State Fiscal Outlook for 2001: February Update

Posted 28 February 2001; updated 8 March 2001

State Fiscal Outlook for 2001: February Update

Much attention has been focused on the national economy and how recent evidence of a slowdown is affecting state finances. Many believe that state fiscal conditions have taken a dramatic downturn and that the outlook is bleak. But that is not the picture painted by a recent 50-state survey conducted by the National Conference of State Legislatures (NCSL). As a group, states have seen their fiscal situation worsen since mid December (when information was last collected). But at the same time, there remains good news in many states, with 20 reporting that revenues were above forecast through the end of January.

This report is based on information collected from legislative fiscal directors in mid to late February. It covers the revenue and expenditure situation through the end of January, state plans to cut spending or tap reserves to keep their FY 2001 budgets in balance, prospects for tax changes in 2001 legislative sessions and the revenue and budget outlook for FY 2002. These are the highlights of the survey:

State revenue growth has slowed. Two months ago, 44 states reported that revenues were on target or above forecasted levels. Now, the tally is 31 states.
Thirty-one states report that spending is exceeding budgeted levels, although in some cases the overruns are small. Medicaid continues to exceed budgeted levels and is proving to be a sizeable problem in many states.
Most states will not need to cut their FY 2001 budgets to keep them in balance. Budget cuts are likely in 11 states and possible in eight.
Most states will not need to tap reserve funds to balance their FY 2001 budgets. Five states expect to use reserves, with six others reporting that reserves might be tapped.
Tax cuts will be considered in several states, although most cuts will be minor. A few states may increase taxes, especially excise taxes.
Preliminary FY 2002 revenue forecasts reflect concerns about the strength of the economy. Most states expect slower revenue growth in FY 2002 compared with FY 2001. Several states also expect to revise their forecasts down over the next few months.
The budget outlook for FY 2002 is guarded and uncertain. While a number of states continue to project favorable revenue growth and strong finances, most are taking a wait-and-see attitude.

FY 2001 Revenue Outlook: Not as Positive as Two Months Ago

As recently as two months ago, 44 states reported that revenue collections were on target or above forecasted levels. This was good news and caused many public officials to be optimistic about state finances for FY 2001. But the NCSL fiscal survey at the end of 2000 did not capture December revenue collections, which are important because holiday sales tax collection figures and quarterly estimated income tax payments give revenue forecasters useful information about the strength of the economy and consumer confidence.

State revenue collections have been erratic in recent months and generally have slowed. Most states reported that November and December revenue collections were disappointing, with sales tax collections being particularly weak. Collections rebounded in some states in January, however. Through the end of January, 31 states reported revenues on target or above forecasted levels. In some of these states, especially those relying on severance taxes, actual collections were well above forecasts.

Of the 20 states reporting revenues above forecast, a regional pattern tends to emerge. States with strong revenue growth tend to be in the West (California, Idaho and Utah) or in the Northeast (Connecticut, Massachusetts and New Hampshire). Several states in the Middle Atlantic (Maryland, New Jersey, New York and Pennsylvania) also are on the list. Many of the other states with revenues above forecast are benefiting from large increases in severance tax collections and include Alaska, Louisiana, Montana, New Mexico and Wyoming.

A regional pattern also emerges for the states with revenues below forecasts. Revenue shortfalls are occurring in a number of southern states including Alabama, Arkansas, Kentucky Mississippi, North Carolina, South Carolina, Tennessee and Virginia. Several states in the Great Lakes region, including Indiana, Michigan and Ohio, are in similar situations.

When the revenue situation at the end of January is compared with the situation two months ago, the tally is that 15 states are worse off, five are better off and 30 are in a similar situation. How states will fare throughout the remaining months of the fiscal year is uncertain. States in the West tend to be optimistic about continuing strong revenue growth. Others, especially those in the South are much more concerned. While lower than projected revenue growth is a problem in and of itself, the magnitude of a revenue shortfall is compounded if spending is exceeding budgeted levels.

State Expenditure Update

Supplemental appropriations are a common feature in most states because it is difficult to predict actual expenditures, especially for caseload driven programs. It is not surprising then that 31 states anticipate making supplemental appropriations for various state programs. As reported in December, Medicaid is continuing to be a problem, with 23 states reporting cost overruns.

But Medicaid is not the only program exceeding budgeted levels. Overages in corrections spending are cropping up in a few states including Colorado, Missouri, Oklahoma and Texas. Funding for education, especially K-12 education, has been insufficient to meet needs in a number of states including Florida and Washington where student enrollment estimates were too low.

Addressing Fiscal Problems in FY 2001 Budgets

The growing number of states reporting lower-than-expected revenues is causing concern about FY 2001 budgets and what actions may be taken to keep them in balance. While 31 states reported that budget cuts would not be necessary to balance the FY 2001 budget, 11 expect to cut their current budgets.

Alabama’s governor has instituted a 6.2 percent cut for all education programs because revenues for the Education Trust Fund (which receives sales and income tax collections) are below estimate by 6.2 percent. In Delaware, the governor is expected to order a 2.5 percent cut in agency budgets to cover cost overruns in Medicaid and information technology. Mississippi is looking at $137 million in cuts. Nevada will limit cuts to one-time expenditures such as equipment and motor vehicle purchases. North Carolina is facing broad cuts to create a $1 billion escrow account to deal with a projected budget gap. Virginia’s governor has implemented $122 million in targeted cuts and $67 million in across-the-board cuts. In West Virginia, public education will be exempt from a 3 percent budget cut.

Another eight states report that budget cuts are possible. If revenues do not rebound in Arkansas, cuts will be required. Louisiana’s governor is looking at ways to eliminate a $29 million deficit carried forward from FY 2000. While budget cuts are possible, education is expected to be exempt.

Because revenue growth has been so strong for the past several years, most states have bolstered their budget reserves, especially their rainy day funds. If revenue shortfalls persist, a few states may tap reserves to balance their FY 2001 budgets.

Although 38 states indicated that reserves would not be used, five reported that some type of reserve would be tapped in FY 2001. Several states will use rainy day funds to deal with budget problems. North Carolina will use $157 million from its rainy day fund in addition to tapping several other reserves (such as the capital reserve fund). Oklahoma usually taps its rainy day fund in the course of a fiscal year and expects to do so again in FY 2001. Mississippi’s governor already has used $15 million in reserves, and is authorized to use another $35 million if necessary. Washington expects to tap reserves, which are down because they already have been used to meet rising Medicaid expenses. Colorado is borrowing from a maintenance trust fund to ensure that planned highway projects go forward and to address cash flow problems stemming from a new constitutional amendment that requires a state funding increase for education.

