States report that they are generally in good to excellent fiscal condition at the beginning of 1998. These conclusions are based on a December 1997, survey of legislative fiscal staff in 50 states, the District of Columbia, the U.S. Virgin Islands, and American Samoa. These are the highlights of the National Conference of State Legislatures' survey of state fiscal conditions at the start of 1998.
Overall, states report that they are in good fiscal shape as the new year starts and work begins on FY 1999 state budgets. Thirty states and the District of Columbia report that revenue collections through the remainder of Fiscal Year (FY) 1998 will exceed initial expectations. Eighteen states anticipate that revenue collections will be on target with estimates. Only Alaska and Hawaii expect declines in collections before the end of the fiscal year.
Nearly all states report that major categories of spending (i.e., education, corrections, Medicaid) will be on target with original budgets. Revenues will be adequate all cases to offset any unanticipated spending requests.
States report that key fiscal issues awaiting legislatures when they convene in 1998 are funding K-12 education, enacting tax cuts or tax reforms, funding corrections programs and meeting transportation funding requirements. A number of states will consider what to do with excess revenues.
Sixteen states report that tax cuts are likely to be considered during their legislative sessions in 1998.
Sales and income tax collections are coming in strong in most of the states that report revenue collections above forecast. Arizona increased its revenue forecast by $300 million or 6 percent up from the budgeted level following a stronger than anticipated growth in corporate and personal income tax collections. Minnesota revised its biennial revenue estimate by $366 million or 3.6 percent because of strong personal income and motor vehicle tax collections. Strong personal income tax collections in North Carolina are expected to push revenue collections $300 million or 3 percent above budgeted levels at the end of the fiscal year.
Official revenue estimates for the remainder of the fiscal year have been increased in many other states based on the strong performance of state revenue collections during the first half of FY 1998. Delaware increased its official estimate by $89.5 million, Florida by $276 million, Illinois by $120 million, Kansas by $217.3 million, Kentucky by $167 million, Mississippi by $31.4 million, Nebraska by $74.2 million, Rhode Island by $58.4 million and South Carolina by $64 million.
States also report good news on the expenditure side of the budget as spending for most major programs is reported to be on target with budgeted levels. Supplemental budget requests for unanticipated spending requirements are expected in only 14 states and the District of Columbia. In all cases, revenue collections will be more than adequate to cover the costs of these supplemental requests. Thirty-six states, American Samoa and the U.S. Virgin Islands anticipate that there will be no requirements for supplemental budget requests before the end of the fiscal year. A number of these states also report that savings in their budgets are expected as a result of declining caseloads in Medicaid and other welfare programs.
The most frequently mentioned program that is expected to require a supplemental appropriation in FY 1998 is adult corrections. Among the states that expect to provide additional corrections funding before the fiscal year is over are Colorado, Idaho, New Jersey and New Mexico. Another program category expected to require additional funding in some states is Medicaid. Alabama, Connecticut and Pennsylvania anticipate additional funding requirements for Medicaid.
Other programs that states anticipate will require some supplemental funding are judicial salaries in Mississippi, a senior citizens drug subsidy program in New Jersey, a salmon preservation program in Oregon, and long-term care in Washington.
The key fiscal issues expected to be prominent on many state legislative agendas in 1998 include K-12 education funding, tax cuts or reform, adult corrections, juvenile justice programs, transportation funding, early childhood programs, higher education, and state employee compensation. Funding for K-12 education and tax cuts or reform were cited by the most number of states as likely to be key fiscal issues during the 1998 legislative sessions.
Other fiscal issues expected to be addressed in 1998 are economic development in Florida and Pennsylvania, property tax relief in Indiana and South Dakota, increasing teacher pay in Louisiana and West Virginia, highway funding in Missouri, and managed care in Montana.
Sixteen states reported that tax cut proposals were likely to be on the agenda for their legislature. Among the proposals is a $200 million personal income tax reduction in Arizona, a property tax credit in Missouri, a reduction of the sales tax on food in Oklahoma, and the elimination of the motor vehicle property tax in Virginia.
Other proposals expected to be considered include reductions of personal income tax rates and the inheritance tax in Delaware, increasing the state tax exemption to the federal level in Georgia, increasing the income tax exclusion for pension income and a reduction in the capital gains tax in Iowa, reducing the sales and personal income tax rates in Maine, and reducing property tax rates in Minnesota.
