Fiscal Affairs Program
State Budget Update: February 2004
19 February 2004
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See a list of previous state budget updates.
Contents
State Budget Update: February 2004
The fiscal crisis that has mired state budgets in red ink appears to be ebbing--at least in the near term. For three consecutive years, nearly every state faced severe budget problems. But a survey conducted by the National Conference of State Legislatures (NCSL) in February reveals that the worst may be over. Compared with the situation one year ago, fewer states are reporting mid-year budget gaps and many even project modest surpluses by the end of fiscal year (FY) 2004. State revenues for FY 2004 appear to have stabilized for the majority of states, with some reporting that they are optimistic about revenue performance for the remainder of the fiscal year.
Notwithstanding this improvement, however, many states remain concerned about their FY 2005 budget situations. More than half the states are facing another round of budget gaps. Although these shortages are less severe than past ones, they occur at a time when most states have depleted reserves, exhausted other one-time funding sources and imposed repeated spending cuts.
This report is based on information collected from legislative fiscal directors in February 2004. It covers the revenue and expenditure situation for most states midway through FY 2004. Forty-six states began their fiscal year on July 1. The four exceptions are New York (April 1), Texas (Sept. 1), and Alabama and Michigan (Oct. 1). It also reports projected state budget gaps for FY 2005 and early tax and gaming proposals that are under consideration.
These are the highlights from NCSL's survey:
FY 2004 Highlights
- Eighteen states have experienced budget gaps so far in FY 2004 (compared with 36 midway through FY 2003). Five states--Iowa, Maine, Maryland, Michigan and Missouri--already have taken action to close their gaps. While Alaska and Rhode Island still have budgetary imbalances, they are lower than they were just two months ago.
- Ten states have seen their FY 2004 fiscal situation deteriorate in the last couple of months. Seven states that did not report gaps in November 2003 now report one. In three others, the gap has grown since that time.
- So far in FY 2004, states have faced a $5.1 billion cumulative budget gap. The current gap is approximately $2.5 billion, one-tenth as large as the $25.7 billion figure one year ago. As they were crafting their FY 2004 budgets in early 2003, states faced an aggregate gap that reached as high as $78.4 billion, although that amount was resolved by the time states began the new fiscal year.
- Of the 18 states reporting FY 2004 budget shortfalls at some point during the fiscal year, only five have had gaps above 5 percent (compared with 15 states at this time last year). Of these five, only Alaska faced a gap above 10 percent. In five states, the imbalances were less than 1 percent.
- As an indicator that state finances have seen some improvement this year, 30 states expect to end FY 2004 with a surplus (excluding amounts in their rainy day funds). In 26 states, the surplus is less than 5 percent of general fund budgets, with nine of these less than 1 percent. Four states project surpluses in excess of 5 percent, with Wyoming topping the list at 14.3 percent.
- The cumulative year-end surplus projected for FY 2004 is $6.0 billion.
- State revenue performance has improved during FY 2004. Twenty-three states reported revenues above the budgeted estimate, with another 13 reporting them on target. Revenues were performing below original projections in 14 states, compared with 30 a year ago.
- Through early February, 34 states had revised their revenue estimates. In a dozen states, revenues were performing in excess of the revision and in 16 they were on target. Six states reported that revenues were below the revised forecast.
- The revenue outlook for the remainder of the fiscal year is stable or optimistic for three-quarters of the states: 25 states expect revenue performance to be stable (more than twice as many as this time last year) while 13 are optimistic (compared with two last year). Twelve states are concerned (versus 31 last year) and one is pessimistic (versus seven last year). In 11 states, the FY 2004 revenue outlook has improved since November 2003.
- Spending overruns continue to exert pressure on state budgets, although to a lesser extent than last year at this time. Twenty-three states report that spending is exceeding budgeted levels, compared with 37 states last year. Of these, 17 report that Medicaid or other health care programs are exceeding budgeted amounts. Other programs over budget include corrections, K-12 education and disaster programs (e.g., hurricane relief, forest fires).
|
Table 1. State Fiscal Crisis Ebbs |
|
Budget Update |
February 2003 |
February 2004 |
|
Budget Gaps |
36 |
18 |
|
Gaps Above 5% |
15 |
5 |
|
Mid-year Gaps |
$25.7 billion |
$2.5 billion |
|
Budget Overruns |
37 |
23 |
|
Revenue Performance |
February 2003 |
February 2004 |
|
|
Budgeted |
Revised |
Budgeted |
Revised |
|
Revenues above forecast |
6 |
5 |
23 |
12 |
|
Revenues on target |
6 |
10 |
13 |
16 |
|
Revenues below forecast |
30 |
12 |
14 |
6 |
|
Revenue Outlook* |
February 2003 |
February 2004 |
|
Optimistic |
2 |
13 |
|
Stable |
11 |
25 |
|
Concerned |
31 |
12 |
|
Pessimistic |
7 |
1 |
|
* Both of Alabama's funds (the general fund and Education Trust Fund) are included in this tally, bringing the total to 51. |
|
Source: National Conference of State Legislatures, survey of state legislative fiscal offices, 2004. |
FY 2005 Projections
- Looking ahead to FY 2005, the fiscal situation is worrisome for many states. Thirty-one project budget gaps (compared to 36 projecting FY 2004 gaps at this time last year). While the number of states is similar to the number last year, the magnitude of the imbalances is not nearly as severe. Sixteen predict shortfalls above 5 percent, compared with 33 last year. Of these 16, five must resolve gaps above 10 percent (versus 18 last year).
