Policy Brief

States' Fiscal View: Gloomy, Gloomier

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That may be the simplest way to describe the latest (preliminary) national data on states’ financial pictures, issued last week.

“We are seeing the worst numbers and indicators that we’ve ever seen in terms of state fiscal conditions,” Scott D. Pattison, the executive director of the National Association of State Budget Officers, said at a Nov. 12 news conference.

And that’s a pretty long time: NASBO and the National Governors Association have been producing "The Fiscal Survey of States,"Requires Adobe Acrobat Reader which is now a semiannual document, since the 1970s.

Overall, states slashed their general-fund expenditures by 4.8 percent in fiscal 2009, and are expected to reduce such spending by another 4 percent in fiscal 2010, based on a preliminary glimpse the NGA and NASBO offered of the next edition of the fiscal survey, expected out next month.

The information did not touch specifically on K-12 education, but it typically is a key component of a state’s general-fund coffers. States have struggled to maintain education spending levels during the recession, though aid provided under the federal economic-stimulus law has been widely seen as a big help.

The groups reported that 42 states made midyear cuts to their enacted budgets in fiscal 2009, for a total of $31.2 billion. And Mr. Pattison said 33 states are now estimating mid-year cuts for fiscal 2010 that total more than $50 billion.

And that wasn’t all: The NGA last week also released a report titled "The State Fiscal Situation: The Lost Decade."Requires Adobe Acrobat Reader It predicts that states won’t fully recover from the recession until late in the next decade.

The NGA report says the federal economic-stimulus law has been vital to states, especially money for Medicaid and the State Fiscal Stabilization Fund, most of which is going to education.

“If Congress had not made these funds available, state budget cuts and tax increases would have been much more Draconian and devastating,” the report says.

But it cautions that both the [stimulus] Medicaid and education funds expire at the end of December 2010. States must plan for the serious cliff in revenues they will face at that time.

Vol. 29, Issue 12, Page 15

Published in Print: November 18, 2009, as States' Fiscal View: Gloomy, Gloomier
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