Some states are also considering increasing some taxes this legislative session. Proposals for tax increases include renewing an additional 1 cent sales tax on food to fund teacher pay increases in Louisiana.
This article is based on a telephone survey in December 1997 of legislative fiscal staff. It includes information from 50 states, the District of Columbia, the U.S. Virgin Islands and American Samoa. Puerto Rico did not respond. The survey asked:
|
State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Alabama |
General fund revenue collections for the first quarter are on target with budgeted projections. The official revenue estimate was revised upward only slightly (0.29 percent) and revenue collections are expected to remain on target with the revised estimate through the remainder of the fiscal year. |
Expenditures for teachers' health insurance are likely to exceed the budgeted level by $25 million to $46 million. Insurance expenditures are high because the employer-paid premiums are too low to maintain a minimum reserve. The Legislature will address this issue in the 1998 session if the trend continues. Medicaid expenditures are also likely to exceed budgeted amounts by $10 million because the appropriation level was insufficient.
Given these two areas of excess spending, the state budget will be tight in 1998. |
Key fiscal issues during the 1998 legislative session are expected to be bond issues for technology infrastructure and capital needs in education, roads and park facilities. The use of savings in retirement systems due to a change in accounting is also likely to be a big fiscal issue. |
No specific recommendations but the idea has been mentioned in public. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Alaska |
General fund revenue collections for the first five months of FY 1998 are $28 million or 1.4 percent below budgeted levels. The official revenue estimate was revised upward only slightly (0.8 percent) because both oil prices and production were lower than expected last spring. Revenues for the remainder of the fiscal year are expected to be $25 million to $40 million below budget (1.3 percent to 2 percent). |
Some areas, such as fire suppression, might be exceeded by between $6 million and $7 million. |
Budget is in good shape. Revenue variations can be balanced from reserve funds. Two key fiscal issues in the upcoming session will be K-12 education funding and deferred maintenance needs of various facilities, schools, roads, state buildings, etc. |
No tax changes are proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
American Samoa |
Revenue collections to date are on target, but are expected to be $2 million or 2 percent below budgeted levels at the end of FY 1998. |
Expenditures are not likely to exceed budgeted levels. The budget condition for the rest of FY 1998 should be stable. |
The top priority in the 1998 legislative session will be the question of whether to establish an independent hospital authority. |
No tax changes are foreseen. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Arizona |
For the first four months of FY 1998, revenue collections came in $40 million or 2.5 percent above the budgeted level. Collections are expected to be on target through the remainder of the year. The official revenue estimate has been revised $300 million or 6 percent up from the budgeted level. Stronger than anticipated growth in corporate and personal income tax collections account for the revision. |
Expenditures in FY 1998 for health and welfare are likely to exceed budgeted levels. This is due to growth in Title 19 programs. In general, the budget condition continues to look positive for the rest of the fiscal year. |
Tax reductions and the resolution of K-12 capital finance litigation are expected to be key fiscal issues in FY 1998. |
The governor has proposed an income tax cut of at least $200 million. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Arkansas |
Through the first five months of FY 1998, revenue collections remained on target. Collections are expected to remain on target through the remainder of the fiscal year. |
Program expenditures are expected to remain on target through the end of the fiscal year. |
No session in 1998. |
No session in 1998. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
California |
For the first 5 months of FY 1998, revenue collections came in $247 million or 1.4 percent below the budgeted level. Collections are expected to be up about $500 million, or about 1 percent by the end of the fiscal year. |
Spending in major program areas is generally at or below the budgeted levels. If revenues exceed the budget forecast (as is expected), the state's school funding guarantee would rise. The state aims to end the fiscal year with a modest reserve. |
The Governor and Legislature achieved multi-year agreements in a number of areas last summer. It's too soon to tell what new issues will develop. |
Nothing to date, beyond the income tax reduction agreed to in 1997. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Colorado |
Into the second quarter of FY 1998, revenue collections are coming in $236.1 million or nearly 5 percent over the budgeted amount. |
Corrections is the only area where spending is exceeding the budgeted level. The state is spending $5 million more than expected primarily because general funds are going to pay counties to house prisoners. |
The key fiscal issue in the 1998 legislative session will focus on what to do about excess revenues. In Colorado, revenues are limited by the constitution and the Legislature will look at refunds, lower taxes, or asking voters for permission to retain the funds. |
No proposals at this time but tax cuts are likely. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Connecticut |
Revenues for the first quarter of the fiscal year are up $362 million or 3.2 percent and are expected to remain above estimate for the remainder of the fiscal year. |
Social services spending-particularly Medicaid-is over budget by about 3 percent. This is because of a delay in the amount of savings assumed through federal grants.
