States report that they are generally in good to excellent fiscal condition at the beginning of 1999. These conclusions are based on a December 1998 survey of legislative fiscal staff in 50 states and the District of Columbia. These are the highlights of the National Conference of State Legislatures' survey of state fiscal conditions at the start of 1999.
Sales and personal income tax collections are coming in strong in most of the states that report revenue collections above forecast. Illinois and Indiana cite strong growth in personal income tax collections for their expected above estimate revenue collections. Maryland, Massachusetts and Mississippi report that personal income taxes and sales taxes are stronger than originally forecast.
Florida increased its official revenue estimate for the remainder of the fiscal year by $210 million on the basis of strong intangible tax collections from mortgages, stocks and bonds. Indiana also increased its revenue estimate by $235 million for the current fiscal year. Other states that have increased their revenue projections for the current fiscal year include Iowa ($50.2 million), Kansas ($107.8 million), Louisiana ($25 million), Maine ($75 million), Maryland ($195 million), Mississippi ($113.3 million), New York ($279 million), North Carolina ($200 million), North Dakota ($48.4 million), Oregon ($67 million) and Washington ($130 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 21 states. In all cases, revenue collections will be more than adequate to cover the costs of these supplemental requests. Twenty-nine states and the District of Columbia 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 continuing strength of the national economy and welfare reform measures have both contributed to the decline of caseloads.
Nevertheless the most frequently mentioned program that is expected to require a supplemental appropriation in FY 1999 is Medicaid, followed by adult corrections.
The key fiscal issues expected to be prominent on many state legislative agendas in 1999 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 1999 legislative sessions. All states with the exception of Kentucky will convene a legislative session in 1999.
Other fiscal issues that will be addressed in 1999 include Y2K conversions, creation of state lotteries and economic development.
Twenty-four states reported that tax cut proposals were likely to be on the agenda for their legislatures. Among the proposals is a cut in the corporate income tax rate in Hawaii, a phasing out of the marriage tax penalty in Idaho, a phase-down of the personal income tax rate in Massachusetts and the elimination of the sales tax on groceries in Oklahoma.
Other proposals to be considered include reducing the personal income tax rate by 10 percent in Mississippi, a three-year phase-in of personal income tax cuts in New Mexico and the possible exemption of clothing from the sales tax in Vermont.
Some states are also considering increasing some taxes this legislative session. Proposals for tax increases include a doubling of the state gas tax in Alaska and an increase in the gas tax in Illinois that would be earmarked for transportation projects.
Also, Montana may consider the elimination of its business property tax and a reduction in local property taxes, which would be offset by the creation of a consumption tax of 4 percent.
This article is based on a telephone survey in December 1998 of legislative fiscal staff. It includes information from 50 states, the District of Columbia and Puerto Rico. The Virgin Islands and American Samoa did not respond. The survey asked:
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Alabama |
For the first two months of FY 1999 (Alabama's fiscal year starts in October), revenues are coming in on target.
The official revenue estimate was revised from the budgeted level due to a year-end balance in FY 1998. Revenues including insurance premium taxes, mortgage recording taxes and court fees grew more than anticipated in FY 1998 and the trend is expected to continue. |
The state match portion of the federal emergency fund is $6.4 million over budget due to damage from Hurricane Georges.
