State budgets continue their slow to moderate rate of recovery. A fall 2012 survey of state legislative fiscal officers found solid revenue performance in most states, although a few reported underperformance in individual tax categories. Generally, it appears that state budgets are in line with budgeted estimates through the first few months of fiscal year (FY) 2013. The slowly improving economic situation across the states has led most officials to describe their current fiscal situation as stable.
Despite these positive fiscal trends, federal deficit reduction actions, increasing program pressures, international debt crises, and the impact from recent storms will continue to challenge lawmakers as they begin their new legislative sessions.
While there are signs of improvement, the turnaround has been uneven across the nation. Although half of the states expect to return to peak revenue levels by the close of this fiscal year, several others are still awaiting a return to peak levels. Some states are uncertain when that will occur.
Three and a half years following the official end of the recession, state officials face the prospect that slow and steady growth may be the “new normal.” With the unpredictability of recent fiscal years, stable is not necessarily a bad position for states but enough uncertainty lingers on the horizon to create a fragile situation for state budgets.
This report is based on data collected in the fall of 2012 from legislative fiscal officers in all 50 states and the District of Columbia and includes information on:
State revenue performance;
Revenue outlook for the remainder of the fiscal year;
Areas of spending over budget;
A summary of state fiscal situations;
Return to peak revenue collections; and
A historical comparison of the recovery of state general fund revenues.