State Budget Update: Spring 2017

5/30/2017

Introduction

Illustration of a pie chartNearly eight years after the end of the Great Recession, states are again facing budget challenges. Over the past few years, states have consistently struggled with slow revenue growth, and this year is no exception.

Many states describe their fiscal situation as stable in the near term, but slow revenue growth could lead to more fiscal challenges in the future, especially if there is a downturn in the national economy. Demographic changes, low energy prices, and a sluggish agricultural economy are also plaguing some state budgets. This report highlights results from NCSL’s most recent survey of legislative fiscal officers about state budget conditions. 

Key Findings

  • For the first time since the end of the Great Recession, a significant number of states find themselves facing budget shortfalls. For the fiscal year (FY) 2017 fiscal year or the current biennium (for states that enact a two-year budget), 22 states reported that their state had addressed, or would address a budget shortfall before the end of the fiscal year. 
  • The situation in most states remains stable. However, many states describe slow revenue growth as a challenge. Caseloads and the need for government services continue to increase, and revenues are not keeping pace with demand. 
  • A majority of states (33) expect to meet their latest revenue forecast for the remainder of FY 2017.