April 8, 2015
Over the course of the past several months, governors in 47 states have released a budget proposal for fiscal 2016, and in some instances fiscal 2017. Three states enacted biennium budgets last year covering both fiscal 2015 and fiscal 2016.
In discussing their fiscal 2016 budget proposals, many governors noted improvements in their state since the end of the economic downturn including business expansions, lower unemployment, and increased consumer spending. The overall improvement in most state economies has led to more stable fiscal conditions. Consequently, the majority of governors’ budget recommendations for the upcoming fiscal year include projections of modest revenue growth, moderate increases in state spending, and rainy day fund levels at or near historical averages. However, governors’ budget proposals for fiscal 2016 remain mostly cautious with limited spending growth and an emphasis on ensuring that budgets are structurally balanced and sustainable in the future. Additionally, in some instances recommended budgets have been constrained by such factors as the decline in the price of oil, lower than anticipated revenue growth, federal uncertainty, and continued pressures from long-term obligations.
Much of the additional spending in governors’ budget proposals is directed towards core services such as education, health care, corrections, and transportation. Many governors discussed the need to make targeted spending increases, with other program areas seeing flat growth or in some instances spending reductions. Education remained a top priority for governors, with most budget recommendations fully funding school finance formulas, while some proposals also included extra funding to expand pre-K, increase school choice, provide teachers with raises, and allow for the hiring of new teachers. Additionally, many recommended budgets included funding to help universities and colleges limit tuition growth, while also tying funding to performance requirements. Many governors viewed increasing educational opportunities as a way to achieve their goals of creating jobs, growing the economy, and providing a chance for all to succeed. In the area of health care, recommended budgets contained less wide-range proposals than the prior year; however, recommended budget proposals still included increased overall health care spending with extra funding added in areas such as mental health, elderly care, and reimbursement rates for health care providers. Additionally, a number of states have proposed increased corrections and public safety spending to expand drug treatment programs, overhaul juvenile justice, and alleviate prison overcrowding. Another point of emphasis in fiscal 2016 budget proposals was the need to increase transportation and infrastructure spending, with several governors releasing comprehensive plans calling for additional revenue and major new investments.
Tax policy also remains an area of focus with governors proposing changes that would either decrease or increase revenue from a variety of sources. Proposals included middle class income tax cuts, lower corporate income taxes, property tax relief, expanding the sales tax base, closing tax loopholes, examining incentives, increasing cigarette taxes, and raising taxes for specific purposes such as transportation and education.
The issue brief below summarizes governors’ budget proposals. Also included are links to proposed budgets, supporting documents, and State of the State speeches. If you would like additional information please contact Brian Sigritz at bsigritz@nasbo.org.
Summaries of Fiscal Year 2016 Proposed Executive Budgets