(NCSL Members may view the report online. Instructions for media and the general public on how to obtain a copy is near the end of the release.)
New National Survey Reports
State Budgets Fall $17.5 Billion Short
Two-thirds of states report declining revenues, over half face shortfalls
DENVER -- Two-thirds of states report declining revenues and more than half of states face expenditures that exceed levels projected in their fiscal year 2003 budgets, according to the National Conference of State Legislatures' (NCSL) State Budget Update.
"State legislators face a common problem around the country. Spending needs are outpacing projected budget levels, particularly in the area of Medicaid and health care costs," said NCSL Executive Director Bill Pound. "Because most states require a balanced budget each year, these gaps must be resolved by the time state officials close their books. 2003 certainly will be a year of tough policy decisions. "
NCSL's new report that received responses from state legislative fiscal offices from all 50 states found that states have at least a collective $17.5 billion budget gap to fill before fiscal year 2003 ends, which for most states is June 30. This accounts for roughly 3.6 percent of original fiscal year 2003 appropriations. The total could rise as states gather additional information on revenue collections in the coming months.
Additionally, the budget landscape will be changed dramatically in nearly half of states. Legislators in 24 states will be working with new governors, who often are responsible for drafting the working budgets the lawmakers start with. There also is a record number of turnover of state legislative seats, 24 percent, compared to an average of 18 percent in recent years.
"Legislatures will have to make extraordinarily tough budget choices in the 2003 sessions," said NCSL President and Oklahoma Senator Angela Monson. "Whether the decisions are to raise revenues or cut programs, the lives of our constituents will be profoundly affected. Everyone, especially the new legislators and governors that will be new to the process this year, will need to make sure they see the human face behind the results of our actions."
State Budget Update shows the anemic fiscal condition of states through the early months of FY 2003.
· about two-thirds of the states, 33, report revenue collections below forecasted levels through October;
· 29 states have made revisions to their revenue estimates for FY 2003. In 26 of these states, the revenue forecast was lowered;
· 31 states report budget gaps in the early months of the current fiscal year;
· the $17.5 billion budget gap mostly has developed since the fiscal year began;
· 24 states report that Medicaid or health care programs-which typically account for 15 percent of the average state's general fund expenditures-are over budget for the early months of FY 2003;
· 29 states report that spending is exceeding budgeted levels and;
The outlook for the remainder of the fiscal year is bleak, with 38 states concerned or pessimistic about revenue performance. Only 10 states report a stable or optimistic outlook -- Florida, Hawaii, New Mexico, North Dakota, Rhode Island, Tennessee, Utah, Washington, West Virginia, and Wyoming.
To deal with budget gaps and revenue shortfalls, states may choose from a variety of cost containment measures, including tapping reserve funds, cutting programs, reducing Medicaid eligibility, making changes in personnel policies, delaying capital projects and implementing short- or long-term tax increases. Last year, many states were able to use rainy day funds and other measures to address the $37 billion 2002 budget shortfall. Many states broke a trend of tax cuts that began in 1994 to balance last year's budgets-raising taxes by $9.1 billion in the aggregate. Eighteen states raised taxes by more than 1 percent, while Hawaii was the only state to cut taxes by more than 1 percent.
NCSL members with passwords may access the report online.
Copies of State Budget Update: November 2002 are free to most news organizations. To obtain a copy, send an email to press-room@ncsl.org. Copies of the report are available to the general public. For information on how to order, contact NCSL's marketing department at 303-364-7812 or books@ncsl.org.
The National Conference of State Legislatures is the bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories.
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For more information contact:
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Gene Rose
NCSL Public Affairs Director
(303) 856-1518
fax (303) 364-7800
gene.rose@ncsl.org |
Bill Wyatt
Public Affairs Manager
NCSL Washington, DC Office
(202) 624-8667
fax: (202) 737-1069
william.wyatt@ncsl.org |
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