The general budget condition is better than originally anticipated with a projected surplus of $38 million for the year. |
Key fiscal issues include a new lottery fund for education, Medicaid funding and legal challenges to the franchise tax. |
The governor-elect is expected to propose a lottery for education and an increase in dependent exemptions under the state income tax. |
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Tax Cuts/Increases |
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Alaska |
General fund revenue collections are below target and are expected to remain below target through the end of the fiscal year. Lower oil prices are the primary reason for the continued slump in revenue collections. The state expects to withdraw nearly $1 billion from the Constitutional Budget Reserve to make up for the anticipated revenue shortfall. |
Expenditures are reported to be on target with budgeted estimates. Officials are carefully monitoring the revenue situation as the new year begins but expect the Constitutional Budget Reserve to play a crucial role in maintaining available revenues. |
The budget gap that exists between general fund revenue collections and current expenditures is expected to be the key fiscal issue during the 1999 legislative session. |
The governor has recommended increasing the state gas tax from 8 cents to 17 cents per gallon. |
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American Samoa |
Not reporting |
Not reporting |
Not reporting |
Not reporting |
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Budget/Expenditure |
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Tax Cuts/Increases |
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Arizona |
General fund revenue collections were running $35 million to $40 million (2 percent to 3 percent) above estimate through November. Based on the revised revenue estimate upward by about 1 percent, collections are expected to be on target through the end of the fiscal year. The estimate was revised. |
Expenditures are reported on target for all programs with the exception of the state mental hospital with costs expected to be about $5 million above estimate. |
Key fiscal issues in the 1999 legislative session are expected to include the loss of one-time revenues from 1998 and school capital construction expenditures. |
Some discussions have taken place regarding tax cuts but no specifics have appeared. |
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Arkansas |
General fund revenue collections through November were on target with projections. Revenues are expected to be 1 percent above estimate at the end of the fiscal year. |
Program expenditures are on target with budgeted estimates. The state fiscal outlook is for fairly stable conditions for both expenditures and revenue collections. |
Key fiscal issues in the 1999 legislative session will be tax relief, property tax reform and highway finance. |
There are no specific proposals on either tax cuts or tax increases. |
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California |
Through November, general fund revenue collections were on target. Revenues are expected to remain on target with budgeted projections through the end of the fiscal year. |
The state MediCal program is expected to require a budget supplement since expenditures are about 4 percent above estimate. Most of the increase is due to unexpected caseload growth and a rate increase in the program. The state's budget is considered to be in good shape but not as strong as originally projected. |
Key fiscal issues in the 1999 legislative session will be K-12 education (reform, funding and teacher preparedness), and possible pay increases for state employees. |
Although no specific tax cut or tax increase proposals have been outlined by the governor or legislative leadership, the minority party is expected to propose additional vehicle license fee reductions on top of last year's cuts. |
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Colorado |
Revenues are expected to be $220.3 million (4 percent) over the budgeted level for FY 1999. |
To date, all major expenditure categories are on target. |
Key fiscal issues in the 1999 legislative session will likely include tax policy and tax reductions along with highway funding. |
Tax reductions are expected but no details have been discussed yet. |
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Connecticut |
Year-to-date general fund revenue collections are running above projection. General fund revenue collections are expected to be $288 million (2.9 percent) above estimate at the end of the fiscal year. |
Expenditures for the Department of Children & Family and the state employees' health plan are likely to exceed budgeted levels.
The state is projecting a surplus of $328 million (3.3 percent), primarily through increased revenue projections. |
Key fiscal issues include determining allocation of tobacco settlement monies, a projected budget surplus and whether the Patriots will get $100 million for a new stadium. Other fiscal issues include funding changes for education aid and possible funding for private prisons. |
The governor has proposed a tax rebate because of 1998's surplus. Scheduled reductions in corporate income tax and inheritance taxes will take effect in 1999. Also proposed is a measure to increase the credit in personal income taxes to a maximum of $340 for the 1998-99 income year, an increase of $65 over the previous $285 credit. |
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Key Fiscal Issues |
Tax Cuts/Increases |
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Delaware |
Revenues through the end of October are running $39 million (1.8 percent) ahead of forecast. The official estimate has not been revised upward, however. |
All major expenditure categories are on target. |
Public education finance and the Y2K computer issue are likely to be the major fiscal issues in the 1999 session. |
No tax reductions or tax increases have been proposed. |
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Tax Cuts/Increases |
|
District of Columbia |
