States Experience Extremely Tight Fiscal Conditions as National Recession Deepens
Source: National Governors Association

Most states experienced poor fiscal conditions in 2008, with conditions for fiscal 2009 continuing to deteriorate and expected to continue to severely decline as the national recession deepens, according to the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO). Spending will decline this fiscal year for the first time since 1983.

In a report released today, The Fiscal Survey of States, NGA and NASBO found that state spending is expected to decrease by .1 percent for fiscal 2009, and states expect to make significant budget cuts in the coming fiscal years. Fiscal conditions varied across states, with some states benefiting more than others from this summer’s run-up in energy and commodity prices while others were significantly more exposed to the economic downturn sparked by the housing crisis. Unfortunately, virtually all states are now in recession or at risk, and states expect continued expenditure pressures from a variety of sources, including Medicaid, employee pensions and infrastructure. In addition, because states historically have continued to feel the impact of national economic downturns even after recovery begins, states could face even more difficult financial conditions in fiscal 2010 and beyond.

In fiscal 2008, state general fund spending growth was 5.3 percent—lower than the 31-year state spending average of 6.3 percent. Six states reported negative budget growth for 2008, and 18 states enacted negative growth budgets for fiscal 2009. State revenue collections were up 2.2 percent in 2008, and 25 states exceeded their original revenue projections; 5 states met their projections; and 20 states were below projections.

+ Fiscal Survey of States (PDF; 496 KB)

This entry was posted on Thursday, December 18th, 2008 at 7:45 pm and is filed under Business and economics, Government and politics. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.