The overall budget outlook is very good with revenues running ahead of estimates. |
Key fiscal issues in 1998 are expected to be the impacts of additional spending, early retirement savings that are not as high as projected, and questions about agency consolidation savings. |
No proposals at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Delaware |
The consensus revenue estimating group has revised the formal revenue estimate upward to reflect very healthy general fund collections that are 4.8 percent or $89.5 million over the original budget estimate for the period through November. Revenues are up from almost all sources. Expectations are that revenues will continue to be very healthy for the remainder of the fiscal year. |
Expenditures are not likely to exceed budgeted levels. The budget condition for the rest of FY 1998 should be very healthy. |
Key fiscal issues for the 1998 legislative session will be tax cuts, infrastructure spending and land use planning. Some discussion is likely to focus on continuation of the 21st Century Fund, first created with funds from a litigation settlement. The fund has been used for open space purchases, agricultural land preservation, education technology and the like, and would need new money to continue as it has. |
Republican legislative leadership is proposing cuts in personal income taxes, inheritance taxes and targeted gross receipts taxes, three rates instead of one for the corporate income tax, and a freeze on school taxes for seniors. The governor has recommended smaller cuts in the personal income tax and across-the-board cuts in the gross receipts tax. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
District of Columbia |
General fund revenue collections through Sept. 30, 1997 came in about 2 percent above the budgeted level. For the remainder of FY 1998, revenues are expected to continue coming in above the budgeted level by about as much. |
Additional funds may be needed for conducting agency evaluations as mandated by Congress. This could affect the availability of funds to pay down the deficit. |
The key budget issue in FY 1998 will be the FY 1999 budget. Consideration will be given to investment in government infrastructure, tax reductions and possible pay raises for employees. |
No specific proposals at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Florida |
General fund revenue collections through September remain on target. The revenue estimate for the remainder of the fiscal year was increased by $276 million or 2 percent. Strong corporate, estate and sales taxes collections were primarily responsible for the revision. |
Expenditures are not likely to exceed budgeted levels. The state's budget condition is good for the balance of FY 1998. |
Economic development is expected to be a key fiscal issue in the 1998 legislative session. |
No tax changes have been proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Georgia |
For FY 1998, the state expects general fund revenue collections to be on target with the budgeted level. |
Expenditures are not likely to exceed budgeted levels. With no significant change in economic conditions, the state expects some surplus at the end of the fiscal year. |
Spending and possibly new legislation related to education, juvenile justice, Medicaid and economic development are expected to be key issues in the 1998 legislative session. |
Governor has proposed increasing the state tax exemption to the federal levels. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Hawaii |
General fund revenue collections through the first five months of the fiscal year are $58 million or 2 percent below estimate. The official revenue forecast was decreased by $84 million or 2.9 percent on the basis of lower tax collections due to slower economic activity and economic problems in Asia. Revenues through the remainder of the fiscal year are expected to be below the revised estimate by $26 million or 0.9 percent. |
Children and adolescent mental health programs are expected to require an additional $14 million or 31 percent increase in spending during the fiscal year. The additional funding is a result of a court decision. The reductions in revenue projections are expected to have a greater impact on fiscal years beyond FY 1998. For the rest of FY 1998, Hawaii's state budget condition appears manageable due to a comfortable carryover balance from the prior year. |
Key fiscal issues expected to be discussed during the 1998 legislative session include measures to stimulate Hawaii's economy, measures to control state spending, tax proposals and other recommendations by the Governor's Task Force on Revitalizing the Economy. |
No tax changes have been proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Idaho |
Through the first five months of FY 1998, general fund revenue collections are on target. Revenue collections through the remainder of FY 1998 are expected to end slightly above estimate. |
Some supplemental appropriations of around $14 million are expected for adult and juvenile corrections. The state's budget is generally described as in good shape despite the need for some supplemental appropriations. |
Key fiscal issues expected to arise during the 1998 legislative session include state employee salaries, education, and corrections. |
