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State Fiscal Conditions 

On February 12, 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 2011 and 2012, but have not yet completely recovered from the Great Recession. 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 $7.0 billion in fiscal year 2014 much of the increase due to the Affordable Care Act.

Although state tax revenues have been growing recently, inflation adjusted revenue levels have not yet returned to 2008 levels. 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 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).




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).

 

 
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