Tax revenue is running $25 million (3.5 percent) above the estimate for the first quarter of FY1999. By the end of the fiscal year, revenues are expected to be $100 million (4 percent) above the estimate. |
All major expenditure categories are on target at this time. Due to strong tax receipts and improved spending controls, the budget is expected to remain stable through the rest of FY 1999. |
The budget surplus is expected to be the key fiscal issue for the 1999 session. Debate will center on whether to save surplus revenues, spend them, cut taxes or pass some combination of the three. |
There have been no proposals to date, but tax cuts are a means to deal with the budget surplus. |
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Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Florida |
General fund revenue collections through November were 1.3 percent above estimate. The official fiscal year revenue estimate was also increased by $210 million (1.3 percent) through the end of the fiscal year. Intangible taxes on mortgages, stocks, and bonds, and sales taxes on autos are reported strong. |
Major expenditure categories are in line with budgeted levels, and the state's budget condition for the rest of FY 1999 is expected to remain good. School construction monies are expected to be in trouble because of their ties to gross receipts taxes on utilities which are experiencing a weakness. |
Key fiscal issues during the 1999 legislative session are expected to be tax cuts in general. |
A possible millage rollback at the local level to be made up by the state and more intangible tax relief are likely to be some tax cut issues addressed during the 1999 legislative session. The five year limit on delinquent taxes may also be another issue to be taken up by the Legislature. |
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Tax Cuts/Increases |
|
Georgia |
General fund tax collections are on target with the estimate for the first five months of the fiscal year and are expected to remain on target. |
K-12 expenditures are expected to exceed the budgeted level due to higher than expected enrollment growth. Other major expenditure categories are in line with expectations. The budget condition is expected to remain solid for the rest of FY 1999. |
Prison construction, Y2K problem resolution and an expansion of the World Congress Center are expected to be the key fiscal issues during the 1999 session. |
To date, no concrete proposals to raise or cut taxes have been proposed. |
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Tax Cuts/Increases |
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Hawaii |
General fund revenue collections were a little above forecast through November. The forecast was revised upward slightly (0.5 percent). |
The state will likely end the current fiscal year with a slight surplus. Supplemental appropriations are expected for mental health services for children, K-12 education, community hospital system, prisons and mental health services for adults. Still undetermined are pending payments to the state salary pool under collective bargaining agreements. |
The key fiscal issue during the 1999 legislative session will be how to stimulate the economy in order to generate a larger general revenue base. |
The governor is proposing corporate income tax cuts. |
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Tax Cuts/Increases |
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Idaho |
General fund revenue collections through November were on target. Revenue collections are also expected to remain on target with the revised revenue estimate, which was decreased by $24 million (1.5 percent) based on uncertainty over Asian economic problems. With continued good consumer spending, it is possible that the state could still meet the original revenue projection. |
Program expenditures are likely to remain on target with budgeted estimates. The state expects a slight surplus ($15 million) by the end of the fiscal year. Although revenue growth is expected to slow down compared to recent years, there is no sense of an economic crisis. |
Key fiscal issues during the 1999 legislative session are expected to be public school facilities, disposition of tobacco settlement monies, state employee salaries and private prison funding. |
The governor-elect has expressed interest in phasing out the marriage tax penalty. |
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Key Fiscal Issues |
Tax Cuts/Increases |
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Illinois |
General fund revenue collections through November were reported to be on target with estimates. The revenue forecast was recently increased by $50 million (0.25 percent) for the remainder of the fiscal year. A healthy growth in personal income tax collections was the primary reason for the revision. |
Program expenditures are as budgeted. The state's budget condition is seen as somewhat weaker than originally projected but is still considered healthy. |
Key fiscal issues during the 1999 legislative session are expected to be K-12 funding, transportation funding and new prisons. |
A gas tax increase to provide funding for transportation projects is possible as are some tax cut proposals being discussed by the House Republican leadership. |
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Tax Cuts/Increases |
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Indiana |
General fund tax collections for the first five months of the fiscal year came in on target. But due to the expectation that personal income tax collections will be stronger than anticipated, the FY 1999 general fund revenue estimate was revised upward $235 million (2.7 percent). |
Major expenditure categories are in line with budgeted levels, and the state's budget condition for the rest of FY 1999 is expected to remain good, with the economy showing continued growth. |
What to do with the budget surplus is expected to be the key fiscal issues during the 1999 session. Funding full-day kindergarten and eliminating the inventory tax are possibilities. |
Nothing official has been recommended to date. |
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Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