No tax changes have been proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Illinois |
Through the first five months of FY 1998, general fund revenue collections are on target. The official revenue forecast was increased by $120 million or 1 percent on the basis of better than expected collections from personal income and sales taxes. |
Expenditures are not likely to exceed budgeted levels. The state's budget condition is described as being in good shape. |
Key fiscal issues expected to be addressed during the 1998 legislative session include welfare-to-work and welfare and Medicaid coverage for legal and non-legal residents. |
No tax changes have been proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Indiana |
General fund collections for the first quarter of FY 1998 are $51.8 million or 3.6 percent above the budgeted level. The revenue estimate will be updated in mid-December. |
Expenditures are likely to be on target. The state's budget condition is good for the balance of FY 1998. |
Key fiscal issues for the upcoming legislative session will be property tax relief and utility regulation. |
No tax changes have been proposed. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Iowa |
Revenues through the end of November were on target. The official estimate for FY 1998 was revised upward by $16 million or 0.3 percent in the November revenue estimating conference. |
Expenditures are on target, with minimal supplemental requests anticipated. |
The 1998 session should be quiet. Possible issues include a revision of the school aid growth factor and minor tax cut proposals. |
The governor will propose increasing the income tax exclusion for pension income and a reduction in the capital gains tax. Due to the large 1997 tax cut, major cuts in 1998 are not expected. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Kansas |
For the first four months of FY 1998, general fund revenue collections came in $91.5 million or 8.1 percent above the budgeted level. Revenues are expected to continue coming in excess of projections. The 1998 revenue estimate has been revised upward by $217.3 million or 5.8 percent. This revision was due to a one-time unanticipated increase in corporate income tax revenues from stock transactions and a generally strong economy leading to growth in personal income tax revenues. |
No big expenditure increases are anticipated and revenue performance is expected to remain strong. |
Tax relief and school finance are expected to be key fiscal issues during the 1998 legislative session. |
While general tax relief is part of the governor's message, no specific proposals have been made. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Kentucky |
For the first quarter of FY 1998, revenues came in 3 percent above or $167 million in excess of the budgeted level. Due to a strong economy generally, the official FY 1998 estimate was revised upward by this amount. For the remainder of the fiscal year, revenue collections are expected to remain on target with the revised estimate. |
Expenditures are not expected to exceed the budgeted level. The state's budget condition for the rest of the fiscal year is expected to remain good. |
Juvenile justice finance, children's health issues and welfare reform are likely to be the key fiscal issues during the 1998 legislative session. |
No specific proposals thus far. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Louisiana |
For the first five months of the fiscal year, general fund revenues are coming in on target and are expected to stay that way through the rest of the fiscal year. |
Expenditures are on target. A supplemental request for corrections is possible. |
One of the key fiscal issues this year will be renewal of the current three cent sales tax on food and utilities that is scheduled to sunset. Other key issues will be funding higher education and teacher pay raises. |
The Governor has suggested that Louisiana renew an additional 1 cent sales tax on food (for a total of four) to fund teacher pay increases. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Maine |
Revenues through the end of October are $58 million or 10 percent ahead of the estimate due to strength in personal income, corporate income, and estate taxes. It is expected that the official estimate for FY 1998 will be revised up in January by about $140 million or 7.5 percent. |
All areas of the budget appear on target through the end of November. However, the Legislature expects numerous supplemental requests as agencies attempt to get a portion of the surplus. |
Tax relief will be the key fiscal issue in the 1998 session. The Legislature created two tax relief funds last year, one funded with a cigarette tax increase and the other funded with excess income taxes. The Legislature will decide how to use these funds. |
Proposals include permanent sales tax reductions, permanent income tax reductions, and one-time rebates of surplus funds. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Maryland |
The official revenue estimate in Maryland has been revised to reflect excess revenues of $194 million or 2.5 percent over the original budgeted amount. |
The state is spending an additional $20 million to address the computer 2000 problem.
