NCSL 50-State Budget Update: Budgets Are Generally Stable But Recovery Continues to be Painfully Slow
DENVER—Four and half years after the end of the Great Recession, budgets appear to be stabilizing and settling into a period of modest growth, according to the National Conference of State Legislatures’ (NCSL) Fall State Budget Update.
The report’s findings—which include state revenue performance, areas of spending over budget and a summary of state fiscal situations—are based on a comprehensive survey of legislative fiscal officers in all 50 states and the District of Columbia.
Although fiscal conditions have improved and revenue collections are meeting projections, the recovery has been painfully slow, according to the report. The modest state revenue recovery in most areas of the country reflect a U.S. annual growth rate averaging just 2.3 percent over the past four years—the lowest post-recession recovery rate in more than 50 years.
“State budget recovery remains a work in progress,” said Arturo Perez, fiscal affairs program director at NCSL. “Although budget gaps are rare and policymakers may have some flexibility to deal with spending overruns or other unexpected developments, there appears to be little room for major new policy initiatives.”
To date, revenue collections have met or exceeded expectations in most states. Nearly all states are optimistic that they will meet their revenue targets for the rest of the fiscal year.
Personal income tax collections were relatively strong through October, with only a handful of states missing their targets. Sales and corporate income taxes showed more volatility—about a dozen states failed to hit their projections. The real test for sales tax collections will occur after officials assess the strength of December holiday sales.
In areas of spending over budget, 17 states reported that at least one category of spending is significantly over budget for FY 2014. Those categories largely included corrections, Medicaid and education.
The report also offered a snapshot of the revenue outlook for the remainder of FY 2014. The majority of state budget officials expect general fund revenues to meet their forecasts. Only a handful of states anticipate that revenues to “likely exceed” or “unlikely meet” their projected targets by the end of the fiscal year, which ends on June 30 for most states.
Credentialed members of the media may receive a free full copy of NCSL's "State Budget Update: Fall 2012.” The link provided in this release does not contain links to the detailed 50-state tables. Please contact the press room to obtain a complete copy of NCSL's budget report. This report is also available for purchase in NCSL's bookstore.
NCSL is a bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.