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Iowa |
General fund revenue collections to date are coming in above the budgeted level (on an annual estimate) by about $100 million or 2-3 percent. Revenue through the remainder of the fiscal year should be on target. The official FY 1999 general fund revenue estimate was revised upward by $50.2 million or 1.1 percent |
Expenditures will be at budgeted levels. |
A brief assessment of the state's budget condition for the rest of FY 1999 is "steady growth." The key fiscal issues during the 1999 legislative session are likely to be K-12 education and possible tax cuts. |
No specific proposals have been presented for either tax cuts or tax increases. |
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Tax Cuts/Increases |
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Kansas |
General fund revenue collections to date are coming in at $24 million (1.6 percent) above the budgeted level. The fiscal year revenue estimate was increased in November by $107.8 million (2.7 percent). |
The Welfare Agency has requested supplementals because caseload numbers are higher than anticipated. The General and Supplemental School Aid bill is lower than estimated. The state's budget condition for the rest of FY 1999 is still strong with continued growth. |
Key fiscal issues during the 1999 legislative session are expected to be K-12 education and special education finance. |
The governor ran for reelection recommending property tax relief on motor vehicles. Removing the top bracket of the personal income tax is a recommendation of a study commission and will likely be addressed during session. |
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Tax Cuts/Increases |
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Kentucky |
General fund revenue collections were on target through November. Revenues are expected to be on target through the end of the fiscal year. Corporate income tax collections are lagging behind but are being offset by stronger than expected personal income tax collections and sales tax collections. |
Major expenditure categories are on target with expectations. The state's budget is considered to be in good condition. Budget reserves were increased by $56 million because of a significant carry forward from FY 1998. |
No session in 1999. |
No session in 1999. |
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Tax Cuts/Increases |
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Louisiana |
Revenues through November are slightly above target ($25 million or 0.5 percent). The official revenue estimate was revised upward by $25 million in December. |
Only one major expenditure category is currently over budget. The state's free tuition program (TOPS) is over by $25 million. |
A major fiscal issue in the 1999 legislative session is likely to be pay increases for K-12 teachers. Another issue is the desire of many officials to give tax rebates and abatements in an election year; however, the budget surplus of the past three years has diminished. |
So far, there are no formal proposals for tax reductions or tax increases. |
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Tax Cuts/Increases |
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Maine |
Revenues are running just slightly below the original forecast, which did not include a ½ cent reduction in the sales tax rate on Oct. 1st that was triggered by strong FY1998 sales tax growth. Revenues for the full fiscal year are expected to exceed the original estimate by $75 million (3.8 percent), even though the original estimate did not anticipate the sales tax rate reduction. |
Most programs are on target. Supplemental requests are expected for the state's education program for handicapped children aged 0-5 years. Also, a $5-10 million shortfall is likely in the program that reimburses businesses for local property taxes paid on new machinery and equipment because many more firms than expected are making M&E purchases. |
The transportation fund faces a $50 million structural shortfall during the FY2000-01 biennium, so transportation funding will be a key issue in the upcoming session. Many agencies are expected to ask the Legislature for budgetary enhancements that have been denied in recent years due to budget constraints. |
No tax reduction proposals have emerged from the governor or legislative leaders of either party. |
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Key Fiscal Issues |
Tax Cuts/Increases |
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Maryland |
General fund revenue collections were above forecast through November. The official revenue forecast for the remainder of the fiscal year was increased by $195 million (2.3 percent). Strong personal income tax collections and sales collections were responsible for the revision. |
Programs that are expected to require additional funding during the fiscal year include Medicaid, child care, Y2K conversions, and prisons. The state is also experiencing savings from its income maintenance payments. Despite the shortfalls in some program expenditures, the state is facing a surplus situation. |
Key fiscal issues during the 1999 legislative session are expected to be personal income tax reductions, establishing a spending affordability limit, and what to do with surplus monies. |
So far, there are no formal proposals for tax reductions or tax increases. |
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Tax/Revenue |
Budget/Expenditure |
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Tax Cuts/Increases |
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Massachusetts |
General fund revenue collections are running ahead of estimate by about $500 million (9 percent - 11 percent) through November. Strong wage growth, new jobs and sales tax collection are expected to result in about a $1 billion revenue surplus at the end of the fiscal year. |
Major expenditure categories are on target with expectations. State employee health care may be underfunded this fiscal year as is the Title XXI program because of an increased caseload. The overall budget situation is considered very healthy. |