The outlook for the rest of the fiscal year is excellent with a projected ending surplus of $255 million. |
One of the key fiscal issues in the 1998 legislative session will be whether or not to spend surplus revenues. A structural deficit is projected after 1999 so there is talk of retaining the surplus. |
No proposals at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Massachusetts |
General fund revenue collections through the first five months of the fiscal year are on target. Revenue collections are expected to remain on target through the remainder of the fiscal year. |
Spending is not expected to exceed the budgeted level in any area. No problems are foreseen as both revenues and expenditures remain on target. |
Tax cuts are expected to be the key fiscal issue during the 1998 legislative session. |
No specific tax changes have been proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Michigan |
General fund revenue collections are on target or slightly above at the start of the fiscal year and are expected to stay that way for the remainder of the year. |
Spending is not expected to exceed the budgeted level in any area.
The overall budget condition is very promising with 4 percent to 5 percent revenue growth and no expenditure surprises. |
The governor's recommendation of constructing five new prisons will be a key fiscal issue as will the phase in of past tax cuts in the FY 1999 budget. |
No new tax cuts expected since past cuts are being phased in. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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Minnesota |
General fund collections are $41.5 million or 1.8 percent above budget for the first quarter of the fiscal year, with income and motor vehicle taxes especially healthy. Sales tax collections are down slightly. A revised biennial estimate reflects revenues $366 million or 3.6 percent above the original budgeted amount for FY 1998. |
Spending is not expected to exceed the budgeted level in any area. Budget conditions are rosy for the balance of the fiscal year. |
The Legislature will take up bonding in the 1998 session as well as consider how to deal with surplus funds. Other significant topics will include property tax relief, substitution of alterntive education funding sources for property taxes, replacing federal food stamp money, and technology funding. The stadium finance issue also is not dead. |
The governor wants property tax cuts, and some members of the Legislature are suggesting income tax cuts. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Mississippi |
For the first five months of the fiscal year, revenue collections are coming in 2.6 percent over the budgeted level. The official revenue estimate was revised to reflect additional revenues of $31.4 million. |
Salary increases for trial judges, supreme court justices and district attorneys were approved without additional funding, so expenditures in those areas are expected to exceed the budgeted level.
The overall budget picture looks good with strong revenue collections. |
A key fiscal issue in 1998 will be the closely followed tobacco settlements. The state now has $17 million in escrow from its earlier settlement with tobacco companies. |
The governor has been talking about a tax cut, but Mississippi is going into the second year of a phased-in tax cut. Chances are that no new tax cut will be adopted until the outcome of the last cut is clear. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Missouri |
General fund revenue collections to date are on target. They are expected to remain on target for the remainder of the fiscal year. |
Expenditures are on target. With revenues also on target, the budget condition should remain strong throughout FY 1998. |
Highway funding will be a concern in the 1998 legislative session, as well as K-12 school funding as the state settles desegregation costs. |
Because the state has exceeded its tax limit for three years, a property tax credit worth $100-$150 million is being considered (e.g., a circuit breaker). |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Montana |
General fund revenue collections remain on target through the first quarter of the fiscal year. Revenues are expected to remain on target through the end of the fiscal year. |
Expenditures are not expected to exceed budgeted levels. The state's budget condition is good for the balance of FY 1998. |
No session in 1998. |
No session in 1998. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Nebraska |
Revenue collections from the beginning of the fiscal year until the end of November came in $41.8 million, or 5.4 percent above the budgeted level. For the remainder of FY 1998, revenues are expected to be on target. Due to strong revenue performance generally, the official estimate was revised upward 3.7 percent, or by $74.2 million. |
Expenditures are not expected to exceed budgeted levels. And with the rainy day fund in good condition and revenues coming in higher than projections, the budget condition is solid. |
The 1997 session cut the personal income tax for tax years 1997 and 1998. The key fiscal issue in the 1998 legislative session is expected to be whether the 1997 cut will be made permanent or larger. |
Nothing officially proposed, but the governor will probably pursue making the 1997 personal income tax cut permanent or larger. A workers compensation rate reduction is also possible. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Nevada |
Revenues are on target for the first quarter of FY 1998, with sales taxes running just slightly ahead of forecast (under 1 percent). |
Spending is not expected to exceed the budgeted level in any area. |
No legislative session is scheduled for 1998, but an interim committee will be studying the issue of children's health care. |
No session in 1998. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
New Hampshire |
Revenues for the first five months are coming in $21 million or nearly 6 percent over the budgeted level. There has been no official change to the revenue forecast and expectations are that revenue collections for the remainder of the fiscal year will come in on target. |
Spending is not expected to exceed the budgeted level in any area.