In addition to these five states, another six report that reserves might be tapped to deal with budget problems this fiscal year. Indiana might tap Medicaid reserves. West Virginia might use reserves to fund supplemental budget requests. Vermont is considering the use of reserves to pay for cost overruns in the transportation fund for snow removal.

State fiscal conditions vary considerably in the current fiscal year, which means that state actions to deal with fiscal problems also will vary. Generally, the states fall into six categories that illustrate the magnitude of their fiscal situation.

Spending overruns/lower-than expected revenues. With a couple of exceptions, states in this category arguably are in worse fiscal condition than other states because they are being hit both on the spending and revenue side of their budgets. The 13 states in this category are Arizona, Arkansas, Colorado, Indiana, Kansas, Kentucky, Maine, Mississippi, Missouri, North Carolina, Ohio, Tennessee and Virginia.

Spending overruns/revenues on target. The severity of the fiscal problems in these states depends on the magnitude of the spending overruns. With the exception of Vermont, most of the seven states in this category are reporting sizeable spending overages. The states are Delaware, Florida, Illinois, Texas, Vermont, Washington and West Virginia.

Spending on target/lower-than-expected revenues. Most of the states in this category are in good shape, despite the revenue situation (which for most is relatively minor). The seven states in this category are Alabama, Iowa, Michigan, Minnesota, Nevada, South Carolina and South Dakota.

Spending overruns/higher-than expected revenues. Although spending is above budgeted levels, so are revenues, which means that most of these states have stable or strong fiscal situations. The leading exception is Louisiana. The 11 states in this category are Connecticut, Georgia, Idaho, Louisiana, Maryland, Massachusetts, Montana, New Jersey, New Mexico, Oklahoma and Pennsylvania.

Spending on target/revenues on target. There are no significant issues to report in Nebraska, North Dakota, Rhode Island and Wisconsin.

Spending on target/higher-than-expected revenues. These states arguably are in the strongest fiscal position relative to the other states. The eight states in this category are Alaska, California, Hawaii, New Hampshire, New York, Oregon, Utah and Wyoming.

Tax Changes Anticipated in 2001

The survey asked if states were likely to consider any tax changes during their 2001 sessions. Twenty-two states replied that tax changes were unlikely to be considered this year. Only 10 states reported that tax increases might be considered while another 18 mentioned that tax decreases were a possibility.

Previous tax cuts and uncertainties over the direction of the economy were cited as reasons for the modest tax cutting proposals being considered this year. This includes Arizona Legislature’s proposal to set aside $15 million in tax cuts for FY 2002 and $30 million for FY 2003. California reported that while general tax rate reductions are unlikely, some targeted tax cuts or credits are possible. Delaware also mentioned that small, targeted tax cuts are possible this session. Florida reported a strong possibility of select tax reductions.

Iowa already took action to suspend the sales tax on residential heating fuel for the months of February and March, and will completely repeal the tax next year. New Jersey has enacted a $36 million corporate tax cut.

Some states are considering tax increases this year. Louisiana is looking at the possibility of raising taxes on riverboat casinos to generate revenue for teacher pay increases. Maine’s governor has proposed increases in the cigarette tax and the meals and lodging tax. Tennessee’s governor has proposed an $800 million tax plan that would be used to cover the projected budget gap in FY 2002.

A few states have large previously enacted tax cuts that will reduce the possibility for further reductions during the 2001 session. Massachusetts’ voters recently approved a measure to gradually reduce the state’s personal income tax rate from 5.9 percent to 5 percent. The revenue loss is estimated at $457 million in FY 2002 and will grow to $1.2 billion in FY 2004. South Dakota voters approved the repeal of the state’s inheritance tax in November 2000, so further tax cuts are unlikely this session.

Although New York has $1.9 billion in tax cuts scheduled to take effect in FY 2002, additional cuts will be considered in the 2001 session. The Senate has proposed a $1.5 billion tax cut, although the governor’s package is $550 million.

Revenue Projections for FY 2002

One advantage of surveying the states in February is that FY 2002 revenue growth projections are widely available. These forecast data are essential to lawmakers as they consider their tax and spending policy options for the next fiscal year or biennium. They also provide important information about how states view their economic prospects over the next 18 months. But revenue forecasts are not strictly a proxy for economic growth because tax policy changes can have significant effects on them.

Twenty-four states project that FY 2002 revenue growth will be lower than FY 2001 estimates. Most of these forecasts reflect the emerging consensus that the economy will grow more slowly in the next 18 months than it has in recent years. In these states, tax collections began FY 2001 strongly, but are expected to slow with the economy through the end of FY 2002. But there are a number of other stories as well. As previously noted, Alaska, Louisiana, Oklahoma, New Mexico, Texas and Wyoming all benefited from higher than expected oil and/or natural gas tax revenues in FY 2001. Their FY 2002 revenue growth forecasts are projected to decline as oil and natural gas prices fall. Massachusetts, New York and Oregon anticipate slower growth--at least in part--due to tax cuts that take effect in FY 2002.

Thirteen states report that FY 2002 revenue growth is forecast to be greater than FY 2001 estimates. These forecasts largely reflect weak revenue growth in FY 2001, rather than exceptionally strong growth in FY 2002. In Delaware, Michigan, Ohio, Vermont and Wisconsin revenues are expected to rebound in FY 2002 after tax cuts limit growth in the current year. Arkansas, Mississippi, Missouri and Virginia already are feeling the effects of the economic slowdown, however, their FY 2002 revenue growth is expected to increase from low FY 2001 levels.

Interestingly, FY 2002 revenue projections reflect a similar view of the economy as a year ago. Of the revenue forecasts that were used to prepare FY 2001 budgets, 23 projected increases of 4 percent or more. Twenty-four states currently expect FY 2002 revenue growth to be at least 4 percent. Of course these forecasts may be revised a number of times. In fact, Iowa, Kansas and Kentucky reported that spring forecasting meetings could result in downward revisions.

Budget Outlook for FY 2002

Most states currently are developing budgets for their next fiscal period, which will begin on July 1, 2001, for 46 states. As budget negotiations progress, states must set spending priorities based on their the best assessment of available revenues. Much attention has focused on these revenue estimates for FY 2002. As the previous section discussed, many states are projecting slower revenue growth than in FY 2001. States likely will face more modest growth in general fund spending as a result of the revenue slowdown. Declining revenue growth could exacerbate funding problems associated with increased Medicaid and K-12 education spending pressures.