Key fiscal issues during the 1999 legislative session are expected to be K-12 education (reform and teacher pay), disposition of tobacco settlement funds and special education. |
The governor is likely to propose a phase-down of the personal income tax from 5.9 percent to 5.0 percent. The Senate is likely to consider a proposal for property tax circuit breakers for seniors. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
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Michigan |
General fund revenue collections were more than 1 percent above estimate through November. Revenues are expected to be about $90 million (1 percent) over estimate by the end of the fiscal year. |
Major expenditure categories are on target with expectations. The budget outlook is considered very good for the remainder of the fiscal year. |
Key fiscal issues in the 1999 legislative session are expected to be further tax reductions and the distribution of the tobacco settlement monies. |
The governor has recommended cuts in the personal income tax. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
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Minnesota |
Revenues for the first four months of FY 1999 are running $352 million (10 percent) over the budgeted amount. Excess revenues are from higher than expected tax collections and tobacco settlement money received in September. |
Expenditures are down $262 million for the year. Health care spending is $173 million less than the budgeted amount. K-12 education spending is also lower than expected. |
Key fiscal issues in the 1999 legislative session are likely to be tax cuts and tax rebates. Education spending will also be an issue. |
The governor-elect and both the House and Senate leadership have come out in favor of tax cuts but nothing specific has been discussed. |
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State |
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Budget/Expenditure |
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Tax Cuts/Increases |
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Mississippi |
Tax revenue is running $71.2 million (5.67 percent) above the estimate for the first five months of FY1999. Income taxes are well above the estimate (13 percent) and sales tax revenues are 6.8 percent over the estimates. The official revenue estimate was revised upwards by $113.3 million. |
Most expenditure categories are on target, although corrections is $10 million over budget: $6.5 million for new prison operations and $3.5 million for payment to local prisons for housing state inmates. The state has an additional request of $5 million in disaster relief for hurricane damage. |
Pay raises for teachers will be a key fiscal issue in the 1999 legislative session. |
The governor has proposed reducing the income tax rate by 10 percent. |
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Tax/Revenue |
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Key Fiscal Issues |
Tax Cuts/Increases |
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Missouri |
Tax revenue collections for the first quarter are on target and are expected to continue coming in at the budgeted level for the remainder of the fiscal year. |
Major expenditure categories are on target and are unlikely to exceed budgeted levels. The state's budget condition for the rest of FY 1999 is good due to better than expected revenues. |
Tax cuts and credits, the tobacco settlement and workforce development are expected to be the key fiscal issues during the 1999 session. |
To date, there have been no official recommendations from the governor or legislative leaders to cut taxes, although tax cuts are expected to be a key fiscal issue in 1999. |
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Tax Cuts/Increases |
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Montana |
General fund revenue collections were on target through November. Revenue collections are expected to remain on target through the end of the fiscal year. A slight revision to the revenue estimate reduced expected revenues by about $4 million (0.1 percent). |
The state's budget condition is described as stable. Aside from additional spending for fire suppression, all major spending categories are on target with original estimates. The human services agency is experiencing some savings which have been redistributed within the human services program structure. Anticipated supplemental requests are insignificant. |
Key fiscal issues during the 1999 legislative session are expected to be economic development, tax reform, education funding and mental health managed care. Also expected to be key fiscal issue is CI-75, a constitutional initiative passed by the voters in November that requires votes on nearly all taxes and fees. |
The governor is proposing a revenue neutral reform package, with the elimination of the business property tax and a reduction in property taxes, which would be offset by a consumption tax of 4 percent. |
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Tax Cuts/Increases |
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Nebraska |
The official revenue forecast for FY 1999 was revised upward $21 million (1 percent). But due to an accounting change, general fund revenue collections are $11.2 million below the estimate (1.4 percent), for the first five months of the fiscal year. Revenues are expected to come in on target for the remainder of the fiscal year. |
Due to payments for a lawsuit, expenditures for health and human services may exceed the budgeted level. Other major expenditure categories are in line with expectations. The budget condition for the rest of FY 1999 should remain stable. |
The key fiscal issue during the 1999 legislative session will be a 1/2 cent sales tax cut that was passed for one year. Legislation could make the cut permanent. |
To date, neither the governor nor legislative leaders have recommended any tax cuts or increases in 1999. |
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Tax Cuts/Increases |
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Nevada |
Revenues through the end of November are running $50 million (5 percent) below the forecast. On Dec. 1 the official estimate was revised downward by 4 percent because sales and gaming tax revenues are lower than expected. |