- The aggregate FY 2005 gap is $35.6 billion, about half as much as the $68.7 billion amount that states reported at the same time last year. California's $15 billion shortfall accounts for 42 percent of the projected FY 2005 gap.
- Some states acknowledge that they are considering tax increases in their 2004 legislative sessions, either to shore up the general fund or to provide funding for specific state programs. At least 15 states will consider tax proposals, although most target cigarette taxes or other narrow taxes. Some states report that it is too soon to know if tax increases will be considered.
- In addition to tax proposals, at least 19 states will examine gaming proposals. Proposals include new or additional slot machines, expanded gambling at race tracks and multi-state lotteries.
- A dozen states are considering other revenue-raising measures such as higher education tuition increases, changing tax due dates, imposing surcharges or raising fees.
|
Table 2. Projected Budget Gaps
(made as budgets were being drafted) |
|
Budget Update |
FY 2004 Gap
(February 2003 projection) |
FY 2005 Gap
(February 2004 projection) |
|
Budget Gaps |
36 |
31 |
|
Gaps Above 5% |
33 |
16 |
|
Total Projected Gap |
$68.7 billion |
$35.6 billion |
|
Source: National Conference of State Legislatures, survey of state legislative fiscal offices, 2004. |
|
Table 3. Projected FY 2004 Budget Gaps |
|
State |
Nov. 2003 Estimate |
Current Estimate |
Notes |
|
Dollars in millions |
Percentage of General Fund Budget |
Dollars in millions |
Percentage of General Fund Budget |
|
|
Alabama Education Trust Fund |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Alabama General Fund |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Alaska |
$320.0 |
14.0% |
$275.0 |
12.0% |
Oil prices continue to be above projections so the estimated gap has shrunk. |
|
Arizona |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Arkansas |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
California* |
$0.0 |
0.0% |
$479.0 |
0.6% |
The current figure assumes that all of the midyear savings and other actions proposed in the governor's FY 2005 budget are adopted. Absent any corrective actions, the FY 2004 shortfall would be roughly $2 billion. As was the case in November, the current estimate assumes that the FY 2003 deficit (currently estimated at $8.6 billion) is "taken off the books" through the sale of a deficit financing bond. The downward adjustment to the reserve since November reflects numerous developments. These include revenue and expenditure revisions, as well as the new administration's decision to roll back the vehicle license fee increase that had been assumed in the FY 2004 budget. |
|
Colorado |
$0.0 |
0.0% |
$68.8 |
1.2% |
Colorado is required to maintain a 4% reserve. Therefore, this gap is a shortfall because the reserve will be lower than 4%. The General Assembly may decide to change the statute so that Colorado may have a lower reserve in FY 2004. This would eliminate the gap. |
|
Connecticut |
$38.1 |
0.3% |
$65.6 |
0.5% |
The legislature's budget office estimates the highest gap to be $65.6 million. The governor's budget office estimated a gap of $101.1 million on Jan. 20, 2004 but revised its estimate to $41.1 million on Jan. 26, 2004, because of higher anticipated personal income tax collections. |
|
Delaware |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Florida |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Georgia |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Hawaii |
$0.0 |
0.0% |
$28.9 |
0.7% |
A plan to use a portion of the carryforward balance would eliminate the FY 2004 gap. |
|
Idaho |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Illinois |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Indiana |
$800.0 |
7.1% |
$1,000.0 |
9.4% |
The budget gap increased due to the revised January forecast, which predicts revenue collections coming in lower than expected. The gap is expected to be filled by transfers from various reserve and dedicated funds and across-the-board budget cuts. |
|
Iowa |
$63.0 |
1.2% |
$0.0 |
0.0% |
The budget gap was resolved by across-the-board cuts ordered by the governor. |
|
Kansas |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Kentucky |
$0.0 |
0.0% |
$302.0 |
4.0% |
The governor issued a reduction order to reduce agency expenditures and capture various funds to balance the current year budget, totaling $302 million. |
|
Louisiana |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Maine* |
$0.0 |
0.0% |
$0.0 |
0.0% |