The overall budget outlook is positive with strong revenues and spending on target. |
In 1998, the Legislature will need to deal with the issue of a corrections facility that is scheduled to sunset and no provisions have been made to build a new facility. |
No proposals at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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New Jersey |
General fund revenue collections for the first four months of the fiscal year are coming in 2 percent or $140 million over the budgeted level. There has been no official change to the revenue forecast but revenues are expected to continue to come in 2 percent to 2.5 percent over the budget. |
Spending is likely to exceed the budgeted level by 4 percent in the area of corrections. This is the result of optimistic budgeting and unanticipated overtime expenses. The states senior citizen drug program is also exceeding the budgeted level by $10 million due to optimistic budgeting.
The general budget condition in New Jersey is healthy and in balance. The year end surplus is likely to exceed budget projections. |
Three key fiscal issues are likely to be discussed in the 1998 session and include school financing-parity issues and capital construction needs, local property tax relief, and dealing with stranded debt of electric utilities and solid waste authorities. |
Phase 3 of an income tax credit based against property taxes will kick in. A cigarette tax increase or changes in employer payroll taxes are viewed as potential revenue streams for funding hospital charity care. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
New Mexico |
First quarter revenue collections are $70 million or 2.3 percent above budget due to strong natural gas prices. The official general fund estimate has been revised upward to reflect the increase. |
Spending on corrections is expected to be 3 percent over budget because of growth in inmate population and contractual issues. |
Revenue collections look strong, but significant legal uncertainty surrounds revenues from Indian reservation gambling operations. Key legislative issues will include use or purchase of privately designed and built prisons, adequacy of higher education funding, welfare reform, and cost savings from managed care. |
An interim legislative committee recommended a cigarette tax increase while another interim committee recommended some tax cut proposals. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
New York |
Through three-quarters of the fiscal year, general fund revenue collections remain on target. Revenues collections through the remainder of the fiscal year are expected to exceed budgeted estimates by $700 million or 2 percent. Higher than anticipated personal income tax collections are driving up much of the revenue surplus. |
The state is anticipating savings in Medicaid expenditures due to cost containment measures. No program expenditures are expected to exceed budgeted levels. The outlook for the state budget is good with a projected budget surplus at the end of FY 1998 of $1.4 billion. |
Key fiscal issues during the 1998 legislative session are expected to be tax cuts and education spending, especially school construction. |
Tax cut proposals that have been discussed so far include cutting the motor vehicle registration fee by 25 percent, speeding the phase in of the property tax proposal and reducing the corporate income tax. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
North Carolina |
General fund revenue collections through the first five months are $80 million or 2 percent above estimate. Revenue collections are expected to be around $300 million or 3 percent above estimate at the end of FY 1998. Personal income tax collections are primarily responsible for the boost in anticipated collections. |
Spending is not expected to exceed the budgeted level in any area. The state's budget condition is described as "very strong" with anticipated surplus revenues and expenditures under control. |
Key fiscal issues during the 1998 legislative session are expected to be funding for juvenile justice, K-12 education and teachers' salaries and early childhood programs. Other fiscal issues expected to be addressed include environmental issues such as water and sewer bonds. |
No tax changes have been proposed. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
North Dakota |
First quarter general fund revenues are 7 percent ahead of the budgeted level, due in large part to sales and motor vehicle excise taxes on purchases made after last year's flood. The state economy also has benefited from federal flood money as well as healthy agricultural and energy production. No revision has been made in the official estimate. |
Spending is not likely to exceed the budgeted level for the FY 1998-1999 biennium. |
The state will have sufficient revenues to meet its biennial budget. No legislative session is scheduled for 1998, although water issues and education will continue to receive attention through the biennium. |
No session in 1998. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Ohio |
General fund collections through October are coming in $85 million or approximately 2 percent over budget. The official revenue estimate has not been revised and revenues are expected to stay on target or slightly above budget for the remainder of the fiscal year. |
It is unlikely that expenditures will exceed the budgeted level in any area. In fact, welfare cases are way down and as a result spending on TANF and Medicaid is significantly below the budgeted level.