Most major expenditure categories are on target and Medicaid is running slightly lower than expected. |
Finding the money to fund K-12 education is likely to be the major fiscal issue in the 1999 session. |
No proposals for tax reductions or tax increases. |
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Budget/Expenditure |
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Tax Cuts/Increases |
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New Hampshire |
Revenues for the first five months of the fiscal year are coming in about 4 percent ($16 million) ahead of the forecast. The official estimate has not been revised upward, however. |
All major expenditures appear to be on target. |
Public education finance is likely to be the major fiscal issue in the 1999 session. |
No proposals for tax reductions or tax increases. |
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Tax Cuts/Increases |
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New Jersey |
Revenues through the end of November are on target, running $42 million (0.7 percent) ahead of the estimate. Any revisions to the estimate will not be considered until January. |
Corrections expenditures are running $63 million (8.3 percent) over budget due to overly optimistic caseload projections. The senior citizen prescription drug program is $15 million (7.3 percent) over budget because cost savings proposals were not enacted. |
Key fiscal issues for the 1999 session include local property tax relief, financing transportation infrastructure improvements and financing K-12 and higher education capital construction projects. |
No proposals yet. |
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New Mexico |
Revenues for the first part of the fiscal year were running above the estimate by $60 million (1.8 percent). The official revenue forecast was revised upward by that amount. |
Major expenditure categories are on target with expectations. |
Public school capital outlay funding, tax cuts, teacher raises and gaming are expected to be the key fiscal issues during the 1999 session. |
The governor has recommended the three-year phase in of $100 million of personal income tax cuts. No official recommendations have been made to date by legislative leaders. |
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New York |
General fund revenue collections have been on target to date. A revision to the official revenue forecast increased the year-end estimate for collections by $279 million (0.75 percent). |
All major expenditures appear to be on target. The budget outlook for the remainder of the fiscal year is good, with a large surplus expected. |
Key fiscal issues during the 1999 legislative session are expected to be K-12 education (school construction and state aid) and juvenile justice. |
No formal proposals have surfaced regarding any new tax cuts or tax increases. The state will already have phased in tax cuts in 1999 of $1.9 billion and in 2000 of $2.1 billion. |
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North Carolina |
Revenues for the first five months of the fiscal year are coming in slightly ahead of the forecast ($55 million or 1.2 percent). In December the revenue estimate for the year was revised upward by $200 million.
The budget situation could be difficult in the future due to a court decision that requires the state to provide refunds of intangible tax revenues and public pension tax revenues. |
All major expenditures appear to be on target. |
The lottery, the intangibles tax and pension tax refunds, teacher pay raises and funding for the governor's children's initiatives are likely to be the key fiscal issues in the 1999 legislative session. |
No proposals for tax reductions or tax increases. |
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North Dakota |
General fund revenue collections are coming in at $42 million (4.5 percent) above the budgeted level. The period is the first 16 months of the biennium. Revenue through the remainder of the fiscal year should be on target. The official FY 1999 general fund revenue estimate has been increased by $48.4 million (3.2 percent) from the budgeted level |
Expenditures for Foundation Aid are $12.3 million (2.6 percent) below the budgeted level because of decreased student enrollments. The savings are likely to be reappropriated for the next biennium |
Key fiscal issues during the 1999 legislative session are expected to include funding for Human Services, K-12 education, and flood control |
No proposals for tax reductions or tax increases. |
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Ohio |
General fund revenue collections are $47.1 million (0.89 percent) above the forecast through November. Revenues are expected to be on target with the revised forecast through the remainder of the fiscal year. General fund revenue collections for FY1999 will increase $664.1 million (4.9 percent) above estimate based on the FY1998 revenue surplus. |
K-12 education will receive $228.3 million above its original budget in the current fiscal year because of legislation passed in FY1998. The state expects to realize savings in various programs during FY 1999, including higher education ($11.3 million), health care ($124.3 million), Temporary Aid to Needy Families ($61.2 million), other welfare ($41.3 million) and justice and corrections ($30.6 million). |
Key fiscal issues during the 1999 legislative session are expected to be electric deregulation, school funding, and business property tax relief. |
There are no formal proposals, but income tax deductions for college tuition and job training, tax relief for the elderly, deductions for long-term care insurance and health insurance purchases are likely to be addressed. A plan for electric deregulation to be revenue-neutral was floated. |
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Oklahoma |
Revenues for the first four months of the fiscal year are coming in on target. |
All major expenditure categories are on target. |
A major fiscal issue in the 1999 session will be requests from the oil industry for tax breaks due to slumping revenues.
