10.1 percent, which happened in 2009. The last time the national debt was at that level or worse was all the way back in 1945.

Professor Dennis Hoffman, director of the L. William Seidman Research Institute at the W. P. Carey School, gave an analysis of the state’s budget situation. He says taxes on individuals are relatively low in Arizona, and the public pensions are generally solvent. Also, the recent upswing in the economy has helped provide some stabilization for incoming state revenue, even though tax collections as a share of income have continued to fall for years. However, the current clarity in the fiscal picture will start to get cloudy again.

“Next year, the temporary sales tax will expire, and within five years, the Arizona corporate income-tax rate will be about 30 percent lower than it is today,” explained Hoffman. “This presents some fiscal challenges that will have to be managed.”

As for the housing market, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School, delivered some good news for hard-hit homeowners.

He said, “Home prices are on the rise in the Phoenix area, and we expect that trend to continue.”

The median single-family home price already went up more than 20 percent from March 2011 to March 2012. The bounce was from $112,000 last March to $134,900 this March.

“Most homes under $250,000 are attracting multiple offers within a couple of days, and there are far more buyers than sellers,” said Orr. “We’ve also seen a big shift in the types of transactions in the market from a focus on lender-owned home sales to a rise in normal resales, new-home sales, investor flips and short sales.”

The number of foreclosures completed this March was down a whopping 60 percent from last March. Also, the number of delinquencies on loans – those who are behind on payments, but not in foreclosure – is down 51 percent. All of this means the supply of lower-priced homes in the area is down to less than a month’s worth of inventory, and new-home construction is cranking up to try to help meet the demand.

Today’s Economic Outlook Luncheon was held at the Westin Kierland Resort & Spa in Scottsdale. The Economic Club of Phoenix hosts the Economic Outlook Luncheon every spring, as one of its opportunities for Valley business leaders and others to network and engage. The club was founded by a group of prominent business executives called the Dean’s Council of 100, in conjunction with the W. P. Carey School of Business. More information about the club can be found at wpcarey.asu.edu/ecp.

Arizona Economic Forecast 2011

Arizona’s Economic Recovery Remains Sluggish, But The Outlook Is Brighter

While the nation’s economy showed some significant signs of life in the first half of 2011, the state’s economy continues to bounce along the bottom. But forecasters at the Economic Club of Phoenix’s Annual Economic Outlook 2011 luncheon on May 5, said they are looking at a comparably stronger finish to the year, with growth continuing at a healthier pace leading up to 2015.

“Arizona job growth is still very weak. For the first quarter, the Arizona economy has added only 4,100 jobs over the first quarter of last year, so growth is well below one half of one percent,” said Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business in an interview before the luncheon. “The summer is not usually a strong period for job growth in Arizona, in fact the economy basically goes nearly flat. We are currently forecasting 1 percent job growth, or an increase of about 24,000 new jobs for the year.”

McPheters said that if Arizona has any hope of generating 1 percent job growth, the state and nation’s economies needed to get moving in the second half of the year.

“Current national forecasts are calling for improved job growth this year, but it will also tend to be weighted to the second half,” he said. “So, economy watchers have their fingers crossed that things will improve after summer.”

According McPheters’ forecast, in 2011 the nation will record 650,00 housing starts, an inflation rate of 2.6 percent, 2 million jobs created and GDP growth of 3.1 percent.

Here in Arizona, where the state once led national economic recoveries, it is now relying on growth in other parts of the country to rev up its financial engine.

“Arizona population growth depends as much on events outside Arizona as within the state,” McPheters said. “If Arizona job growth improves (and it has a long way to go), this would act as a ‘draw.’ But people have trouble moving if they cannot sell their house or if they cannot get the price they need. That is why we expect to see more young people move to the state, they will rent instead of buy and are less locked into a particular career path.”

This year, McPheters forecasts that Arizona job growth will only be 1 percent, with personal income rising 4 percent. Meanwhile, single-family home permits are expected to rise by just 10 percent and the population will increase by 1.5 percent. The forecast is only slightly better in 2012, with employment expected to be up 2 percent, a 30 percent increase in single-family home permits and a 1.8 percent rise in the number of people moving into the state.

Arizona Economic Forecast 2011

However, McPheters said, the state’s economy will continue an upward trajectory through 2015, with personal income rising 6.5 percent, the rate of job growth hitting 3.5 percent and a population increase of 2.5 percent. Single-family housing permits are expected to increase by 50 percent in 2013 (reflecting the current stasis in the residential home industry) before leveling off to a 20 percent growth rate in 2015.

Arizona Economic Forecast, Far Forecast, Arizona Recovers

In raw numbers, McPheters forecasts that between 2011 and 2015 the state will create 300,00 jobs, issue 112,500 single-family home permits, and see 665,000 new residents.

Arizona Forecast, Annual numberic change in employment

The state’s ongoing budget crisis has been one of the major factors in Arizona’s slow economic recovery.

“The effect of budget cut backs has been felt sharply by local governments,” McPheters said. “Their employment is down by 5,000 workers and is expected to decline more in the months ahead. Typically, we look to state and local government as a source of stability, not necessarily a growth sector. But current budget problems have changed all that.”

Not too long ago, Arizona enjoyed a substantial budget surplus. So, where did all the money go? Dennis Hoffman, director of the L. William Seidman Research Institute, succinctly illustrated the devastating effect the economic crash had on Arizona residents and, in turn, the state’s revenue.

  • The number of millionaires in Arizona dropped from 6,000 in 2006 to about 2,500 in 2009.
  • Taxes paid by millionaires dropped from more than $800 million in 2006 to under $300 million in 2009.
  • In 2006, the state’s 70,000 tax filers with incomes of $200,000 and above paid half of all taxes or $1.6 billion. In 2009, that same group of taxpayers shrank to under 50,000, paying about $550 million — less than 25 percent of the total taxes paid.
  • In addition, the state reduced tax rates by 10 percent after 2006.

 

When adjusted for inflation, the average amount of income tax collected from an Arizona resident dropped from about $1,650 in 2005 to about $1,050 in 2009. But even as fewer dollars come in, the state’s expenditures have remained relatively constant.

“Right now, the state’s expenditures represent about $425 per $10,000 of personal income in Arizona,” Hoff man said at the luncheon. “However, the state is only collecting about $300 per $10,000 of personal income. Obviously, that’s not sustainable.”

Hoffman did sound one bright note.

“The last couple of months have seen considerably robust retail sales, especially in the area of durable goods,” he said, adding that improved consumer confidence is fueling the recent growth.

That will certainly help the state government as it grapples with its budget crisis, but Hoffman also pointed out that the temporary sales tax increase will expire just as the economy is expanding and putting more pressure on public sector services. He added that state policymakers will face a “balancing act” during much of the next five years — especially in 2014. Part of the solution, Hoffman said, will involve streamlining the state’s expenses and raising taxes.

“Government just simply has to be more efficient in it’s expenditures,” he said. “(And) we have to ask everyone to contribute according to their means.”

To read more, visit knowledge.wpcarey.asu.edu.