A common theme in survey responses was that uncertainties in the economy and mounting costs from health and education programs could dampen the budget outlook for FY 2002. Colorado noted that the outlook for FY 2002 is not as good as past years because of slowing revenue collections and new education spending requirements. Florida legislators are likely to consider spending cuts because the increasing burden of Medicaid and education obligations is outpacing revenue growth.

Illinois echoed a common theme around many state capitols: Because of modest revenue growth, the FY 2002 budget likely will be maintenance-only, with little spending growth and few new initiatives. Iowa reported that a possible downward revision to its revenue estimate for FY 2002 would complicate already difficult fiscal conditions. Kentucky notes that the budget outlook for FY 2002 is tight given the state’s economy and Medicaid cost overruns. Maine projects a budget shortfall of approximately $100 million that will need to be addressed in FY 2002.

Several states report that the outlook for FY 2002 is stable to optimistic. Included in this group are states such as Oklahoma, which is projecting a large windfall from higher than projected natural gas tax receipts. Lawmakers in the state will try to identify one-time expenditure needs that can be funded with the windfall. Wyoming also reports strong revenue growth from higher than estimated severance taxes on energy resources. Vermont reports that its outlook for FY 2002 is fine given a large general fund surplus, stable revenue sources and moderate spending pressures.

The growing number of states expecting to grapple with tight budgets may be reminiscent of the economic downturn in the early 1990s. But states have a long way to go before they reach the drastic budget balancing measures implemented a decade ago. Those measures included big tax increases, workforce reductions, temporary government shut downs and across-the-board spending reductions. For now, most states are managing with modest adjustments.

FY 2001 Revenue Update

Above Forecast
(20 States)

On Target
(11 States)

Below Forecast
(20 States)

Alabama (General Fund)
Alaska
California
Connecticut
Georgia
Hawaii
Idaho
Louisiana
Maryland
Massachusetts
Montana
New Hampshire
New Jersey
New Mexico
New York
Oklahoma
Oregon
Pennsylvania
Utah
Wyoming

Delaware
Florida
Illinois
Nebraska
North Dakota
Rhode Island
Texas
Vermont
Washington
West Virginia
Wisconsin

Alabama (Education Trust Fund)
Arizona
Arkansas
Colorado
Indiana
Iowa
Kansas
Kentucky
Maine
Michigan
Minnesota
Mississippi
Missouri
Nevada
North Carolina
Ohio
South Carolina
South Dakota
Tennessee
Virginia

FY 2001 Expenditure Update on Target
State	Yes	No	Programs Over Budget
Alabama	X
Alaska	X
Arizona		X	Medicaid
Arkansas		X	County jails, higher education
California	X
Colorado		X	Medicaid, corrections
Connecticut		X	Medicaid, social services
Delaware		X	Medicaid, other health programs
Florida		X	Medicaid, education
Georgia		X	Medicaid
Hawaii	X		Note: consent decree will result in supplemental appropriation
Idaho		X	Medicaid
Illinois		X	Medicaid
Indiana		X	Medicaid
Iowa	X		Note: cost overruns are possible for health care salaries and utility costs
Kansas		X	Welfare
Kentucky		X	Medicaid
Louisiana		X	Education
Maine		X	Medicaid, other programs
Maryland		X	Medicaid
Massachusetts		X	Medicaid
Michigan	X
Minnesota	X
Mississippi		X	Education
Missouri		X	Medicaid, corrections
Montana		X	Medicaid, fire costs, corrections, Revenue Dept.
Nebraska	X
Nevada*	X		Note: child welfare may need supplemental funding
New Hampshire	X
New Jersey		X	Employee contracts, school aid, subsidies for horse racing
New Mexico		X	Medicaid, schools, university and agency fuel costs, health insurance
New York	X
North Carolina		X	Medicaid, other programs
North Dakota	X
Ohio		X	Medicaid
Oklahoma		X	Medicaid, debt service, corrections
Oregon	X
Pennsylvania		X	Education
Rhode Island	X
South Carolina	X
South Dakota	X
Tennessee		X	Mental health services, state parks
Texas		X	Medicaid, corrections
Utah	X
Vermont		X	Medicaid, public safety
Virginia		X	Medicaid, other programs
Washington		X	Medicaid, education
West Virginia		X	Corrections, health and human services, public safety and capital outlays
Wisconsin	X
Wyoming	X
Total	19	31

Budget Cuts to Balance FY 2001 Budgets
State	No	Yes	Possible	Notes
Alabama		X		Budgets supported by the general fund are not expected to be cut. Due to the Education Trust Fund shortfall, the governor has instituted a 6.2 percent pro-ration for all education programs, and it is not yet clear whether any programs will be exempted.
Alaska	X
Arizona	X
Arkansas			X	If revenues do not meet projections, cuts will be required, but no information yet on what those cuts might be.
California	X
Colorado	X
Connecticut	X
Delaware		X		The governor is expected to order a 2.5 percent cut in some state agencies' budgets to pay for cost overruns for Medicaid and other health programs.
Florida		X		The governor and legislative leaders have indicated that budget cuts most likely will be necessary to meet FY 2001 requirements.
Georgia	X
Hawaii	X
Idaho	X
Illinois	X
Indiana	X
Iowa		X		The appropriations bill will determine spending slowdowns/cuts. No extraordinary measures beyond this are expected.
Kansas	X
Kentucky			X	No significant cuts are expected. Some agencies may be asked to lapse spending back to the general fund in order to balance the budget.
Louisiana			X	The governor is currently making a list of ways to deal with the $29 million deficit, including budget cuts. He said he will not cut education.
Maine			X	There may be some action taken. Projected current services exceed base revenue.
Maryland	X
Massachusetts	X
Michigan	X
Minnesota	X
Mississippi		X		The governor is proposing general fund budget cuts for FY 2001 of approximately $137 million.
Missouri			X	There has been a state hiring freeze since December. Spending limitations may be required of various state departments to eliminate budget shortfalls for this fiscal year.
Montana	X
Nebraska	X
Nevada		X		Cuts of $20 - $30 million are limited to one-time expenses (e.g., equipment and motor vehicles).
New Hampshire	X
New Jersey	X
New Mexico	X
New York	X
North Carolina		X		A series of actions are taking place to create a $1 billion escrow account to deal with the projected budget gap. This includes a requirement that state agencies revert $248 million in appropriations to the general fund and delaying repairs and renovations ($39.5 million). The state also will suspend retirement contributions for five months for a saving of $151 million.
North Dakota	X
Ohio			X	While it's far too early to know, future changes in the budget may be needed to be made to get through FY 2001.
Oklahoma	X
Oregon	X
Pennsylvania	X
Rhode Island	X
South Carolina			X	State officials are closely monitoring the budget in anticipation of possible budget cuts.
South Dakota	X
Tennessee	X
Texas			X	It is still too early to say if budget cuts or other spending measures will be taken to balance the budget in FY 2001.
Utah	X
Vermont	X
Virginia		X		The governor has put forth $122 million in targeted budget cuts and $67 million in across-the-board budget cuts. The governor also has proposed converting $263 million in appropriations for capital construction into a dept issuance in order to free-up the general fund appropriations earmarked for the projects.
Washington		X		Budget cuts and reserve spending are expected to address expenditure overruns.
West Virginia		X		The governor has ordered 3 percent cuts from the current budget for all state agencies except public education. The cuts are expected to save $25 million--about 1 percent of the FY 2001 general fund budget.
Wisconsin		X		The executive branch ordered state agencies to freeze hiring, restrict travel and allow 0.5 percent of their budgets to lapse back into the general fund by the end of the fiscal year.
Wyoming	X
Total	31	11	8

