State Fiscal Outlook

1
State Fiscal Outlook

• New England Board of
• Higher Education
• Boston, MA
• December 5, 2008
• Brian Sigritz
• Staff Associate
• National Association of State Budget Officers

444 North Capitol Street, NW, Suite 642
Washington, DC 20001 [phone]
www.nasbo.org
2
Recent State Fiscal Situation

• Flat spending/declining revenue
• Shortfalls in the billions
• Across the board budget cuts, layoffs
• Credit crisis impacting short- and long-term
  borrowing
• Most states in recession
• Some energy and agriculture states doing
  relatively well
• All states at some risk

3
Flat and Declining Expenditure Growth
31-year historical average rate of growth is 6.3
percent Fiscal 08
numbers are preliminary actual Fiscal 09
numbers are appropriated
Source Preliminary NASBO December
2008 Fiscal Survey of States
4
Revenue Growth 2nd Quarter PIT Relatively Strong
Source Rockefeller Institute of Government U.S.
Census Bureau
5
3rd Quarter Revenue Trends

• 42 states have reported 3rd quarter data
• Overall revenue growth of 0.1
• -2.6 growth when adjusted for inflation
• Sales tax collections declined 0.7, corporate
  income declined 15.3, and personal income grew
  at a weak 1.5

Source Rockefeller Institute of Government
6
Budget Cuts Increasing
Source Preliminary December 2008 Fiscal Survey
of States
7
Balances Declining
31-year historical average is 5.7
Source Preliminary
NASBO December 2008 Fiscal Survey of States
8
Higher Education 10.5 of Total State Spending
Source Preliminary NASBO 2007 State Expenditure
Report
9
Total Expenditures Percentage Growth in
Spending Categories Over 10 Years
Sources NASBO 1997 and 2006 State Expenditure
Reports
10
State Fiscal Outlook

• Much will depend on the national economy
• Expect significant drops in revenue and spending
• States will face dramatic budget cuts
• States will look for creative financing and
  revenue opportunities to meet these spending
  demands
• Opportunity for reform
• Recovery for states at best in FY 11