Ohio's budget condition for FY 1998 looks pretty good with revenues slightly above estimates and expenditures below or on target. |
School finance issues will continue to dominate the legislative session. The Legislature will also be watching the outcome of electric utility deregulation, especially since some utility revenue is earmarked for education. |
Last summer the senate with the governors support passed a resolution to increase the sales tax by 1 percent for education. The house rejected the measure, but it is likely to come up again. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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Oklahoma |
General fund revenues through November are running 2.2 percent or $34 million over the budgeted amount. Revenues through the remainder of the fiscal year are expected to be on target. |
Oklahoma's budget condition for FY 1998 looks good. Revenues are on target and expenditures are not likely to exceed budgeted levels. |
Education, state employee pay raises, corrections funding, and Medicaid expansion are all likely to be key fiscal issues during the 1998 session. |
Discussions have already surfaced around repealing the state sales tax on groceries, reducing tax rates and offering a rebate to taxpayers. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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Oregon |
For the first quarter of the biennium, personal income tax revenue collections are 3 percent or $175 million above the budgeted level. The personal income tax revenue forecast has been revised upward 3 percent, or by $252.4 million due to higher than expected collections. |
Spending for salmon preservation and disproportionate share hospital payments will be the biggest expenditure areas of concern. The budget condition remains strong, but less so than the prior year. |
No session in 1998. |
No session in 1998. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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Pennsylvania |
General fund revenue collections are on target through the first five months of the fiscal year. Although the official revenue forecast has not be revised, revenue collections are anticipated to be $380 million or 2.5 percent above estimate at the end of the fiscal year. |
Some supplemental appropriations are expected for the medical assistance program due to a delay in the implementation of a managed care program for Medicaid. Aside from the small supplemental budget request, the remainder of the budget is in good shape. |
Key fiscal issues during the 1998 legislative session are expected to include economic development, implementation of managed care, K-12 funding and higher education funding. |
No tax changes have been proposed. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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Puerto Rico |
No response. |
No response. |
No response. |
No response. |
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State |
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Budget/Expenditure |
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Tax cuts/increases |
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Rhode Island |
General fund revenue collections through the first five months are $15 million or 3 percent above estimate. A revision to the revenue estimate projects that year end revenues will be $58.4 million or 3 percent above the budgeted estimate. Most of the increase in revenues is attributed to strong personal income and sales tax collections. |
Human services spending is expected to require an $18 million or 1 percent supplemental appropriation to cover caseload growth. The overall state budget is in good shape and the anticipated revenue surplus allows for flexibility in spending or tax cuts. |
Key fiscal issues during the 1998 legislative session are expected to include legislative oversight of state agencies, human services, and state debt reduction. |
No tax changes have been proposed. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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South Carolina |
General fund revenue collections through the first five months of the fiscal year were on target with estimate. The official revenue forecast for the remainder of the fiscal year increased estimated collections by $64 million or 1.4 percent. |
Spending is not expected to exceed the budgeted level in any area. The budget is in good shape as spending is held in check and sales and personal income tax growth exceed original projections. |
Key fiscal issues during the 1998 legislative session are expected to include full funding for K-12 education, funding for highway programs, and possible taxation and regulation of video poker. |
No specific tax cuts or increases are proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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South Dakota |
General fund collections are on target. |
Spending is not expected to exceed the budgeted levels. Revenues are fine. |
Key fiscal issues for the upcoming session will be local property taxes. The state currently has no income tax, but the income tax is gaining support. |
The governor has recommended use of state funds to provide a 3.5 percent reduction in local property taxes. This would be in addition to an earlier 20 percent reduction. The goal is 30 percent reduction overall, with 6.5 percent to go. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
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Tennessee |
During the first three months of FY 1998, general fund revenue collections are coming in $23.3 million or 2 percent above the budgeted level. Revenue collections are expected to continue at this rate for the rest of the fiscal year. |
Expenditures are not expected to exceed budgeted levels.