Use of Reserves to Balance FY 2001 Budgets
State	No	Yes	Possible	Notes
Alabama	X
Alaska	X
Arizona	X
Arkansas				Not applicable--no rainy day fund.
California	X
Colorado		X		The state borrowed from a maintenance trust fund to ensure that planned highway projects would go forward and to address a one year cash flow problem stemming from a new amendment that requires a state funding increase for education.
Connecticut	X
Delaware	X
Florida			X	It is unclear if Florida will be forced to tap reserve funds this fiscal year. Substantial reserves are available if needed.
Georgia	X
Hawaii	X
Idaho	X
Illinois	X
Indiana			X	Medicaid reserves may need to be tapped.
Iowa			X	Reserve funds are an alternative, but it is too early to determine if it will be necessary to tap them.
Kansas	X
Kentucky	X
Louisiana	X
Maine	X
Maryland	X
Massachusetts	X
Michigan	X
Minnesota	X
Mississippi		X		The governor has taken $15 million out of the reserve funds so far and is authorized to take another $35 million but probably won't do so unless absolutely necessary.
Missouri	X
Montana	X
Nebraska	X
Nevada	X
New Hampshire	X
New Jersey	X
New Mexico	X
New York	X
North Carolina		X		The state is likely to tap various reserve funds including the capital reserve fund ($39.5 million) and the rainy day fund ($157 million) to balance the budget in FY 2001.
North Dakota	X
Ohio			X	While this is always possible, it hasn't been discussed. It is too early to know for sure.
Oklahoma		X		Reserve funds normally are tapped, and this year probably will not be an exception. There is a strong balance of about $395 million in the rainy day fund.
Oregon	X
Pennsylvania	X
Rhode Island	X
South Carolina	X
South Dakota	X
Tennessee	X
Texas	X
Utah	X
Vermont			X	The state might tap into reserves to pay for cost overruns in the transportation fund for snow removal (an estimated $1 million shortfall). The transfer would be replaced with money from the general fund surplus.
Virginia	X
Washington		X		Reserves will be tapped, but the reserve funds are down because they already have been used to meet rising Medicaid expenditures.
West Virginia			X	It is possible that reserve funds could be used to pay for some of the supplemental requests.
Wisconsin	X
Wyoming	X
Total	38	5	6

Tax Changes Anticipated in 2001 Sessions
State	No Changes	Tax Increases	Tax Decreases
Alabama	X
Alaska		X
Arizona			X
Arkansas		X
California			X
Colorado	X
Connecticut			X
Delaware			X
Florida			X
Georgia	X
Hawaii			X
Idaho			X
Illinois	X
Indiana	X
Iowa			X
Kansas		X
Kentucky	X
Louisiana		X
Maine		X
Maryland	X
Massachusetts	X
Michigan	X
Minnesota			X
Mississippi	X
Missouri	X
Montana	X
Nebraska	X
Nevada*	X
New Hampshire	X
New Jersey			X
New Mexico			X
New York			X
North Carolina		X
North Dakota			X
Ohio	X
Oklahoma			X
Oregon	X
Pennsylvania	X
Rhode Island			X
South Carolina			X
South Dakota	X
Tennessee		X
Texas	X
Utah			X
Vermont		X
Virginia			X
Washington		X
West Virginia		X
Wisconsin	X
Wyoming	X
Total	22	10	18

