States spending plummets as revenue comes up short
20 06 08 - 16:01
Spending by states in the coming fiscal year will plummet as revenues continue to come up short and expenses like health care and employee pensions continue to mount, according to a report released Thursday.
The midyear survey of state finances by the National Governors Association and the National Association of State Budget Officers showed state spending nationally will grow by just 1 percent in the fiscal year that begins in most states July 1.
That's down from a 30-year average growth of 6.7 percent. It's also a considerable drop from the current year, which saw spending growth of about 5 percent.
The joint survey also found that 18 states reported their upcoming budgets will be smaller than spending plans for the current year. Just four states said their budgets shrunk this year.
Still, the situation is not as bad as the post-Sept. 11 downturn, at least not yet, said NASBO executive director Scott Pattison. "It is certainly a weakening fiscal situation and unfortunately we're very concerned about the future," he said.
NGA Executive Director Ray Scheppach says as bad as things are, the real concern is that conditions will get worse for states, whose recovery typically lags behind the national economy.
"We're fearful that this is going to be a three or four year kind of struggle for states," Scheppach said.
The report also found:
_Thirteen states were forced to cut their budgets during this fiscal year; by contrast only three states had to make midyear budget cuts last year.
_The number of states with revenue shortfalls increased this year, with 15 states exceeding their projections, 14 states meeting projections and 20 states falling below what they estimated.
Estimated spending on Medicaid, the joint state-federal health care program for poor families and children, will increase 4.4 percent in governors' recommended budgets next year, more than four times the rate of overall spending growth in those budgets.
The 18 states reporting negative growth for the upcoming fiscal year: Alabama, Alaska, Arizona, California, Florida, Kentucky, Maine, Michigan, Montana, New Jersey, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Virginia, West Virginia and Wyoming.
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