State Budget Update: Summer 2012

Introduction

Although the Great Recession ended three years ago, state finances have yet to enjoy a robust recovery.  While there are signs of improvement, the turnaround has been slow and uneven across the nation. Moreover, the new found flexibility that lawmakers expect from improving revenues may be hobbled by mounting budget pressures.  The bottom line:  State budgets still face considerable challenges. 

Fortunately, state budgets today are better positioned to handle these challenges. As reported by legislative fiscal directors, year-end balances are rising, with more states shoring up their rainy day funds. Revenue performance is improving and beginning to return to pre-recession levels. New budget gaps are rare and confined to a few states. State spending has remained within budgeted amounts. Overall, the economic outlook for the current fiscal year is stable for the vast majority of states.

This report is based on data collected from legislative fiscal officers in June and July 2012. It includes information on:

• State year-end balances;
• General fund spending and revenue changes;
• The FY 2013 state economic outlook; and
• Strengths and challenges affecting the FY 2013 budget outlook.
 
This report provides information on all 50 states and the District of Columbia.