*Teachers have initiated a business tax increase

State	State Revenue Update	Expenditures	Budget Cuts, Etc.	Use of Reserve Funds	Tax Increases/Cuts	Growth Rate for FY 2002 / Budget Outlook
Alabama	Revenue collections are slightly above the original 0.8 percent projection when considering the general fund and the Education Trust Fund together. However, revenues for the Education Trust Fund, which receives income and sales tax revenues, are 6.2 percent below projections.	Expenditures from the general fund are on target.	Budgets supported by the general fund are not expected to be cut. Due to the Education Trust Fund shortfall, the governor has instituted a 6.2 percent pro-ration for all education programs and it is not yet clear whether any programs will be exempted.	Reserve funds are not expected to be tapped.	Neither tax cuts nor tax increases are likely.	For 2002, revenue growth for the Education Trust Fund is projected at 2.5 percent and revenue growth for the general fund is projected at 1 percent. The budget process for 2002 is just beginning, since the Alabama fiscal year begins Oct. 1.
Alaska	General fund revenues are expected to be at least $200 million above original projections because oil prices have remained at around $27 per barrel.	General fund expenditures are about on target.	No budget cuts are anticipated.	Alaska normally uses reserve funds to meet budget needs. It will be close, but this year may be the first year since 1997 that the state will not have to use reserve funds.	So far, no tax proposals are on the table, but there may be a proposal to increase alcohol taxes. This, however, is not a major revenue source for the state.	Total revenues for FY 2001 are projected at $2.4 billion, and total revenues for FY 2002 are expected to fall to $1.9 billion because of the anticipation of lower oil prices. Legislators realize that the state's fiscal gap is returning.
Arizona	Revenue are below the revised forecast (although they are still slightly above the original forecast). The forecast, which stands at 6 percent growth for FY 2001, may be revised downward in coming weeks.	Medicaid spending continues to be over budget. Expenditures for other programs are on target.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	Minor tax cuts are possible. The legislature's budget sets aside $15 million for FY 2002 tax cuts and $30 million for FY 2003 tax cuts.	Revenue is projected at 7.1 percent for FY 2002, which is higher than the FY 2001 forecast. The budget outlook for FY 2002 is positive. The recent fall off in revenues is expected to be temporary, with the state returning to strong revenue growth in FY 2002 and FY 2003.
Arkansas	Tax collections are $22.3 million below forecast through the end of January after being $44 million above forecast through the end of October. The state is not revising its forecast; however, revenues could come up $25 million short.	There is a slight cost overrun for county jails.	If revenues do not meet projections, cuts will be required, but no information yet on what those cuts might be.	The state does not have a reserve fund.	The only tax change is a possible increase in the tobacco tax.	The revenue growth forecast for FY 2002 is 5.1 percent. The FY 2001 rate is 2.7 percent. The FY 2002 revenue forecast may be overly optimistic.
California	A strong surge in December and January collections pushed revenue collections to 9 percent above budgeted estimates. Revenues are expected to end $710 million above the budgeted level by the end of FY 2001.	Expenditures are on target with budgeted levels.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	While no general tax rate reductions are likely to be considered in 2001, some targeted tax cuts or credits are possible.	The projected rate of revenue growth for FY 2002 is 1.7 percent compared to a projected rate of 7.9 percent in FY 2001. The wild card in the FY 2002 budget will be how the state deals with the current energy supply problems. The governor has proposed $3 billion in one-time expenditures, including large K-12, higher education and health care commitments.
Colorado	Revenue collections through January are $65 million below the December forecast, which was revised slightly upward from the September projection. Revenues are expected to grow by 4.7 percent for FY 2001. The outlook for the rest of the year is uncertain.	Both corrections and Medicaid are over budget. The state is limited in the amount of supplemental appropriations that can be made because of a spending limit equal to 6 percent of prior year appropriations.	Budget cuts will not be required in FY 2001.	The state borrowed from a maintenance trust fund to ensure that planned highway projects would go forward and to address a one year cash flow problem stemming from a new amendment that requires a state funding increase for education.	Legislature may rethink additional permanent tax cuts after several years of cuts, in light of recent revenue numbers.	Growth rate for FY 2002 is 6.7 percent compared to 4.7 percent for FY 2001. The budget outlook is not as good as in the past due to decreasing revenue collections, restrictive limits and education spending requirements.
Connecticut	Revenues are expected to end $724 million above the budgeted estimate, because of strong income tax collections through January. The outlook is cautious, even in the fourth or fifth year of significant revenue surpluses.	Some cost overruns are expected in Medicaid and other social services programs. Total overruns should not be more than 1 percent of the FY 2001 budget.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	The Governor has proposed some tax cuts and the legislature may consider them but the cuts are likely to be minor in scope.	FY 2002 revenue growth is expected to be modest. A major issue in putting together the FY 2002 budget is a disagreement how much under the spending cap the budget should actually be.
Delaware	The revenue situation has not changed significantly as revenues are still close to target.	Cost overruns for Medicaid and other health related programs may force some budget cuts.	The governor is expected to order a 2.5 percent cut in some state agencies' budgets to pay for the cost overruns.	The state is not expected to tap into reserve funds.	Small, targeted tax cuts are possible.	The projected revenue growth rate for FY 2002 is 4.6 percent. The FY 2001 rate is 2.1 percent.
Florida	General fund revenue growth through January is on target with budgeted estimates, although significant surpluses recorded at the end of the first quarter have largely disappeared and there is the expectation that Florida will lower the FY 2001 revenue estimate this Spring.	Expenditures are above budgeted levels due to increases in Medicaid spending. A $271 million Medicaid budget shortfall is now expected. In addition, education spending is over budget due to unexpected new student enrollment.	The Governor and legislative leaders have indicated that budget cuts most likely will be necessary to meet FY 2001 requirements.	It is unclear if Florida will be forced to tap reserve funds this fiscal year. Substantial reserves are available if needed.	There is a strong probability of select tax reductions this session. Continuation of the phase out on intangible tax is likely. Proposals under consideration include repeal of the liquor by the drink tax and continuation of a sales tax holiday.	Between 4 and 5 percent growth is predicted for FY 2002. Legislators will look to cut budget expenditures wherever possible. FY 2002 will be a difficult year to balance because of continued Medicaid and education demands.
Georgia	Revenue collections through January are coming in at 8.9 percent, well over the budgeted estimate of 7.5 percent. The outlook is good but collections are showing signs of slowing.	Leftover budget surplus of more than $900 million was carried over from last year and is being used for a number of capital projects and to cover growing Medicaid costs.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	No state tax changes although the state continues to cut property taxes by increasing the homestead exemption and then reimbursing local governments.	Revenues are still projected to grow at about 7 percent for FY 2002. The budget outlook is good but will be conservative.