FY 2004 Medicaid program shortfalls totaled $135 million (5.2%) of general fund appropriations. A special budget bill resolved these shortfalls. Other FY 2004 program shortfalls have not yet been presented publicly, so no estimates are available. |
|
Maryland* |
$0.0 |
0.0% |
$0.0 |
0.0% |
Following the 2003 session, the governor vetoed legislation that would have raised $135 million through corporate income tax changes, a 10% corporate income tax surcharge, and a 2% insurance premium tax on HMOs. Based on that action, the estimated FY 2004 shortfall was $101.7 million. Subsequent to that action, the administration withdrew $204 million in spending in July 2003 and realized gains at closeout and through one-time federal aid to offset deficiencies. It also revised revenue projections. |
|
Massachusetts |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Michigan |
$505.0 |
5.6% |
$0.0 |
0.0% |
The general fund budget was balanced in December 2003 with a combination of appropriation reductions and tax increases. |
|
Minnesota |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Mississippi |
$60.0 |
1.7% |
$60.0 |
1.7% |
|
|
Missouri |
$240.0 |
3.5% |
$0.0 |
0.0% |
|
|
Montana |
$0.0 |
0.0% |
$22.6 |
1.7% |
This is a projection of the revenue shortfall measured from the estimates adopted by the Legislature. |
|
Nebraska |
$90.0 |
3.4% |
$105.0 |
4.0% |
|
|
Nevada |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
New Hampshire |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
New Jersey |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
New Mexico |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
New York |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
North Carolina |
$0.0 |
0.0% |
$0.0 |
0.0% |
The governor has held back 2% of agency allotments as an uncertainty reserve against April income tax collections. |
|
North Dakota |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Ohio |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Oklahoma |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Oregon |
$0.0 |
0.0% |
$85.0 |
0.8% |
See endnote. |
|
Pennsylvania |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Rhode Island |
$15.0 |
5.0% |
$3.8 |
0.1% |
The enacted opening surplus, projected at $35.7 million, now is estimated to be $43.9 million (an increase of $8.2 million). Revenues are projected to be $20.5 million less than enacted. The governor has proposed revenue adjustments totaling $15.7 million. The departments and agencies are projected to overspend by $24.7 million. The governor proposes to cover this overspending by shifting $20.4 million from capital projects and lowering debt service costs. |
|
South Carolina |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
South Dakota |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Tennessee |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Texas |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Utah |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Vermont |
$0.0 |
0.0% |
$0.0 |
0.0% |
No gap was projected in FY 2004, primarily because of federal fiscal relief. |
|
Virginia |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Washington |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
West Virginia |
$0.0 |
0.0% |
$20.0 |
0.7% |
Agencies have taken a 2.9% cut in expenditures (1.4% in higher education). Public education, state police, corrections, the children's health insurance program, public defender, and Medicaid were exempt from cuts. |
|
Wisconsin |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Wyoming |
$0.0 |
0.0% |
$0.0 |
0.0% |
|
|
Total |
$2,754.5 |
|
$2,515.7 |
|
|
|
(N/R)= No response |
|
Notes:
* The following states reported FY 2004 budget gaps that are not reflected in this table:
California: $2.0 billion (2.5%)
Maine: $101.7 million (1.0%)
Maryland: $135 million (5.2%)
Oregon budgets biennially; the December 2003 economic and revenue forecast projected a July 2003-June 2005 biennium ending balance of $136 million. The 2003 Legislature passed a combination of tax measures (including a graduated personal income tax surcharge) designed to generate approximately $780 million in general fund revenues for the biennium. The tax measure was subsequently referred to a special election by citizen petition. The measure (known as Ballot Measure 30) failed by a 59% to 41% margin on Feb. 3. The result was a loss of $780 million of general fund revenue plus an additional $23 million in revenue from cigarette taxes dedicated to the Oregon Health Plan for the biennium (and an additional $310 million in general fund revenue for the 