Another key fiscal issue is finding money in the budget to meet demands as previously enacted tax cuts take effect. |
The governor still wants to cut taxes and is looking at several options, including the sales tax on groceries. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Oregon |
General fund revenue collections for the biennium (through 12/1/98) were on target with the estimate. The forecast for FY 1999 has been revised upward slightly by $67 million (.8 percent), because collections are expected to be stronger than anticipated. |
Expenditures for human service programs are all expected to be within 5 percent of the target. Prison expenditures are down 2 percent because prison populations are growing slower than the caseload forecast. For the rest of FY 1999 the budget is expected to remain stable. |
K-12 school funding is expected to be the key fiscal issue during the 1999 session. |
A private retirement income tax exemption and tax cuts for the working poor have been recommended by Senate leadership. To date, the governor has made no recommendations on tax cuts or increases. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
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Pennsylvania |
General fund revenue collections through November were $84.8 million (1.3 percent) above the estimate. Strong personal income tax collections helped offset a drop in corporate income tax collections. General fund revenue collections are expected to be between $200 million and $300 million (1 percent - 1.6 percent) above the original forecast at the end of the fiscal year. |
All major expenditure categories are on target. Supplemental budget requests for all programs amount to $41.5 million, including some welfare requests. Savings in other programs will likely offset supplemental requests. |
Key fiscal issues during the 1999 legislative session will be personal income tax cuts and corporate income tax cuts. There is a possibility for property tax cuts as well. |
No specific proposals for tax reductions or tax increases have been discussed. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
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Puerto Rico |
The official revenue estimate was decreased by $62.9 million (2.9 percent) because of effects to the economy brought about by Hurricane Georges. |
A supplemental appropriation is expected for the state housing program due to widespread hurricane damage to homes on the island. |
The key fiscal issue during the 1999 legislative session is expected to be state assistance for displaced residents. |
No specific proposals for tax reductions or tax increases have been discussed. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
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Rhode Island |
General fund revenue collections were running above the budgeted estimate through November. General fund revenue collections are expected to be $66.3 million (3.3 percent) above the fiscal year-end estimate. |
All major expenditure categories are on target. The state's budget outlook is considered healthy with an expected surplus at the end of the fiscal year. |
Key fiscal issues during the 1999 legislative session are expected to include the allocation of the tobacco settlement monies, acceleration of the tax reductions and the possible phase out of the inventory tax. |
Tax cut proposals may include acceleration of tax reductions (personal income tax), and the possible phase out of the inventory tax. |
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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 were on target with estimates through November. Revenue collections through the end of the fiscal year are expected to be on target with estimates revised after November. Sales tax and personal income tax collections have been strong so far. |
All major expenditure categories are on target. The state's budget condition is described as being in good shape and normal growth is expected in revenues. |
Key fiscal issues during the 1999 legislative session are expected to include video poker and a proposal for a referendum on creating a state lottery. Lottery profits would be earmarked for K-12 education. |
The governor-elect proposed a tax reduction for the elderly. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
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South Dakota |
General fund revenue collections to date are coming in on target compared to the estimate, which covers the first four months of the fiscal year. Revenue through the remainder of the fiscal year should be on target. |
The state anticipates savings in its school funding formula because of lower than anticipated enrollments. |
A key fiscal issue during the 1999 legislative session will likely be whether to raise gasoline taxes or other motor vehicle taxes. |
There are no specific proposals for tax reductions or tax increases. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Tennessee |
Revenues for the first five months of the fiscal year are coming in below the forecast by about 2 percent ($34 million).