Hawaii	General fund tax collections through January are 6.9 percent above the budgeted estimate. Revenues are expected to end close to the revised estimate of 6 percent by the end of FY 2001.	While most general fund programs are on target with budgeted levels, a consent decree on mental health will likely result in $33 million in supplemental appropriations requests from the Department of Education and an additional $30 million from the Department of Health.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	Some targeted tax credits for food purchases are likely to be considered by the Legislature in 2001.	The projected revenue growth rate for FY 2002 is 5.5 percent compared with a growth rate of 6 percent for FY 2001. Issues impacting the FY 2002 budget will likely include additional spending to meet the demands of the consent decree on mental health services and how much the state will spend on various collective bargaining agreements with its employee unions.
Idaho	Revenue growth for the balance of FY 2001 is expected to be 9.8 percent instead of 7.2 percent, due primarily to one-time death tax collections of $20-30 million--equal to nearly 1 percent of the general fund. Increased corporate collections also may be one-time events.	A supplemental appropriation of $33 million was made for Medicaid to fund caseload growth of 20 percent instead of the expected 8 percent.	There is still a record surplus. No budget cuts are planned for the FY 2001 budget.	Reserve funds will not be tapped in FY 2001.	A tax relief package is in the works, with permanent rate reductions in both corporate and personal income taxes probable, along with some additional business and corporate tax incentives. The House has approved a substantial rebate of personal income taxes; Senate support of the rebate is less certain.	A very conservative revenue growth rate of 2.1 percent for FY 2002 has been adopted. Spending growth is targeted at 13 percent, with K-12 education expected to grow at 6.8 percent, higher education at 9.7 percent, and possible increases of 28 percent in health and welfare costs and 24 percent in corrections spending, due to caseload growth.
Illinois	Revenues remain close to budgeted estimate through January. Sales tax collections are down but not significantly. The outlook for the rest of the year is a little more cautious than before.	Medicaid expenditures are over budget and will require a supplemental appropriation.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	Tax cuts are not likely in the 2001 session.	Growth rate for FY 2002 is between 3.5 to 4.5 percent. This is slightly better than FY 2001 because some earlier enacted tax cuts that were phased in over a number of years are now included in the base. The FY 2002 budget outlook is for a maintenance only, low growth budget.
Indiana	Revenue collections have been revised down again for 2001. At the end of January, collections were 1 percent below the December forecast of 2.7 percent.	Medicaid expenditures still are exceeding their budgeted level.	No budget cuts or other extraordinary measures are being discussed at this time, and there still is a surplus in the general fund.	Medicaid reserves may need to be tapped.	The chairs of the House Ways & Means and Senate Finance Committees have said there is no need to increase taxes. There is, however, discussion of using gaming revenues for a property tax relief bill.	FY 2002 revenue growth is projected at 4.9 percent above FY 2001. The legislature's recently released budget includes conservative spending increases for FY 2002.
Iowa	General fund receipts are below the revised estimate for FY 2001 and only 0.2 percent above last year's year-to-date collections. The economic slowdown is hitting all sources of revenue. The revenue outlook is less than optimistic.	Overall, expenditures are on target. Increased health care salaries and utility costs are two primary areas of potential cost overruns.	A deappropriations bill will determine spending slowdowns / cuts. No extraordinary measures beyond this are expected.	Reserve funds are an alternative, but it is too early to determine if it will be necessary to tap them.	Iowa suspended the sales tax on residential heating fuel for the months of February and March, and will completely repeal the tax next year.	Projected revenue growth rate for FY 2002 is 4.4 percent--but this likely will be lowered on March 14 when the revenue estimate conference convenes. FY 2002 will bring very tight fiscal conditions.
Kansas	General fund receipts through the end of January were 1.9 percent ($47.6 million) below the estimate made in November. The estimating committee won't meet again until April to change the November estimate. The projected growth rate of 6.7 percent for FY 2001 will likely fall short and a revision could occur in April.	The governor recommended and the legislature will consider supplemental appropriations ($28 million), mainly for welfare to meet caseload adjustments.	No budget cuts or other extraordinary measures to balance the FY 2001 budget are anticipated yet, but there may be, depending on revenue estimates in April. Currently there are no bills that would make budget reductions.	Kansas does not anticipate tapping reserve funds to meet FY 2001 budget needs. The governor in 2001 has spent down to within 7.5 percent of the budget, and since Kansas requires 7.5 percent to be unspent, there are no reserves to tap.	There is a prospect of some discussions of potential tax increases, but nothing is certain yet: everything is focused on the April revenue estimating meeting.	The projected revenue growth rate for FY 2002 is a 2.4 percent compared with the 6.7 percent growth rate for FY 2001. Overall, the general fund budget estimate is for 5.2 percent increase in spending ($230 million).
Kentucky	General fund revenue growth through the end of January was 4.1 percent. Growth must average 6.5 percent for the remainder of FY 2001 in order to meet the forecast 5.2 percent. Sales tax collections were particularly weak in November and December, though they rebounded in January.	Medicaid cost overruns are expected to reach $80 million in FY 2001.	No significant cuts are expected. Some agencies may be asked to lapse spending back to the general fund in order to balance the budget.	Budget reserve funds are a last resort and are not expected to be tapped unless the fiscal situation worsens dramatically.	No significant tax changes are expected.	The projected FY 2002 revenue growth rate is 5.4 percent. The FY 2001 rate is 5.2 percent. Both figures could be revised down when the consensus forecast group meets in March. The FY 2002 budget outlook is tight given the state of the economy and Medicaid costs overruns. Budget cuts are the more likely balancing option since a three-fifths majority is needed to enact tax increases.
Louisiana	Revenues are $67 million over the original forecast due to strong performance in oil and gas industries.	Spending on K- 12 education is over budget.	The governor is currently making a list of ways to deal with the $29 million deficit carried over from FY 2000. Although he is considering cuts, he has said he will not cut education.	Strict limitations on the use of reserve funds will not allow the state to tap them this year.	Looking at possibly raising taxes on riverboat casinos to generate revenue for teacher pay increases.	FY 2002 growth rate is 1.76 percent above FY 2001. The FY 2002 budget outlook continues to be somewhat bleak.
Maine	A March 5 revenue meeting revealed a $48 million revenue shortfall. About $11 million of the shortfall will affect the FY 2001 budget with the remaining $37 million affecting fiscal years 2002 and 2003.	An Emergency Budget Bill was passed to provide an addition $8.8 million for FY 2001. The Medicaid program will receive approximately $7 million.	There may be some action taken. Projected current services exceed base revenue.	No proposals at this time.	It is very likely that some tax increases may be passed. For example, the governor has proposed an increase in the cigarette tax and an increase in the meals and lodging tax.	Still projecting growth in FY 2002 of approximately 5 percent. The state also will need to address its budget shortfall, approximately $124 million in FY 2002.
Maryland	General fund tax collections through January are $35 million above the revised estimate for FY 2001. The budgeted revenue estimate for FY 2001 was increased in December by $320 million (3.5 percent). Strong collections were reported for sales and personal income taxes.	Medicaid spending continues to be over budget. Expenditures for other programs are on target.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	No proposals have been put forth regarding tax changes, although some minor cuts may be considered.	The projected rate of revenue growth for FY 2002 is 2.9 percent compared with a 4.9 percent rate of growth for FY 2001. The Governor's proposed budget would increase spending above the level recommended by the state's spending affordability committee. In addition, the governor is proposing tapping the state's rainy day fund for $575 million to be used in program expenditures in FY 2002.
