Revenue Projections Mainly on Target, Survey Finds

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After years of lagging behind projections and creating record deficits, state general-revenue collections this year are largely on target and in some cases ahead of expectations, a new survey indicates.

In part because budget forecasters have learned to be more cautious in projecting tax receipts, most states will not find their legislative sessions overshadowed by pressures over balancing the budget, a report by the National Conference of State Legislatures concludes.

Forty-four states stand at or above their revenue targets, compared with only half the states at the same time last year.

In proposing fiscal 1994 budgets, the survey found, most governors have called on lawmakers to either hold the line on spending and programs or redirect current funds to modest new initiatives.

In cases where budget pressures remain high, however, severe cuts have been ordered, the survey notes. And throughout the nation, any revenue growth is being quickly absorbed by Medicaid, elementary and secondary education, and corrections.

Among the states still fighting to make ends meet are California, Michigan, and South Carolina, where revenues are about 4 percent below expectations. Less troubled but also in a pinch are Kentucky, Oklahoma, and Vermont, the survey found.

Fifteen states and the District of Columbia are more than 1 percent above budget targets, with Alaska, at 9 percent over, and Colorado, at 7 percent, leading the way. Thirty states, meanwhile, are at or near their anticipated levels.

Not a Major Tax Year

Calls for higher taxes have not been heard much this year in state capitals, according to the N.C.S.L. Outside of Montana's effort to create a statewide sales tax, most major tax proposals would be temporary levies.

Officials in West Virginia are seeking a higher income-tax rate for residents with taxable incomes over $100,000. In New Hampshire, the legislature is considering broadening the base of the state's business-profits tax.

"But even if all the proposals were to be enacted,'' the report notes, "1993 would not be a major tax year to compare with 1991 and 1992.''

The most drastic state fiscal action is expected this year in California and Maine, where the recession continues to exact a painful toll.

California officials face an $8.6 billion budget shortfall, which Gov. Pete Wilson has proposed to counter with cuts in education and other social programs. In Maine, where the budget woes may be the most acute, across-the-board cuts in spending, including for education, are on the table.

Lawmakers in Michigan will also be under the gun, the report found, as they consider transferring funds from the state's retirement account into its general fund and still making $93 million in budget cuts.

Vol. 12, Issue 25

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