IN THIS SECOND IN A SERIES OF ANNUAL REPORTS, DATA ON DIRECT EXPENDITURES FOR THE ARIZONA CRIMINAL JUSTICE COLLECTED BY THE LAW ENFORCEMENT ASSISTANCE ADMINISTRATION AND THE CENSUS BUREAU ARE SUMMARIZED. DIRECT EXPENDITURES INCLUDE SALARIES, WAGES, FEES, COMMISSIONS, PURCHASES OF SUPPLIES, MATERIALS, AND LAND. INTERGOVERNMENTAL TRANSFERS, SUCH AS PAYMENTS BY ONE GOVERNMENT TO ANOTHER FOR BOARDING PRISONERS, ARE EXCLUDED. EXPENDITURE DATA FOR JUDICIAL, LEGAL, PROSECUTION, AND PUBLIC DEFENSE SERVICES INCLUDE BOTH CRIMINAL AND CIVIL JUSTICE ACTIVITIES. THE FIRST SECTION OF THE REPORT PRESENTS STATEWIDE EXPENDITURES DATA BY LEVEL OF GOVERNMENT AND TYPE OF ACTIVITY. ARIZONA'S EXPENDITURES ARE COMPARED TO THOSE OF OTHER 'HIGH CRIME' STATES IN THE SECOND SECTION. TRENDS IN CRIMINAL JUSTICE SPENDING ARE EXAMINED IN THE THIRD SECTION, AND THE FINAL SECTION PRESENTS A BREAKDOWN OF EXPENDITURES BY COUNTY. DURING FISCAL YEAR 1976, ARIZONA CRIMINAL JUSTICE EXPENDITURES REPORTEDLY TOTALED $243,613,000, WITH THE MOST COSTLY ACTIVITIES BEING POLICE PROTECTION, CORRECTIONS, AND JUDICIAL SERVICES. FOURTEEN PERCENT OF TOTAL GOVERNMENT FUNDS WERE SPENT FOR CRIMINAL JUSTICE ACTIVITIES, THE HIGHEST PROPORTION AMONG THE 50 STATES. DIRECT EXPENDITURES FOR THE ARIZONA CRIMINAL JUSTICE SYSTEM MORE THAN DOUBLED BETWEEN 1971, THE FIRST YEAR COMPARABLE DATA WERE COLLECTED, AND 1976. OCCURRING DURING A PERIOD OF INFLATION AND RISING CRIME, IT IS INDICATED THAT THIS INCREASE SHOWS ONLY A SLIGHT RISE OF ACTUAL EXPENDITURES IN RELATION TO REPORTED OFFENSES. GRAPHS AND STATISTICAL TABLES ARE INCLUDED. (RCB)