State Fiscal Conditions
On February 13, Scott Pattison, Executive Director of the National Association of State Budget Officers (NASBO), spoke to the Tax Economists Forum, a Washington, DC based group of public finance economists, about the current condition of state finances and the outlook for the future. To briefly summarize Mr. Pattison’s presentation: the current fiscal condition of state governments has improved somewhat when compared to fiscal years 2007 and 2008, but have not yet completely recovered. States, as a whole, face significant challenges in both the near-term and the long-term. Some of the challenges facing state governments include: an aging population requiring expensive health care and other social services; some states will be forced to accommodate large numbers of immigrants; and declines in federal spending, both in terms of decreased grants-in-aid and indirect cuts such as reductions in defense spending. Unlike previous years, MEDICAID spending is projected to increase by less than $2.0 billion in fiscal year 2013 compared to the $19.4 billion increase between fiscal year 2011 and 2012, much of it driven by the American Recovery and Reinvestment Act.
Although state tax revenues have been growing recently, revenue levels may not return to 2008 levels until 2013. States will have a difficult time if economic growth does not accelerate as their combined balances are expected to be 9.0% of their expenditures at the end of this fiscal year. If Texas and Alaska are excluded, that figure drops to 5.0%. A link to Mr. Pattison’s presentation is provided here (pdf).
Past State Fiscal Conditions
On April 25, Scott Pattison, Executive Director of the National Association of
State Budget Officers (NASBO), spoke to the Tax Economists Forum, a
Washington, DC based group of public finance economists, about the current
condition of state finances and the outlook for the future. To briefly
summarize Mr. Pattison’s presentation: the current fiscal condition of state
governments has improved somewhat when compared to fiscal years 2008,
but states, as a whole, face significant challenges in both the near-term and
the long-term. Some of the challenges facing state governments include: an
aging population requiring expensive health care and other social services;
some states will be forced to accommodate large numbers of immigrants;
and declines in federal spending, both in terms of decreased grants-in-aid
and indirect cuts such as reductions in defense spending. MEDICAID
spending is projected to increase by $19.4 billion between fiscal year 2011
and 2012, much of it driven by the American Recovery and Reinvestment
Act.
Although state tax revenues have been growing recently, revenue
levels may not return to 2008 levels until 2013 or 2014. States will
have a difficult time if economic growth does not accelerate as their
combined balances are expected to be 6.2% of their expenditures at the
end of this fiscal year. If Texas and Alaska are excluded, that figure
drops to 3.7%. A link to Mr. Pattison’s presentation is provided here (pdf).