Massachusetts	General fund tax collections are $200 million to $300 million above the budgeted estimate through January. Revenues are expected to be $254 million (3 percent) above the budgeted level by the end of FY 2001. Personal income and sales tax collections have been above estimate.	Medicaid expenditures are above estimate by $255 million (10 percent) but the cost overruns could shrink before the end of FY 2001 through managed actions.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	No general tax cut proposals are likely in 2001 because of the voter-approved measure to reduce the state's personal income tax rate from 5.9 percent to 5 percent. The loss of revenue from the tax law change in FY 2002 is estimated at $457 million and growing to $1.2 billion by FY 2004.	The projected revenue growth rate for FY 2002 is 4.9 percent compared with a 7 percent rate of growth in FY 2001. Major issues in the FY 2002 budget are likely to include rising costs for the senior pharmacy program, a possible change to the state education finance formula and a debate over the tobacco settlement fund.
Michigan	The state revised the forecast downward by 1.7 percent in January, which puts the revised forecast at -1.8 percent below FY 2000 collections. Across the board, November and December collections were significantly below forecasts. While the January numbers were better, the state still needs a few months of strong collections to make the revised forecast.	Expenditures are on target.	Budget cuts will not be required because a $179 million surplus carried over from FY 2000 will be used to balance the FY 2001 budget.	The state does not anticipate tapping the rainy day fund.	Tax changes are unlikely in the 2001 session.	General fund revenue growth is projected at 1.7 percent above the current FY 2001 forecast. The rate would have been just over 5 percent if not for previously enacted tax cuts. The school aid fund is projected to grow 4.8 percent. Because of the 1.7 percent revenue growth rate, the state is looking at a very tight FY 2002 budget. The governor has proposed a continuation level budget with no new initiatives. The state economy is expected to bottom out in early 2001 and rebound by late spring.
Minnesota	Revenue collections through January are below forecast. Although this is not leading to fiscal problems, the total year-end surplus is expected to drop.	Spending is on target with the budgeted amount.	No budget cuts are planned for the FY 2001 budget.	Reserve funds will not be tapped in FY 2001.	The prospect is good for additional tax cuts and spending increases. Additional future permanent tax reductions and another rebate for the current biennium are likely.	The revenue forecast for FY 2002 is not yet available. The budget outlook is a little less optimistic than it was in November 2000, but is still good.
Mississippi	Revenues are well below the original forecast. The original number was revised downward by $145 million in November. Through January it looks like the adjustment was too small and that revenues could end $200 million below the budgeted estimate.	The only expenditure category currently over budget is K-12 education.	Governor is proposing general fund budget cuts for FY 2001 of approximately $137 million.	Governor has taken $15 million out of reserve fund so far and is authorized to take another $35 million but probably won't do so unless absolutely necessary.	Tax cuts are unlikely in the 2001 session.	FY 2002 revenue growth rate is officially 3.7 percent, but will probably be pared back. This is higher than the growth rate in FY 2001, which will be about 2 percent by the end of the fiscal year. Mississippi experienced a revenue shortfall in FY 2000, which was carried over into FY 2001 and is making FY 2002 even tighter.
Missouri	General fund collections are at 3 percent growth rather than the originally projected rate of 4.9 percent (due to lower-than-expected sales tax collections, previously enacted corporate franchise tax cuts, and exemptions in personal income taxes.) Collections at 3 percent growth are expected for the remainder of FY 2001.	Medicaid expenditures are well above estimates. A tax credit for prescription drugs is one of the culprits. The credit is coming in 4 times greater than expected ($20 million projected cost versus $80 million actual cost).	There's been a state hiring freeze since December. Spending limitations may be required of various state departments to eliminate budget shortfalls for this fiscal year.	Missouri will not tap reserve funds. To do so would require a 2/3s vote in each house, which is highly unlikely under current conditions.	The legislature is not expected to make any tax changes this session.	Projected revenue growth for FY 2002 currently is set at 5.6 percent. The budget outlook can be described as dim and very tight. The Governor's budget does not recommend a pay raise for state employees.
Montana	Revenue collections through January continue ahead of budgeted levels, and are expected to remain so through the end of the fiscal year.	Supplemental appropriations have been made for fire costs, Medicaid, corrections and the Revenue Department.	No budget cuts are planned for the FY 2001 budget.	Reserve funds will not be tapped.	Tax changes are unlikely in the 2001 session.	The projected FY 2002 revenue growth rate is 2.2 percent compared to a FY 2001 rate of more than 3 percent, resulting in an extremely tight outlook for the budget. Spending increases will be smaller than those proposed by the governor.
Nebraska	Revenue collections are on target. The collections are in between the original estimate and the revised October estimate (a 2 percent increase). The revenue outlook for the rest of FY 2001 is consistent with the above.	Expenditures are on target.	Budget cuts will not be required in FY 2001.	The state does not anticipate tapping reserve funds.	Tax changes are unlikely in the 2001 session.	The projected revenue growth for FY 2002 is 5.8 percent. This projection is lower than FY 2001 if revenue collections hit the upwardly revised forecast. No service reductions are anticipated and the state is expected to finance its previous obligations, such as increased state aid for education. Medicaid costs are projected to increase. The state may have to increase reliance on its rainy day fund.
Nevada	Gaming tax collections are below forecast by 1 percent for the first seven months of FY 2001; sales tax revenues are also somewhat lower. Overall, revenues are expected to end the fiscal year slightly below original projections.	Spending is on target.	Cuts of $20 - $30 million are limited to one-time expenses (e.g., equipment and motor vehicles).	The rainy day fund was increased in FY 2000 under a trigger mechanism for surplus revenues. It will not be tapped in FY 2001.	A teachers' initiative for a new business tax requires legislative approval. No other tax increases have been proposed formally.	The FY 2002 revenue growth rate projected by the Economic Forum in May 2000 was 4.7 percent, compared to a 6.3 percent rate for FY 2001. New projections will be released in May. With general fund revenues down slightly, it is expected that the governor's proposed budget for FY 2002-2003 will have to be trimmed a bit.
New Hampshire	There has been no significant change since the mid-December report of revenue collections being above projections. The revenue outlook for the rest of FY 2001 is vague with everyone waiting until March, when corporate income tax receipts will come in. The December 2000 numbers were strong, but the perspective for March is "cautiously optimistic."	Expenditures are on target.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	Tax changes are not likely in the 2001 session.	The House hasn't finished its budget yet, but it projects a revenue growth rate of 3 percent. The rate of growth compared to FY 2001 is leveling off but it's still positive.
