State Budget Update: Fall 2016

1/30/2017

Introduction

Halfway through FY 2017, states continue to feel the effects of the Great Recession, with slow tax revenue growth.

According to NCSL’s "State Budget Update: Fall 2016" budget survey, 28 states and the District of Columbia expect to meet their revenue forecast for FY 2017, but half of those states revised their original revenue outlook downward. Fourteen states do not expect to meet their forecasted revenues and may face budget shortfalls as they move further into FY 2017.

Key Findings

Despite some overall concern about slow revenue growth, state budgets were largely described as stable as they approached the midpoint of the current budget year.

  • Personal income tax performance is mixed heading into 2017. Personal income tax collections are on target in about one-third of the states, below estimate in about one-third and above forecasted levels in another third.
  • Sales and use tax collections have been more sluggish. Over 20 states reported that sales tax collections are below estimate. Corporate income taxes, a notoriously volatile revenue source, are also below estimate in at least 20 states. Energy dependent states also continue to face lower severance tax revenue than expected, with at least 10 states that levy a severance tax reporting collections below their budgeted estimates.

This report highlights results from NCSL’s most recent survey of legislative fiscal officers about state tax collections and other indicators of state fiscal health. 

Source: Information for this report was gathered with the cooperation of the National Association of Legislative Fiscal Offices.