STATE BUDGET UPDATE Presentation at the Fiscal Leaders Seminar & Fall Forum Washington, D.C. Arturo Pérez National Conference of State Legislatures
OVERVIEW Better state fiscal conditions Few budget gaps Revenues continue to improve Year-end balances are rising Performance is uneven & state budgets remain vulnerable Federal deficit it reduction actions Spending pressures Sluggish economic recovery
FY 2013 TAX COLLECTIONS (COMPARED WITH THE L ATEST E STIMATE) Personal Income 2 13 Sales & Use 2 Corporate Income 2 8 2 5 2 14 15 11 6 2 18 13 15 15 14 Above Estimate On Target Below Estimate Tax Not Levied Not Available (NE & NM)
OTHER TAXES Severance 2 8 9 8 Real Estate Transfer 2 8 9 Miscellaneous
2012 STATE TAX CHANGES AK WA ME MT ND HI CA OR NV ID UT AZ WY CO NM SD NE KS TX OK MN WI IA MO AR LA IL MS MI IN KY TN AL NY PA OH WV VA NC SC GA VT NH MA RI CT NJ DE MD DC Increase of 1% or more, n = 3 Decrease of 1% or more, n = 3 FL PR
2012 BALLOT MEASURES: TAXES AR - Temporary sales tax increase of 0.5% for state highways CA - 2 measures- Prop 30 temporarily increases sales tax & income tax on incomes over $250K; money to K-12 and community colleges Prop 39 Requires multistate businesses to pay income taxes based on percentage of their sales in California. Dedicates revenues for five years to clean/efficient energy projects. OR - corporate tax refunds redirected to K-12
35 REVENUE OUTLOOK FOR THE REMAINDER OF THE FISCAL YEAR 34 ns 30 25 Numb ber of Jur risdictio 20 15 10 6 5 6 7 4 0 Optimistic Stable Concerned Pessimistic
R EVENUE O UTLOOK FOR THE R EMAINDER OF THE F ISCAL Y EAR VT NH MA RI CT NJ DE Optimistic Stable Concerned Pessimistic 6 34 7 4 MD DC
SPENDING OVERRUNS IN FY 2013 Medicaid or other health care programs 10 states compared with 6 at this time last year and 20 two years ago Education (K-12 & Higher Ed) 5 states Corrections ID, MD, MS, VT
SUMMARY OF CURRENT STATE FISCAL SITUATION
R ECOVERY (RECESSIONARY IMPACT ON GENERAL FUND REVENUE COLLECTIONS) $350 Recession of 1991 $300 $250 Billions o of Dollars $200 $150 $100 $50 $0 Fiscal Year Recession Length: 8 months
R ECOVERY (RECESSIONARY IMPACT ON GENERAL FUND REVENUE COLLECTIONS) $560 Recession of 2001 02 $540 $520 Billions of Dollars $500 $480 $460 $440 $420 Fiscal Year Recession Length: 8 months
W EAKOVERY (RECESSIONARY IMPACT ON GENERAL FUND REVENUE COLLECTIONS) $670 The Great Recession $660 $650 Billio ons of Dollarrs $640 $630 $620 $610 $ $600 $590 $580 $570 Fiscal Year Recession Length: 18 months
R ECOVERY G ROWTH R ATE OF G ENERAL F UND R EVENUES IN C OMPARISON TO P REVIOUS R ECOVERIES Below 27 In Line 10 Above 4 Not Applicable 9 VT NH MA RI CT NJ DE MD DC
RETURN OR PROJECTED RETURN TO PEAK REVENUE COLLECTIONS 14 13 12 10 8 6 4 2 0 FY 2011 6 6 6 FY 2012 FY 2013 FY 2014 4 FY 2015 1 FY 2016 0 FY 2017 1 FY 2018 Unknown: 11 states Not Applicable: AK, DC and ND
RETURN OR PROJECTED RETURN TO PEAK REVENUE COLLECTIONS FY 2011 / FY 2012 19 VT NH MA RI CT NJ DE MD DC FY 2013 6 FY 2014 / FY 2015 10 FY 2016 / FY 2017 1 FY 2018 / FY 2019 1 Unknown 11 Not Applicable 3
STATE YEAR-END BALANCES FY 2007 TO FY 2013 (PROJECTED) GF Expendit tures 14% 12% 12.0% 10% 8% All Jurisdictions 8.0% YE EB as a % of 6% 4% 2% 0% 4.8% 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Year Source: NCSL survey of state legislative fiscal offices, various years.
STATE YEAR-END BALANCES FY 2007 TO FY 2013 (PROJECTED)( GF Expendit tures 12% 10% 11.0% 8% YE EB as a % of Without: AK and TX 6% 4% 4.4% 2% 1.8% 0% 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Year Source: NCSL survey of state legislative fiscal offices, various years.
STATE YEAR-ENDEND BALANCESANCES FY 2007 TO FY 2013 (PROJECTED) GF Expendit tures 12% 10% 11.4% YE EB as a % of 8% 6% 4% 2% 4.1% Without: AK, CA, IL and TX 5.1% 0% 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Year Source: NCSL survey of state legislative fiscal offices, various years.
STATE YEAR-END BALANCES FY 2007 TO FY 2013 (PROJECTED)( 14% 12.0% 12% 11.4% 10% 11.0% 8.0% 8% GF Expendit tures YE EB as a % of 6% 4.8% 5.1% 4% 4.1% 4.4% 2% 1.8% 0% 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Year Source: NCSL survey of state legislative fiscal offices, various years.
$200 $180 C UMULATIVE S TATE B UDGET G APS: FY 2002-FY 2014 $160 $28.2 $140 Billions of Dollars $120 $100 $80 $60 $40 $20 $0 $37.2 Amount Before Budget Adoption Amount After Budget Adoption Projected $29.9 $49.1 $5.3 $77.0 $78.4 $0.7 $36.3 $40.3 $26.9 $12.8 $145.9 $12.3 $6.8 $83.9 $91.0 $32.2 $12.2 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: NCSL survey of state legislative fiscal offices, various years.
TOP FY 2013 CHALLENGES
CONCLUSION Improving revenues YEBs are rising Budget gaps are rare Spending is stable Increased flexibility Performance is uneven Medicaid Federal actions Unemployment Lackluster revenue growth
FOR MORE INFORMATION NCSL Homepage: www.ncsl.org Budget & Tax: www.ncsl.org/fiscal State Budget Update: Summer 2012 (available online) State Budget Update: Fall 2012 (available December 2012) Weakcovery (available December 2012)
Additional Questions? Arturo Pérez arturo.perez@ncsl.org org 303-856-1493