Top 12 Webinars

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State Budgets, Federal Deficit, Pensions and Jobs


February 6, 2012
 

This informative webinar explored the federal deficit and its potentially significant impact on the states. Hear which states have developed contingency plans, what is the likelihood of deficit reduction by Congress and what may happen if automatic cuts go into effect. 

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Even though over half of the states predict revenues are likely to meet or exceed their FY 2012 estimates, any significant negative developments could stall recent improvements in state fiscal conditions. 

States Brace for Federal Deficit Reduction 

Action, or inaction, by Congress to reduce the federal deficit will have a significant effect on state budgets.

• Lawmakers in eight states – Hawaii, Maine, Maryland, Massachusetts, Tennessee, Utah, Vermont and Virginia – have developed contingency plans in the event of federal cutbacks.
• With the failure of the Joint Select Committee on Deficit Reduction to produce a bill to cut up to $1.5 trillion in federal spending, more states may consider contingency plans.
• As automatic across-the-board cuts loom in the future, states will be grappling with how to prepare for such a potentially cataclysmic hit to their budgets. Education, environment, energy, justice, housing, labor/job training and human services programs are particularly vulnerable.
• 2012 promises more federal debate on tax reform, tax cut extensions, debt ceiling increases and budget resolution, all having varying potential effects on state budgets, program services and credit ratings.

NCSL has set up a Federal Deficit Reduction Task Force to ensure that federal policymakers are aware of and understand the implications of various deficit reduction proposals on states. Information about the task force is available here.  

Bruised Budgets Might Take More Hits in 2012 

The Great Recession has given way to what some are calling the “Great Unknown” concerning state budgets. State fiscal conditions continue to improve, but at a very slow pace. Stronger revenue performance is driving the improvement in state finances; however, budget officials expressed concern about the strength of economic growth.

• Unemployment remains stubbornly high – eight states are still in the double digits.
• Uncertainties about the European debt crisis have created turmoil in financial markets and shaken investor confidence.
• There are questions about what impact congressional action (or inaction) to reduce the federal deficit will have on state budgets.

Even though over half of the states predict revenues are likely to meet or exceed their FY 2012 estimates, any significant negative developments could stall recent improvements in state fiscal conditions.

NCSL’s Budget & Tax webpage, with research and news about the state of state budgets, is available here. NCSL’s “State Budget Update” is available here.

Jobs, Jobs, Jobs

A number of states have initiated state-level stimulus plans in an effort to create jobs and promote economic development.

• Public spending on infrastructure projects, small business development, job creation incentives, and investments in green energy and health technology are some of the ways states have tried to jump start their own economies.
• Approximately 13.9 million workers across the country are unemployed, according to the Bureau of Labor Statistics. Private sector employment continued to expand, but in the latter months of 2011, more than 24,000 government jobs were shed, mostly in state government.  Since September 2008, more than half a million public sector jobs have been lost.
• BLS data show that over the previous 12 months, unemployment decreased in 43 states and the District of Columbia. Nevada has the highest unemployment rate, a distinction the state has held since January 2010. Michigan previously held the spot for a record 50 consecutive months.

Information from NCSL’s Labor & Employment is available here.

NCSL Economic Development, Gambling and Trade

State Pensions: Controlling Costs

Over the past two years, 40 state legislatures have enacted significant revisions to at least one of their state retirement plans. The changes range from increasing employee contributions as well as age and service requirements for retirement, to revising cost-of-living adjustments. 

• Some policymakers are considering a “hybrid” model for state pensions that offers employees both a traditional pension plan and a 401(k)-type plan.
• In 2012, states are expected to continue to look at redesigning retirement plans, controlling costs for retiree health care programs, and managing unfunded liabilities.

More information about state pensions can be found at NCSL’s pensions website.