The state's overall budget condition is good. |
Key fiscal issues in the 1998 legislative session will probably include discussions about privatization of prisons and additional funding for higher education. |
No proposals at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Texas |
General fund revenue collections are on target with estimate through the first quarter of FY 1998. Estimated collections through the end of the fiscal year are expected to remain on target. A higher than estimated FY 1997 ending balance provides a $650 million projected revenue surplus. |
Expenditures are not expected to exceed budgeted levels. The budget situation is stable and robust tax collections are helping to offset declining lottery sales. |
No session in 1998. |
No session in 1998. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Utah |
General fund revenue collections are on target through the first five months of the fiscal year. Revenues are expected to remain on target through the end of the fiscal year. |
Expenditures are not expected to exceed budgeted levels. The state budget is in a good position even though the economy has slowed down slightly. |
Key fiscal issues during the 1998 legislative session are expected to include highway funding, increasing demand for prison construction, and a higher Medicaid match. |
No specific tax cuts or increases are proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Vermont |
Revenues are above projections by $3.5 million or 0.5 percent through the end of November. The official estimate will be revised upward slightly in early January. |
All budget areas are under control. In fact, the revised estimate in January is expected to show reductions in spending needs for major human service programs. The Legislature may try to carry funds forward into FY 1999 to provide additional funds for school finance reform (Act 60). |
The major issues will be implementation of Act 60 (the property tax/school funding reform) and utility restructuring. |
No specific proposals are on the table. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Virginia |
General fund revenue collections through the first five months of the fiscal year are running ahead of estimate. Revenues are expected to grow at 7.1 percent during the fiscal year compared with a budgeted estimate of 4.3 percent. The official revenue forecast for the fiscal year was increased by $443 million or 6 percent based partly on strong personal income tax growth. |
Expenditures are not expected to exceed budgeted levels. The state delayed a prison opening because of decreased need, Medicaid utilization is down and the TANF caseload is down significantly. With low unemployment, strong revenue growth and expenditures under control, the state budget is in good shape. |
The key fiscal issue during the 1998 legislative session is expected to be the elimination and replacement of the local property tax on motor vehicles. |
The incoming governor has proposed the elimination of the local personal property tax on motor vehicles up to a certain threshold. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Virgin Islands |
General fund revenue collections through the first quarter of the fiscal year are approximately $40 million or 20 percent below estimate. Revenues through the remainder of the fiscal year are expected to remain below estimate although there is a possibility for improvement. |
Although expenditures have not exceeded the budgeted level, the Legislature estimates that the Virgin Islands is running a deficit of about $500 million. Some financial relief is expected in the form of the final payment from the Federal Emergency Management Agency on an emergency loan. |
Key fiscal issues to be addressed during the 1998 legislative session include possible taxation of limited liability corporations and partnerships. |
No formal tax changes have been proposed. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Washington |
For the 1997-99 biennium, revenue collections to date are $150 million above the budgeted level. Revenues through the remainder of the fiscal year are expected to be on target. The FY 1998 revenue estimate has been revised upward by $100 million due to strong economic conditions and a conservative initial forecast. |
Generally, spending is higher than anticipated for developmental disabilities, long-term care, nursing homes, foster care, juvenile rehabilitation and community care. |
Transportation financing, responding to salmon listed as endangered species and whether the state should provide a tax cut or save surplus revenues will be key fiscal issues in 1998. |
No specific tax cuts or increases are proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
West Virginia |
Revenues are running $26 million or 2.8 percent ahead of estimate for the first five months of the fiscal year. The official estimate may be revised upward by the Governor in January. |
Expenditures for the current budget year are on target, although minor supplemental requests are anticipated in January when the Governor's revenue and budget requests for FY 1999 are released. |
Major issues include public employee and teacher raises, increased teacher pension contributions, and whether to accept federal funds for children's health insurance. |
No tax proposals from the governor of legislative leaders, although an interim committee may recommend a 5% reduction in health care provider taxes. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Wisconsin |
Personal income taxes are running ahead of estimate, but the exact amount will not be released until the January revenue estimate is certified. Staff expect an upward revision in the official estimate at that time. |
Spending in all major budget categories is expected to remain within budgeted levels. |
A tie in the Senate will likely preclude any major policy initiatives in the 1998 session, which is the second year of the biennium. |
No tax changes have been proposed at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key fiscal issues |
Tax cuts/increases |
|
Wyoming |
General fund collections are on target for the first quarter of FY 1998 or 0.5 percent ahead of budget and are expected to remain on target for the balance of the fiscal year. The revenue estimate for the FY 1998-1999 biennium was revised upward by $13.3 million or 1.5 percent due to strong sales and mineral severance tax collections. |
Spending is not expected to exceed the budgeted level. The condition of the budget is good, and a surplus is expected at the end of FY 1998 to help fund the second year of the biennium ending June 30, 2000. |
Education funding will be a key fiscal issue in the 1998 legislative session. |
No tax changes have been proposed. |
