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State Budget Update: November 2010Fiscal Leaders Seminar
Dec. 8, 2010
Corina Eckl
Fiscal Program Director
Overview
State revenue performance is improving.
Higher revenues will be inadequate to cover the loss of
one-time funds and rising costs.
States have reported a total estimated budget gap of
$562.9 billion (FY 2008 through FY 2013 est).
Year-Over-Year Percent Real Change in Major Taxes
Source: The Nelson A. Rockefeller Institute of Government. State Revenue Report, November 30, 2010.
FY 2011 Tax Collections (Compared with the Latest Estimate)
Source: NCSL survey of state legislative fiscal offices, November 2010.
Personal Income Tax General Sales Tax Corporate Income Tax
Above Estimate
On Target
Below Estimate
Not applicable
AK
HI
CA
OR
WA
ID
NV
MT
WY
UT
CO
AZ NM
ND
SD
NE
KS
OK
TX
MN
IA
MO
AR
LA
WIMI
IL IN
OH
KY
TN
MS AL
FL
GA
SC
NC
VAWV
PA
NY
ME
VT
NH
MA
RI
CT
NJ
DE
MD
Revenue Outlook for the Remainder
of the FY 2011
Puerto Rico
Source: NCSL survey of state legislative fiscal offices, November 2010
Stable, n = 31
Concerned, n = 17
Pessimistic, n = 0
Optimistic ,n = 3
* 49 states reporting
** Includes Puerto Rico
Revenue Outlook for the Remainder of the Fiscal Year
(2003-2010)
Source: NCSL survey of state legislative fiscal offices, November, various years.
0
5
10
15
20
25
30
35
Nov. 2003* Nov. 2004 Nov. 2005 Nov. 2006 Nov. 2007** Nov. 2008 Nov. 2009** Nov. 2010**
Optimistic Stable Concerned Pessimistic
Projected Return to Peak
Revenue Collections
N/A: North Dakota Not in the current forecast horizon: 19 statesNo Response: 2 states
0123456789
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Nu
mb
er o
f St
ates
Fiscal Year
Source: NCSL survey of state legislative fiscal offices, Summer 2010
Revenue Concerns
Sluggish recovery of state collections
Use of one-time funds in FY 2009 and FY 2010
– ARRA cliff
– Rainy day funds, tax amnesty programs, fund
transfers, etc.
Expiration of temporary taxes or repeal by voters
Feasibility of increasing taxes or other revenues
Spending Concerns
Implications of past budget cuts
Potential for further budget cuts
Rising costs
– Medicaid/health care
– Education
– Corrections
– Other
Unfunded liabilities
Spending Overruns in FY 2011
Medicaid or other health care programs (18 states)
– Connecticut ($185 million)
– Maryland ($239 million)
Corrections or public safety programs (5 states)
Social service programs (4 states)
– Kansas (increased social service caseloads)
– Massachusetts (emergency housing assistance)
Education (3 states)
– Texas (K-12 funding formula is $400 million (2.1 percent) over
budget)
Source: NCSL survey of state legislative fiscal offices, November 2010.
AK
HI
3.6%
CA
18.7%
OR
16.0%ID
14.0%
NV
32.0%
MT
10.2%
WY
UT
AZ
14.7%
WA
14.5%
CO
16.0%
NM
4.6%
ND
SD
NE
13.2%
KS
7.9%
OK
14.0%
TX
17.0%
MN
19.8%
IA
4.7%
MO
AR
LA
16.3%
WI
9.2% MI
17.0%
IL IN
OH
KY
TN,1.2%
MSAL
FL
6.7%
GA
12.7%
SC
NC
20.3%
VAWV
PA
NY
13.6%
ME
12.9%VT, 8.6%
NH
MA, 7.6%
RI, 9.2%
CT, 18.3%
NJ, 26.0%
DE
MD, 13.5%
10% to 19.9%, n = 18
5% to 9.9%, n = 7
0.1% to 4.9%, n = 7
More than 20% n= 3
Not gap or no forecast, n= 16
Projected FY 2012 Budget Gapsas a Percentage of General Fund Budget
Source: NCSL survey of state legislative fiscal offices, July 2010.
Puerto Rico, 5.5%
Source: NCSL survey of state legislative fiscal offices, November 2010.
AK
HI
2.6%
CA
20.2%
OR
17.0%ID
NV
40.0%
MT
8.5%
WY
UT
AZ
13.5%
WA
14.5%
CO
NM
ND
SD
NE
11.8%
KS
OK
TX
17.0%
MN
12.1%
IA
MO
AR
LA
15.6%
WI
9.6% MI
IL IN
OH
KY
TN, 0.6%
MSAL
FL
7.7%
GA
SC
NC
VAWV
PA
NY
20.4%
ME
10.6%VT, 6.5%
NH
MA
RI, 9.5%
CT, 16.8%
NJ
DE
MD, 11.8%
10% to 19.9%, n = 10
5% to 9.9%, n = 5
0.1% to 4.9%, n = 7
More than 20% n= 3
No gap or no forecast n=26
Projected FY 2013 Budget Gapsas a Percentage of General Fund Budget
Source: NCSL survey of state legislative fiscal offices, July 2010.
Puerto Rico, 5.5%
Source: NCSL survey of state legislative fiscal offices, November 2010.
State Budget Gaps FY 2002-FY 2013 (projected)
Source: NCSL survey of state legislative fiscal offices, various years.
$37.2
$79.0 $83.7
$37.0$26.9
No Estimate
$12.8
$117.3
$174.1
$110.6
$82.1$66.0
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Bill
ion
s
Fiscal Year
Amount Before Budget Adoption Amount After Budget Adoption Projected
State Actions to Close Budget Gaps
Budget cuts: All programs & services subject to cuts
Tax increases
Other revenue increases
Federal stimulus funds
Wide array of other actions, many one-time in nature
Renewed focus on streamlining and efficiency
Key Concerns Looking Ahead
Mounting spending pressures
– Feasibility of further budget cuts
– Unfunded pension and other liabilities
Revenue performance/new revenues
Replacing federal stimulus funds
Federal actions affecting states
Structural budget gaps
AK
HI
CA
OR
ID
NV
MT
WY
UT
AZ
WA
CO
NM
ND
SD
NE
KS
OK
TX
MN
IA
MO
AR
LA
WIMI
IL IN
OH
KY
TN,
MSAL
FL
GA
SC
NC
VAWV
PA
NY
ME
VT
NH
MA
RI
CT
NJ
DE
MD
FY 2012 & FY 2013, n = 10 + 6
FY 2012 only, n = 10
FY 2012, FY 2013 & FY 2014, n= 16 + 14
Not applicable or no response, n= 21
Structural Budget GapsFY 2012, FY 2013 & FY 2014
Source: NCSL survey of state legislative fiscal offices, July 2010.
Puerto Rico
Source: NCSL survey of state legislative fiscal offices, November 2010.
Quote of Note
"The hole is so deep and the options so few, that
even if tax collections tick up a bit, it's probably
like drowning in 5,000 feet of water instead of
5,050 feet -- you don't really feel much
difference."
Jack Hailey
Senate Committee on Human Services
California
Conclusion
State revenues performance is improving.
The loss of one-time funds will be challenging.
More budget gaps loom.
The new political landscape will shape state
actions to deal with budget problems.