2005-07 biennium). In anticipation of a possible referral of the legislatively approved tax measure, the Legislature also passed a disappropriation measure that would take effect on May 1, 2004 if the tax measure was referred and rejected. The disappropriation of $545 million is primarily targeted to K-12 schools ($284 million), human services ($188 million), public safety ($57 million), and post-secondary education ($16 million). Because of moderate economic growth in the state's revenue forecast, the current projected deficit between the revenue loss from the failure of the ballot measure and the scheduled disappropriation is approximately $85 million. A combination of factors (reversions, economic growth) may eliminate the deficit over the next two official forecasts (March 2004 and June 2004) leaving the state balanced (but with potentially a zero projected ending balance). |
|
Source: National Conference of State Legislatures, survey of legislative fiscal offices, February 2004. |
|
Table 4. Projected FY 2004 Ending Surpluses
(excluding rainy day funds) |
|
State |
Dollars
in Millions |
Percent of General Fund |
Notes |
|
Alabama Education Trust Fund |
$79.0 |
1.8% |
The governor's proposed supplemental appropriations made during the regular session that started Feb. 3, 2004 would use much of this currently anticipated surplus by the end of the fiscal year. |
|
Alabama General Fund |
(N/A) |
(N/A) |
|
|
Alaska |
(N/A) |
(N/A) |
|
|
Arizona |
$179.0 |
2.8% |
|
|
Arkansas |
(N/A) |
(N/A) |
|
|
California |
(N/A) |
(N/A) |
|
|
Colorado |
(N/A) |
(N/A) |
|
|
Connecticut |
(N/A) |
(N/A) |
|
|
Delaware |
$183.8 |
7.5% |
Unencumbered funds are available for FY 2005 appropriation. |
|
Florida |
$1,634.0 |
7.7% |
Federal aid and some carryover from previous fiscal year. |
|
Georgia |
(N/A) |
(N/A) |
|
|
Hawaii |
(N/A) |
(N/A) |
|
|
Idaho |
$59.0 |
3.1% |
Any surplus is due mostly to the federal aid package. |
|
Illinois |
$346.0 |
1.3% |
The governor's FY 2004 budget assumes that the general revenue balance will be $346 million, with an additional $276 million in the rainy day fund. |
|
Indiana |
(N/A) |
(N/A) |
|
|
Iowa |
(N/A) |
(N/A) |
|
|
Kansas |
(N/A) |
(N/A) |
|
|
Kentucky |
(N/A) |
(N/A) |
|
|
Louisiana |
$15.0 |
0.2% |
The projected surplus includes funding for areas over budget, that is, current estimated revenue less appropriations and supplemental funding needs. |
|
Maine |
$1.0 |
0.04% |
This possible surplus reflects current appropriations vs. current estimates of revenue. |
|
Maryland |
$189.7 |
1.8% |
This is based on the administration's assumptions in its budget submission, including $9.4 million in additional revenue beyond the official estimate, and projected reversions of $161.3 million. |
|
Massachusetts |
(N/A) |
(N/A) |
|
|
Michigan |
$29.0 |
0.3% |
|
|
Minnesota |
$416.0 |
3.0% |
FY 2004 is the first year in a biennial budget; a shortfall occurs in FY 2005. The tobacco endowment transfer of $1 billion to the general fund occurs in FY 2004 but pays for spending in FY 2004 and 2005. |
|
Mississippi |
(N/A) |
(N/A) |
|
|
Missouri |
$125.0 |
1.5% |
The estimated surplus ranges from $125 million to $150 million. |
|
Montana |
(N/A) |
(N/A) |
|
|
Nebraska |
(N/A) |
(N/A) |
|
|
Nevada |
$133.4 |
5.8% |
The 2003 Legislature projects an ending fund balance of $133.4 million. Because of a number of new tax sources that are just beginning to be collected, it will be a few more months before it can be determined if the projected ending fund balance will be higher or lower than projected. However, gaming and sales tax revenues are higher than projected thus far in FY 2004. |
|
New Hampshire |
$45.6 |
3.4% |
|
|
New Jersey |
$342.0 |
1.4% |
|
|
New Mexico |
$160.0 |
3.9% |
This transfer to reserves is large due to the implementation of GASB 34. |
|
New York |
(N/A) |
(N/A) |
|
|
North Carolina |
(N/A) |
(N/A) |
|
|
North Dakota |
$65.0 |
3.6% |
|
|
Ohio |
$123.0 |
0.5% |
The Office of Budget and Management estimated this ending balance in July 2003. It has not been changed thus far this fiscal year. |
|
Oklahoma |
$73.0 |
3.4% |
Figures are through December revenue collections; the percent shown is 3.4% above the final FY 2004 estimate |
|
Oregon |
(N/A) |
(N/A) |
|
|
Pennsylvania |
$43.5 |
0.2% |
This is the projected ending surplus after transferring $14.5 million to the rainy day fund. |
|
Rhode Island |
$0.1 |
0.004% |
|
|
South Carolina |
$50.0 |
1.0% |
The Board of Economic Advisors decreased the revenue estimate in August 2003 by $107.6 million. Consequently, the Budget and Control Board reduced the capital reserve fund (a rainy day fund) and reduced agency appropriations by 1%. The potential "surplus" is the amount above this revised estimate. |