New Jersey	General fund revenues are above estimates (1 percent to 2 percent) through January. Sales tax and corporate income tax have deteriorated since mid-December but personal income tax collections have been stronger. General fund revenues for FY 2001 should grow between 7 percent and 8 percent and revenues are expected to end between $200 million and $400 million above the budgeted estimate.	Supplemental appropriations are expected to amount to around $300 million (1.4 percent) above enacted budget levels. Overruns are mainly for state employee contracts, school aid, and subsidies to the horse racing industry.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	A phase-out of the tax on S corporations ($36 million in FY 2002) has already been enacted.	The projected revenue growth rate for FY 2002 is 6.5 percent, compared to a 7 percent to 9 percent for FY 2001. The official forecast for FY 2002 is at the high end of the reasonable range. The outlook for FY 2002 is fair at this point with a budgeted surplus of $1 billion (undesignated and rainy day fund) or 4.3 percent of recommended appropriations.
New Mexico	Revenue collections are up because natural gas prices are even higher than expected. The revenue outlook is extremely good with revenues expected to grow 14.5 percent for FY 2001.	The state is experiencing significant overruns in Medicaid, schools, university and agency fuel costs, and health insurance.	No budget cuts are expected.	Reserve funds are not expected to be tapped.	The governor is pushing for a $75 million personal income tax cut. The majority party leaders are discussing more modest tax cuts, including one-time rebates.	The projected revenue growth rate for FY 2002 is projected at 2.2 percent, compared to 14.5 percent for FY 2001, as natural gas prices fall from their extraordinary levels. Spending growth is expected to increase 10 percent in FY 2002.
New York	Strong revenue growth in January helped push the estimate for FY 2001 revenues up by $450 million. Strong sales tax and personal income tax collections were reported in January. Collections for FY 2001 are expected to grow by double digit rates.	General fund expenditures are on target for FY 2001.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	Although $1.9 billion in tax cuts are scheduled to go into effect in FY 2002, lawmakers are looking at another big cut. The Senate is proposing a $1.5 billion cut, with the governor proposing a $50 million cut.	The projected revenue growth rate for FY 2002 is 5.3 percent (vs. double digit growth in FY 2001). Major issues in the FY 2002 budget are expected to include a projected growth rate of 9 percent for Medicaid, high technology investment in the state and a proposal for a new school aid formula.
North Carolina	General fund tax collections were below the estimate by $400 million through January. Poor sales tax and corporate income tax collections were cited as a reason for the lagging revenue performance. The revised estimate for FY 2001 projects revenues to be $635 million below the budgeted level.	General fund expenditures are over budget by $156 million, with Medicaid accounting for $108 million of the total. The projected budget shortfall for FY 2001 is now $791 million.	A series of actions are taking place to create a $1 billion escrow account to deal with the projected budget gap. This includes a requirement that state agencies revert $248 million in appropriations to the general fund, and delaying repairs and renovations ($39.5 million). The state will also suspend retirement contributions for five months for a saving of $151 million.	The state is likely to tap various reserve funds including the capital reserve fund ($39.5 million) and the rainy day fund ($157 million) to balance the budget in FY 2001.	The legislature is likely to review its "tax loopholes" as means of generating additional revenues for FY 2002. The governor is advocating the creation of state lottery that could generate $400 million to $500 million. Other tax measure considerations will hinge on the outcome of school funding adequacy lawsuit that is near final judgment.	The projected revenue growth rate for FY 2002 is 5.5 percent compared with a 6 percent growth rate for FY 2001. Major issues in the FY 2002 budget deliberation are expected to include the current revenue and economic situation, a projected shortfall in Medicaid, rising costs for the state health insurance plan that covers state employees, state retirees and teachers. The state will also be short on the revenues necessary to cover a continuation level budget.
North Dakota	Revenue collections to date are on target under a limited growth environment. There is some concern about sales tax revenues. Corporate income taxes are lagging, but personal income tax collections are above predictions. A revised forecast is expected in March.	Expenditures are on target with projected levels.	Budget adjustments are not expected for FY 2001 at this time.	Use of reserve funds will not be necessary within the current fiscal situation.	Relatively minor tax changes are under consideration. There is a movement to remove the sales tax on used farm machinery. Another proposal suggests decoupling the state income tax liability from the federal liability standard.	Revenue growth is projected at 2.5 for FY 2002, identical to FY 2001. Fiscal conditions are not expected to change much at this point, although the economic forecast review scheduled for March could alter the situation.
Ohio	Revenue collections through January are below target due to the following: Sales tax is $190.8 million below estimate (5.1 percent), personal income is $51.5 million below estimate (1.2 percent, and total tax receipts are $282 million below estimate (3.1 percent). Ohio is heavily dependent on manufacturing (22-24 percent of the state's economy) and most forecasters believe that manufacturing has been in a recession since the third quarter of last calendar year. For the rest of the year, there is concern that the above trends are likely to continue.	Ohio enacted a supplemental Medicaid bill near the end of the last calendar year for Medicaid spending in FY 2001. Lower spending in TANF and in other human service programs is offsetting higher spending in Medicaid.	While it's far too early to know, future changes in the budget may be need to be made to get through FY 2001.	While this is always possible, it hasn't been discussed. Again, too early for that discussion.	Tax increases are extremely unlikely, as are the postponement of previously enacted tax cuts.	The Governor's budget shows growth in FY 2001 tax receipts of 2.2 percent and 7.1 percent for FY 2002. (The forecast was completed in November 2000 before much of the bad economic news started coming out.) Increasingly tight revenues will compound an already difficult budget that tries to address increasing growth in Medicaid and the need to respond to recent adverse state supreme court rulings on education finance.
Oklahoma	General fund revenue growth for FY 2001 has been revised up again, from 6.6 percent in December to 7.7 percent, because of continued increases in natural gas prices. However, the gross production tax for natural gas production is the only revenue source that has increased.	Supplemental appropriations are expected for debt services, Medicaid and corrections.	No budget cuts are anticipated.	Reserve funds normally are tapped, and this year probably will not be an exception. There is a strong balance of about $395 million in the rainy day fund.	No tax increases are expected. For tax cuts, the governor has proposals to institute a sales tax holiday and to reduce the income tax.	Revenues for FY 2002 are expected to grow 6 percent above FY 2001 revenues, not including rainy day funds. The budget outlook for FY 2002 is very positive, so the state is trying to identify one-time expenditure needs, such as education and capital improvements, that can be funded by the natural gas revenue increases.
Oregon	Forth quarter personal income tax collections were slightly above forecast and January tax collections were surprisingly strong. The state is anticipating that personal income tax collections will end more than 2 percent above the budget level by the end of FY 2001, thus triggering the state's "kicker law" that will automatically generate tax refunds. Corporate income tax collections may fall below the 2 percent trigger level for corporate income tax refunds.	General fund expenditures are on target with budgeted levels. Medicaid costs are reported to be under control because of the implementation of management controls.	Budget cuts will not be required in FY 2001.	Reserve funds will not be tapped in FY 2001.	No major tax proposals have been approved by legislative leadership to date.	The projected revenue growth rate for FY 2002 is a decline of 1.7 percent because of slower economic growth and effects of a projected 2 percent kicker refund (down from the 6.8 percent rate for FY 2001).