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Issues & Research » Budget & Tax » State Budget Update: April 2009
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State Budget Update: April 2009
April 23, 2009
The state fiscal situation is growing increasingly dire. As revenue shortfalls mount, budget gaps are swelling—in some cases to staggering levels. The only bright spot is the onset of federal stimulus funds provided through the American Recovery and Reinvestment Act of 2009 (ARRA). Without that money, state finances would be even more dismal.
The bulk of state fiscal problems can be traced to the national recession and the resulting effects on state revenue collections. Revenues continue to falter and even repeated downward revisions have not captured the full extent of the decline. For many states, the current revenue situation is nearly unprecedented, at least in recent years. As one official noted, "This is the most dire fiscal situation in the state's recent history."
These persistent revenue shortfalls have generated yawning budget gaps. When enacting their budgets for fiscal year (FY) 2009, lawmakers collectively resolved a $40.3 billion budget gap. But their actions were not enough to keep their budgets balanced. Just a few months into the fiscal year, a new $32 billion gap opened, which eventually climbed to $62.4 billion. Officials hope the FY 2009 gap has peaked, but a few note that upcoming revenue forecasts could still add to their current fiscal year imbalance.
As bad as the FY 2009 situation has been, it is already eclipsed by a jaw-dropping gap of at least $121.2 billion for FY 2010. That is the shortfall states are aiming to resolve as they enact their new budgets. If FY 2010 budgets follow a pattern similar to the one in FY 2009 (and in FY 2008, for that matter), new gaps are likely to emerge after the fiscal year begins. But the nightmare does not end there. At least 31 states and Puerto Rico have already forecasted budget gaps in FY 2011, with the initial estimate at $44.5 billion.
This report provides information on all 50 states and Puerto Rico. It is based on data collected from legislative fiscal directors in April 2009. It includes information on budget gaps in FY 2009, revenue performance for major tax categories (through March 2009 for most states), spending overruns in FY 2009, the outlook for revenue performance for FY 2010, and budget gap projections for FY 2010 and FY 2011. This report also includes a table summarizing state fiscal situations.
To purchase the report click here.
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State Budget Update: April 2009
April 23, 2009
The state fiscal situation is growing increasingly dire. As revenue shortfalls mount, budget gaps are swelling—in some cases to staggering levels. The only bright spot is the onset of federal stimulus funds provided through the American Recovery and Reinvestment Act of 2009 (ARRA). Without that money, state finances would be even more dismal.
The bulk of state fiscal problems can be traced to the national recession and the resulting effects on state revenue collections. Revenues continue to falter and even repeated downward revisions have not captured the full extent of the decline. For many states, the current revenue situation is nearly unprecedented, at least in recent years. As one official noted, "This is the most dire fiscal situation in the state's recent history."
These persistent revenue shortfalls have generated yawning budget gaps. When enacting their budgets for fiscal year (FY) 2009, lawmakers collectively resolved a $40.3 billion budget gap. But their actions were not enough to keep their budgets balanced. Just a few months into the fiscal year, a new $32 billion gap opened, which eventually climbed to $62.4 billion. Officials hope the FY 2009 gap has peaked, but a few note that upcoming revenue forecasts could still add to their current fiscal year imbalance.
As bad as the FY 2009 situation has been, it is already eclipsed by a jaw-dropping gap of at least $121.2 billion for FY 2010. That is the shortfall states are aiming to resolve as they enact their new budgets. If FY 2010 budgets follow a pattern similar to the one in FY 2009 (and in FY 2008, for that matter), new gaps are likely to emerge after the fiscal year begins. But the nightmare does not end there. At least 31 states and Puerto Rico have already forecasted budget gaps in FY 2011, with the initial estimate at $44.5 billion.
This report provides information on all 50 states and Puerto Rico. It is based on data collected from legislative fiscal directors in April 2009. It includes information on budget gaps in FY 2009, revenue performance for major tax categories (through March 2009 for most states), spending overruns in FY 2009, the outlook for revenue performance for FY 2010, and budget gap projections for FY 2010 and FY 2011. This report also includes a table summarizing state fiscal situations.
To purchase the report click here.
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