|
South Dakota |
$3.1 |
0.3% |
This projection was made on Dec. 3, 2003, a month before the Legislature convened. |
|
Tennessee |
$163.4 |
0.8% |
|
|
Texas |
(N/A) |
(N/A) |
|
|
Utah |
$55.0 |
1.4% |
|
|
Vermont |
$15.9 |
1.8% |
This estimate is before any budget adjustment action. Officials expect that, in the course of completing the FY 2005 budget process, these funds will be spent or allocated. |
|
Virginia |
$358.4 |
2.8% |
|
|
Washington |
$523.0 |
4.6% |
|
|
West Virginia |
(N/A) |
(N/A) |
|
|
Wisconsin |
$74.5 |
0.7% |
|
|
Wyoming |
$113.0 |
14.3% |
|
|
Total |
$5,998.4 |
|
|
|
Key: (N/A) = Not applicable
Source: National Conference of State Legislatures, survey of legislative fiscal offices, February 2004. |
|
Table 5. General Fund Revenue Performance Through December 2003 |
|
State |
Compared with
Budgeted Estimate? |
Compared with
Revised Estimate? |
Date Revised |
|
Above |
On Target |
Below |
(N/A) |
Above |
On Target |
Below |
|
Alabama |
X |
|
|
|
|
X |
|
Feb. 5, 2004. Estimates are only slightly above budgeted estimates for the general fund. However, the Education Trust Fund (income and sales taxes) is seeing much better growth. |
|
Alaska |
X |
|
|
|
X |
|
|
December 2003. |
|
Arizona |
X |
|
|
X |
|
|
|
|
|
Arkansas |
X |
|
|
X |
|
|
|
|
|
California |
X |
|
|
|
|
X |
|
November 2003. |
|
Colorado |
|
X |
|
X |
|
|
|
|
|
Connecticut |
|
X |
|
|
|
X |
|
December 2003. |
|
Delaware |
X |
|
|
|
X |
|
|
December 2003. |
|
Florida |
X |
|
|
|
X |
|
|
December 2003. |
|
Georgia |
|
|
X |
|
|
|
X |
January 2004. |
|
Hawaii |
|
|
X |
|
|
|
X |
Dec. 22, 2003. |
|
Idaho |
X |
|
|
|
X |
|
|
Jan. 15, 2004. |
|
Illinois |
|
X |
|
X |
|
|
|
|
|
Indiana |
|
|
X |
|
|
|
X |
Jan. 12, 2004. |
|
Iowa |
|
|
X |
|
|
|
X |
Dec. 8, 2003. Revenues through December were below estimate; however, revenues through January are on target. |
|
Kansas |
|
X |
|
|
|
X |
|
November 2003. |
|
Kentucky |
|
|
X |
|
|
X |
|
Dec. 23, 2003. |
|
Louisiana |
X |
|
|
|
|
X |
|
Dec. 16, 2003. |
|
Maine |
X |
|
|
|
X |
|
|
Dec. 1, 2003. Revenues were 1.1% over budget through the first half of the year. The forecast will be revised again Mar. 1, 2004. |
|
Maryland |
|
|
X |
|
X |
|
|
December 2003. |
|
Massachusetts |
X |
|
|
|
|
X |
|
January 2004. |
|
Michigan |
|
X |
|
|
|
X |
|
Jan. 14, 2004. |
|
Minnesota |
|
|
X |
|
|
X |
|
November 2003. |
|
Mississippi |
|
|
X |
|
X |
|
|
November 2003. |
|
Missouri |
|
X |
|
|
X |
|
|
January 2004. |
|
Montana |
|
|
X |
|
|
X |
|
December 2003. |
|
Nebraska |
|
|
X |
|
|
|
X |
October 2003. |
|
Nevada |
X |
|
|
X |
|
|
|
|
|
New Hampshire* |
|
|
X |
X |
|
|
|
|
|
New Jersey |
|
X |
|
X |
|
|
|
|
|
New Mexico |
X |
|
|
|
|
X |
|
January 2003. |
|
New York |
|
X |
|
X |
|
|
|
|
|
North Carolina |
X |
|
|
X |
|
|
|
|
|
North Dakota |
X |
|
|
X |
|
|
|
|
|
Ohio |
|
X |
|
X |
|
|
|
|
|
Oklahoma |
X |
|
|
X |
|
|
|
|
|
Oregon |
X |
|
|
|
X |
|
|
December 2003. |
|
Pennsylvania |
X |
|
|
|
|
X |
|
Dec. 23, 2003. |
|
Rhode Island |
|
|
X |
|
|
|
X |
November 2003. |
|
South Carolina |
|
|
X |
|
X |
|
|
Revenues are only slightly above August 2003 forecast. |
|
South Dakota |
X |
|
|
X |
|
|
|
|
|
Tennessee |
X |
|
|
|
|
X |
|
Dec. 11, 2003. |
|
Texas |
|
X |
|
X |
|
|
|
|
|
Utah |
|
X |
|
X |
|
|
|
|
|
Vermont |
X |
|
|
|
X |
|
|
Jan. 15, 2004. |
|
Virginia |
X |
|
|
|
X |
|
|
December 2003. |
|
Washington |
|
X |
|
|
|
X |
|
November 2003. |
|
West Virginia |
|
X |
|
X |
|
|
|
|
|
Wisconsin |
|
|
X |
|
|
X |
|
Revenues were re-estimated in February 2004. |
|
Wyoming |
X |
|
|
|
|
X |
|
January 2004. |
|
Total |
23 |
13 |
14 |
16 |
12 |
16 |
6 |
|
|
*New Hampshire: Revenues are below budget because $25 million of the federal flex grant is shown as FY 2003 revenue (receivable) on the states' books, but the budget shows this revenue as FY 2004. |
|
Source: National Conference of State Legislatures, survey of legislative fiscal offices, February 2004. |
|
Table 6. Performance of Major Tax Categories |
|
State |
Notes |
|
Alabama |
Personal income tax and sales tax both are stronger than anticipated. As of Feb. 9, 2004, personal income tax receipts were up 5.35% over last year at the same time and sales tax receipts were up 8% over last year. However, these taxes do not go to the general fund but to the Education Trust Fund. The Education Trust Fund as a whole is up 9.5% over last year at this time. |
|
Alaska |
Oil prices continue to be above projections. |
|
Arizona |