Tennessee relies heavily on sales, franchise and excise taxes. Sales tax revenues are on target but both franchise and excise revenues are coming in lower than expected. The official estimate won't be revised until March. |
All major expenditures appear to be on target. |
Funding higher education, home and community based health care and funding Tenncare (the plan that replaced Medicaid in 1994) are likely to be the major fiscal issues in the 1999 session. |
No proposals for tax reductions or tax increases. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Texas |
The original revenue estimate for the biennium called for revenue growth of 6.2 percent, but revenue growth is now estimated at 11 percent. The biennium ending balance is now estimated at $3.7 billion. Some of the balance will be due to budget savings but most will result from revenue growth above estimate. Strong revenue sources include the sales tax, insurance, franchise and other taxes. |
All major expenditures appear to be on target. Some emergency appropriations are expected for drought and flood relief aid during the past year. The budget is expected to remain on target through the remainder of the biennium. |
Key fiscal issues during the 1999 legislative session are expected to include allocation of tobacco settlement monies, K-12 and higher education, tax relief in relation to the property tax and additional funding for state prisons. |
The governor is expected to make some proposals for tax relief, especially in relation to property taxes. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Utah |
General fund tax revenue is on target through the end of the second quarter. For the remainder of the fiscal year, revenues are expected to continue coming in at the budgeted level. |
Major expenditure categories are on target at this time. The state's budget condition is strong, but the economy is expected to start leveling off through the remainder of FY 1999. |
Continued highway funding for a major highway project, and funding for education reforms, Y2K resolution and corrections are expected to be the key fiscal issues during the 1999 legislative session. |
In 1999, the governor is expected to recommend the phase-in of a manufacturing exemption passed previously, but postponed. No proposals from legislative leadership have been made at this time. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
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Vermont |
Tax revenue is running $23 million (7.5 percent) above the estimate for the first five months of FY1999. However, this pace is not expected to continue because much of the overage is a one-time estate tax settlement. Corporate income taxes are also well above estimate, while income and sales tax collections are close to the original estimates. Revisions in the official estimate are not due until January. |
Most expenditure categories are on target, although corrections may submit a small supplemental request. The property tax rebate program under the new education finance law is running $13 million below estimate. |
Tax reductions are expected to be the key fiscal issue for the 1999 session (see next column). New prison capacity may also be an important issue, as the state has been sending prisoners to other states due to a lack of bed capacity. |
The governor has proposed reducing income taxes by 1 percent (Vermont piggybacks federal liability). The House Appropriations chair has called for tax credits tied to higher education, while the Senate Finance Committee chair has proposed exempting clothing from the sales tax. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Virginia |
General fund revenue collections through November were 11.7 percent above estimate. Revenues are expected to be about $385 million (8.1 percent) above estimate by the end of the fiscal year. |
All major expenditures appear to be on target. Savings are expected in both corrections and Medicaid. The budget outlook for the remainder of the fiscal year is for very strong revenue growth and for spending to remain within projections. |
Key fiscal issues during the 1999 legislative session are expected to include K-12 school construction and other aid to localities. |
Tax cut discussions so far would only trim taxes at the margins, with no significant proposals surfacing at this time. |
|
Virgin Islands |
Not reporting |
Not reporting |
Not reporting |
Not reporting |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Washington |
General fund revenues through the first quarter are running just above the estimate, at $50 million. The revenue forecast has been revised upward $130 million (1.5 percent), due to strong collections, but over the remainder of the fiscal year, collections may be down due to layoffs at Boeing. |
Expenditures for welfare are well below budget (10 percent to 20 percent), due to a drop in caseload. Any anticipated savings are likely to be used for education. Despite the possibility of lower revenue collections, the state's budget condition for the rest of FY1999 looks good due to the tobacco settlement. |
Salmon recovery, health care and compensation for higher education employees, teachers and other state employees are expected to be the key fiscal issues during the 1999 session. |
Small tax cuts for economic development have been proposed by the governor. No other proposals have been made to date. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
West Virginia |
General fund revenues through the end of November are just slightly ($5 million) ahead of target. The official estimate has not been updated and probably will not be. |
The Medicaid program may need a supplemental of about $10 million because health care provider taxes are running below projections. |
The public employee health insurance program (self-funded) will need to make up a $50 million shortfall. |
A governor's tax reform commission is looking at tax restructuring. If the governor and legislative leaders agree that reform is needed, this would most likely be addressed in a special session after the conclusion of the regular session. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Wisconsin |
Revenues are very close to the original target, and significant revisions are unlikely when the mid-January report is released. |
All major expenditure categories are on target. |
Tax cuts will be a big issue (see next box). The state has been sending many prisoners out of state and will address prison needs in 1999. Other issues include a constitutional amendment to allow lottery funds to be used to reduce residential property taxes, and resolving the backlog of claims on the leaking underground storage tank trust fund. |
Both parties are proposing tax reductions. The Republicans, who control the House, want an across the board reduction in income tax rates. The Democrats, who control the Senate, are pushing for property tax reductions. |
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State |
Tax/Revenue |
Budget/Expenditure |
Key Fiscal Issues |
Tax Cuts/Increases |
|
Wyoming |
General fund revenue collections through November were on target with estimates. Revenues are projected to remain on target through the end of the fiscal year. |
All major expenditure categories are on target. Funds are available to cover some expected supplemental budget requests including $12 million for Y2K and $18 million for K-12 capital construction. |
Key fiscal issues during the 1999 legislative session are expected to include K-12 school finance, including capital construction and the funding formula, especially for small school districts. |
No proposals for tax reductions or tax increases have been presented yet. |
