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The state budget process is central to the administration of state government. As well as allocating resources, budgets set policy, review and evaluate policy, and lay the foundation for future planning and program review. However, state fiscal conditions change throughout the fiscal year. Tracking these conditions is crucial in addressing fiscal challenges that arise.

NCSL conducts periodic surveys and publishes the results in State Budget Updates. These reports address state fiscal conditions in the Spring, Summer and Fall. Based on data collected by legislative fiscal officers in the 50 states and territories, State Budget Update is the definitive source for the current fiscal conditions in the states.

Keeping state budgets balanced has been difficult for state legislators in recent years. Many states continue to face budget challenges due to the lingering effects of the “Great Recession.” In light of this era of constrained state finances, NCSL has compiled information on measures, both proposed and enacted, that states are taking to bring budgets into balance.

Here are the key issues covered in these documents:

• State fiscal conditions as reported in NCSL's State Budget Update;
• Measures to balance budgets;
• Strategies to manage budget shortfalls;
• State funding trends;
• State budget status; and
• Top fiscal issues for legislative sessions.

You can see all the documents related to this topic by clicking on the document library tab at the top of this page or you can search all budget and tax documents on the site here.

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Budget procedures, the way states produce their budgets, vary in America's state and territorial legislatures. Important structural differences include the nature of a state requirement to balance the budget; an annual or biennial budget cycle; the governor’s authority to revise the enacted budget; and whether earmarked or federal funds are subject to the appropriations process. The most important political difference among states is the balance between legislative and executive authority in composing the budget. Governor’s line-item vetoes are one element in legislative and executive balance, but tradition and partisanship are equally decisive. 

Whether the executive or legislative branch dominates the budget process, there is generally cooperation between the branches. It is expected that a state will enact a balanced budget before the beginning of its fiscal year. Late budgets and vetoes are most likely when a state is experiencing serious fiscal difficulties. Otherwise, executive and legislative negotiations are intended to resolve budget disagreements and avoid vetoes and late budgets.  

States use different types of budgets, including line-item, program-based, performance-based, and modified zero-based. Most state fiscal years end on June 30, although four states follow a different schedule.

Here are the key issues covered in these documents:

• Legislative budget procedures;
• Performance based budgeting;
• Zero base budgeting;
• Funding trends;
• Annual and biennial budgeting;
• Balance budget requirements;
• Late state budgets; and
• Legislative oversight of federal funds.

You can see all the documents related to this topic by clicking on the document library tab at the top of this page or you can search all budget and tax documents on the site here.

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A government’s revenue system is the entire means by which a government acquires funding. States rely on a broad range of revenue sources to fund government. On average, states generate more than one-third of their revenues from personal income taxes and another one-third from general sales taxes. The remaining revenues are split between excise taxes (on gasoline, cigarettes and alcohol); corporate income and franchise taxes; and taxes on business licenses, utilities, insurance premiums, severance, property and several other sources. That being said, the general character of a state or state and local revenue system is more important than the nature of any single one of its components.

The relative importance of the major revenue sources for state and local governments changed since 1971. Property taxes declined in importance, and their share was picked up mostly by state individual income taxes, charges and miscellaneous revenues. Since state revenue systems have developed gradually and tax policy is used to address multiple objectives, state revenue systems are likely to include inconsistencies.

Each year NCSL conducts a survey at the close of legislative sessions and, based on information provided by legislative fiscal directors, reports the significant revenue changes in State Tax Actions.

Here are the key issues covered in these documents:

• State tax changes by year and type as collected in State Tax Actions;
• Principles of a high quality revenue system;
• State reliance on major taxes; and
• Tax and expenditure limitations.

You can see all the documents related to this topic by clicking on the document library tab at the top of this page or you can search all budget and tax documents on the site here.

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NCSL’s Washington D.C. office tracks federal decisions regarding fiscal matters that may have an impact on the states.  Documents in this section examine federal policies with state fiscal implications, including: funding for services and programs; budget processes; tax and revenue systems; legislative oversight and unfunded mandates.

•  The federal budget;
•  Federal mandates;
•  Fiscal federalism; and
•  NCSL federal policy positions.