Sales and corporate income taxes are above forecast. Because of insufficient change in withholding rates when the federal government lowered its rates, the personal income tax is below forecast. |
|
Arkansas |
Income taxes and tobacco and alcohol taxes are growing slightly less than expected. Corporate income tax is performing at only 90.6% of forecast. Sales (gross receipts) tax is slightly more than forecast (4.6% vs. 3.4%). |
|
California |
For FY 2004, the three major taxes are above the budget act by a combined $2 billion. |
|
Colorado |
Corporate income tax and estate taxes are above estimates, and personal income tax is below. |
|
Connecticut |
Personal income tax is performing better than expected, sales tax is on target, and corporation tax is performing worse than expected. |
|
Delaware |
Personal income tax is on target and corporate franchise tax is off. |
|
Florida |
The general fund sales tax is exceeding the most recent estimate (Nov. 5, 2003) by more than $210 million, with total receipts through January of $9,018 million. The year-to-date receipts are up 7.4% over the same period last year. Most major sources are exceeding estimates, and officials will revise this year and FY 2005 on March 12. Some of the overage is likely the result of an amnesty that ended October 30. |
|
Georgia |
Sales, personal income and motor fuel taxes are underperforming. |
|
Hawaii |
After six months, cumulative income taxes are 6.2% ahead of last year's and general excise taxes are 3.1% ahead of last year. Taxes accruing to the general fund are 1.8% ahead of last year; however, the estimate for FY 2004 is 5.2%. |
|
Idaho |
Revenues are slightly ahead of target. |
|
Illinois |
The $690 million in unbudgeted federal money from the JGTRRA of 2003, along with a successful tax amnesty program, have significantly helped the state's bottom line revenue performance. However, stripping away those items reveals underperforming base revenues in income, sales, interest earnings, riverboat revenues and some others. |
|
Indiana |
The sales, personal income, and corporate income taxes are slightly under forecast (less than 1% year-to-date). |
|
Iowa |
The personal income tax has increased 5.1% through January 2004. Estimate is 4.5%. Sales tax is down 5.9%; estimate was for zero growth. Corporate income tax is down 18.1%; estimate is -24%. |
|
Kansas |
The personal income tax is within 0.5% of estimate, while the sales tax is down about 1% and the corporation income tax is up about 25%. |
|
Kentucky |
As of December 2003, sales taxes are down 0.6% and would be up 1.9% if adjusted for one-time occurrence in FY 2003. The personal income tax is up 3.7%. |
|
Louisiana |
Taxes are performing as expected. |
|
Maine |
Through the first half of FY 2004, personal income tax was over by 2.1%, sales tax was over by 1.1%, corporate income tax was under by 3.8%, cigarette tax was over by 1.4%, and insurance premium tax was under by 8.8% (but has been recovering despite legal challenges to an interpretation of annuity sales). |
|
Maryland |
Income and sales taxes are performing better than estimated. |
|
Massachusetts |
Although corporate income tax collections have been strong, sales and personal income tax collections continue to be weak. In conjunction with employment data, there is a concern that this is jobless economic recovery. |
|
Michigan |
Major tax performance is consistent with the latest revenue estimates. |
|
Minnesota |
Major revenues are on track with the forecast through January. |
|
Mississippi |
Sales tax below estimate, personal income tax above estimate and corporate income tax above estimate. |
|
Missouri |
Personal income tax 4.9%; sales tax 4.2%; corporate income tax 12.8% (all net increases through January 2004). |
|
Montana |
Personal income tax is on target; corporate income tax is below target; property tax is below target; investment earnings are below target. |
|
Nebraska |
Preliminary estimates of collections through January 2004: personal income tax under estimates by $17 million or 2.5%, sales tax under estimates by $18.7 million or 2.7%, corporate income tax above estimates by $5.8 million or 9.7%, others are above estimates by $11 million or 14.2%. Aggregate is behind estimates by $19.6 million or 1.3%. |
|
Nevada |
Gaming and sales tax revenues are higher than projected thus far in FY 2004. Sales tax revenues were projected to increase by 5% in FY 2004 and through the first five months have increased by 10.8%. Gaming percentage fee revenues were projected to increase by 14.2% in FY 2004 (the tax rate was increased in FY 2004) and during the first six months have increased by 18.5%. To date, sales and gaming tax revenues are approximately $27.5 million higher than projections though about the first half of FY 2004. |
