Our latest Fiscal Survey of States released today shows that state budgets are improving, but growth is slow and states are still not back to pre-recession levels. Improvement can be seen in the data – for example, 19 states had to cut their budgets mid-year in fiscal 2011 which is much better than the 39 states that made cuts in 2010. However, revenue is still below the peak fiscal 2008 collection levels and thus spending is also still below pre-recession levels.
Of the revenue forecasts, only personal income collections are expected to improve significantly this year. Sales and corporate are flat for fiscal year 2012 – based on enacted budgets. The results of the survey fit with what NASBO has been concerned about for a while - that state budget growth for at least a couple more fiscal years will be tepid.
Budget growth in the report is 2.9% this year over last. Budgets historically have grown on average 5.6% year-over-year. I think the current 2.9% growth for this year is closer to what we can expect – on average – for at least the next couple of fiscal years.
I hope I’m wrong, but slow growth for state finances appears at this point to be how things are going. There may indeed be some particularly good years if the economy improves considerably but right now it sure looks like state budget growth will be less than the 5.6% average we used to see before this "Great Recession". We also see in this report the end of overall enacted tax increases. States actually decreased their enacted taxes – in the aggregate – this past year
- Scott D. Pattison, Executive Director