state budget actions fy 2013 and fy 2014

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State fiscal conditions continued to improve in fiscal year (FY) 2013. General fund revenue growth was notably strong and outpaced projections in most states. At the same time, expenditures were generally on target. The combination of these factors enabled many states to shore up reserves and support supplemental expenditures. Overall, the fiscal situation was solid in almost every state in FY 2013.

Despite the improved fiscal situation, lawmakers remain cautious about the budget outlook for FY 2014. Officials are uncertain about the sustainability of the stronger revenue growth rates experienced in FY 2013 because collections may have been influenced by taxpayers pushing income into tax year 2012 to avoid an anticipated increase in federal tax rates in 2013.  FY 2014 revenue forecasts reflect this concern and suggest that states are returning to the path of slow and steady revenue growth that has distinguished the current economic recovery from previous recoveries, where it was more common to see a robust upturn. Additionally, spending needs are expected to outpace revenue growth. As a result, state year-end balances are projected to fall by the close of FY 2014.

Fiscal highlights in FY 2013 and FY 2014 are:

  • State general fund revenues grew by 5.3 percent in FY 2013. FY 2014 revenue growth is projected at 1.3 percent.
  • General fund expenditures increased by 4.4 percent in FY 2013. FY 2014 appropriations are budgeted to grow 3.9 percent.
  • FY 2013 year-end balances rose 22.8 percent above the prior year level, but are expected to decline 11.7 percent by the close of FY 2014.
  • Higher education and Medicaid received the largest percentage increase in FY 2014 appropriations.