|
New Hampshire |
Through Dec. 31, 2003, business taxes are above budget by $4 million. |
|
New Jersey |
Gross income tax revenue is up 6%, sales tax revenue is up 4.7%, corporate income tax revenue is up 20%: all are generally consistent with forecast through mid-year. |
|
New Mexico |
All categories are tracking at least with the estimate; however, oil and gasoline revenues are tracking above. |
|
New York |
Personal income tax collections are on target with mid-year projections; there are no problem areas in other tax categories. |
|
North Carolina |
Through January, the sales tax is up 3.7% versus 2.6% forecast, and withholding tax receipts are growing 3.1% compared to 3.3% projection. Fourth quarter estimated income tax payments fell 4%, compared to 6% decline for other three quarters of the 2003 tax year. |
|
North Dakota |
Sales tax is up 6.9% and personal income tax is up 3.7%. |
|
Ohio |
Compared with estimates through December 2003: the personal income tax is up $16.9 million (0.5%); non-auto sales taxes are down $11.4 million (0.4%); auto sales taxes are up $12.0 million (2.1%); the public utility excise tax is up $3.3 million (4.1%); and the kilowatt-hour excise tax is down $190.0 million (10.1%). The corporate franchise tax is up $14.8 million (746%). For the first half of the fiscal year, activities under the CFT are generally refunds, tax payments due to audit findings, late payments, and other tax reconciliations. The cigarette tax is down $17.4 million (6.4%), but this shortfall is thought to be a timing issue that will correct itself in the second half of the fiscal year. |
|
Oklahoma |
Net income tax is 0.8% below estimate; natural gas gross production is 41.9% above estimate; sales tax is 2.6% above estimate; motor vehicle tax is 4.5% above estimate; and other sources are 1.2% below estimate. |
|
Oregon |
Personal income tax up marginally (+0.4%); corporate income tax up slightly (+6.2%). |
|
Pennsylvania |
Through December 2003, the personal income tax was 3.5% above the same six-month period in the previous year, the sales tax was 2.2% above the previous year, and the corporate net income tax was 14.9% above the previous year. |
|
Rhode Island |
The personal income tax estimated payments due in December and January appear to be running behind the revised estimated receipts. |
|
South Carolina |
All three major categories have shown slight growth over the previous year through the first two quarters of FY 2004: the sales tax is up 4.5%, the personal income tax is up 1.9%, and the corporate income tax is up 51% (but it makes up only 2.1% of total general fund revenue). |
|
South Dakota |
All major taxes are above the revenues from a year ago. |
|
Tennessee |
Sales tax is $40.8 million above original estimate; all other major tax categories are stable. |
|
Texas |
Sales taxes are slightly above estimate. |
|
Utah |
Based on tax commission reports, sales tax is down slightly from expectations. Personal income tax and corporate income tax are showing some improvement. |
|
Vermont |
Corporate income tax, personal income tax, sales tax, and room and meals taxes are all above targets. |
|
Virginia |
All are above forecast, especially nonwithholding. Sales are up, but not significantly (no data on Christmas sales yet). |
|
Washington |
Major tax categories are performing as expected. |
|
West Virginia |
The personal income tax is lagging below estimate at $18.3 million below as of Dec. 31, 2003, or 96.63% of the estimate. The consumer sales tax is lagging below estimate at $11.3 million below as of Dec. 31, 2003, or 97.55% of the estimate. |
|
Wisconsin |
Personal income taxes are significantly lower, corporate income taxes are significantly higher, and sales taxes are slightly lower than projected. |
|
Wyoming |
The sales tax is on target; the severance tax is above target. |
|
Source: National Conference of State Legislatures, survey of legislative fiscal offices, February 2004. |
|
Table 7. Outlook for General Fund Revenues through the Remainder of FY 2004 |
|
State |
Optimistic |
Stable |
Concerned |
Pessimistic |
|
Alabama Education Trust Fund |
X |
|
|
|
|
Alabama General Fund |
|
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 |
13 |
25 |
12 |
1 |
|
Note: Michigan still has concerns about the timing of the economic rebound and the potential revenue growth built into the current revenue estimates.
Source: National Conference of State Legislatures, survey of legislative fiscal offices, February 2004. |
|
Table 8. FY 2004 Budget Overruns |
|
State |
Yes |
No |
Notes |
|
Alabama |
X |
|
Medicaid (funded by the general fund, not the Education Trust Fund) has a $59.6 million shortfall.. The governor has recommended that $38.9 million of the anticipated end-of-year balance be appropriated to solve part of the $59.6 million problem and that the remainder of the shortfall be addressed by cost controls (including limiting patients to four brand-name prescriptions per month) and an increased bed tax on nursing homes. |
|
Alaska |
|
X |
Officials expect no net supplemental appropriations for FY 2004 operations. |
|
Arizona |
X |
|
K-12 education and Medicaid. |
|
Arkansas |
|
X |
|
|
California |
X |
|
There are significant deficiencies in corrections. |
|
Colorado |
X |
|
K-12 education and Medicaid. |
|
Connecticut |
X |
|
A total of $57.3 million in net deficiency requirements are anticipated at this time. The Department of Children and Families (DCF) has a projected net deficiency of $22.5 million, largely due to caseload increases, a new residential development, and a staffing expansion in response to a finding by the DCF Court Monitor. The Department of Social Services has a projected net deficiency of $20.2 million due largely to Medicaid. |
|
Delaware |
|
X |
|
|
Florida |
|
X |
|
|
Georgia |
X |
|
Medicaid. |
|
Hawaii |
X |
|
Approximately $7.4 million more is needed for the salaries of certain department of education personnel because of a miscalculation by the administration in budgeting for collective bargaining increases. |
|
Idaho |
|
X |
|
|
Illinois |
|
X |
|
|
Indiana |
|
X |
|
|
Iowa |
|
X |
|
|
Kansas |
X |
|
Medicaid. |
|
Kentucky |
|
X |
|
|
Louisiana |
X |
|
Minimum Foundation Program (K-12 education) is over budget by $24 million, and prisoner health care is over by $7 million. |
|
Maine |
X |
|
Medicaid spending was running significantly ($135 million) ahead of budget. The budget bill enacted Jan. 30 addressed the FY 2004 shortfall in Medicaid programs. Only a small portion of the FY 2005 expected shortfall of $155 million has been addressed by actions taken for the FY 2004 shortfall in Medicaid. Current estimates stand at roughly $138 million in FY 2005. |
|
Maryland |
X |
|
There are Medicaid and mental health require deficiency appropriations of $242 million in federal funds (of which $137 million represents remaining one-time federal aid from the Jobs and Growth Tax Relief and Reconciliation Act of 2003). There are $78 million in general fund deficiencies, of which $36 million is for foster care, $10 million for disaster relief resulting from Hurricane Isabel, and $7 million for non-public special education placements. |
|
Massachusetts |
|
X |
|
|
Michigan |
X |
|
Medicaid (concerns involving the approval of federal waivers that still are pending). |
|
Minnesota |
|
X |
|
|
Mississippi |
X |
|
Medicaid and corrections. |
|
Missouri |
X |
|
Medicaid. |
|
Montana |
X |
|
K-12 education is over budget by an estimated $8.8 million. Corrections and district courts are two additional areas of concern for the biennium. |
|
Nebraska |
|
X |
No significant overruns. |
|
Nevada |
|
X |
|
|
New Hampshire |
|
X |
|
|
New Jersey |
X |
|
Local education aid may be underbudgeted by $100 million to $125 million because of court-ordered aid restorations for targeted special needs districts. State funds for prescription drug coverage for elderly or disabled may be underbudgeted by about $149 million, reflecting anticipated federal funding that is unlikely to be received. |
|
New Mexico |
|
X |
|
|
New York |
|
X |
|
|
North Carolina |
|
X |
|
|
North Dakota |
|
X |
|
|
Ohio |
|
X |
|
|
Oklahoma |
|
X |
|
|
Oregon |
|
X |
|
|
Pennsylvania |
X |
|
Medical assistance is over budget due to higher caseload and a decision to keep general assistance recipients in managed care rather than shifting them to fee-for-service (as originally proposed to contain program costs). A state supplemental request of $78 million has been requested for medical assistance. The state supplemental would have been $60 million higher if it were not for federal fiscal relief to help pay for increased costs. |
|
Rhode Island |
X |
|
Corrections. Unachieved projected savings in the Department of Mental Health, Retardation and Hospitals, and in the Department of Children, Youth and Families. |
|
South Carolina |
X |
|
Corrections. |
|
South Dakota |
X |
|
Medicaid ($35.1 million from all funds, $11 million from the state general fund) and inmate health care ($2.4 million from the state general fund). |
|
Tennessee |
|
X |
|
|
Texas |
|
X |
|
|
Utah |
|
X |
|
|
Vermont |
X |
|
Medicaid, corrections, child care and state mental hospital (decertification). |
|
Virginia |
|
X |
|
|
Washington |
X |
|
Corrections, K-12 education and forest fire management. |
|
West Virginia |
|
X |
|
|
Wisconsin |
|
X |
There are pressures in medical assistance. |
|
Wyoming |
X |
|
Medicaid. |
|
Total |
23 |
27 |
|
|
Source: National Conference of State Legislatures, survey of legislative fiscal offices, February 2004. |
|
Table 9. Projected FY 2005 Budget Gaps |
|
State |
Estimated Budget Gap (in Millions) |
< | |
