Transcript Fiscal State of the States

State Fiscal Outlook:
Minnesota and the Nation
ONE MINNESOTA
January 25, 2012
Scott Pattison
Executive Director
National Association of State Budget Officers
444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org
Current Fiscal Situation:
Overview
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State Fiscal Outlook
Revenue improvement
 Still not yet pre-recession
 Spending pressures
 Health care reform
 Limited federal funds

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State and Local Employment
Continues to Decline

State and local employment has declined 665,000 from
the start of the recession through December


State employment declined 132,000 from Aug. 2008-Dec. 2011
Local employment declined 533,000 from Sept. 2008-Dec. 2011

State governments have eliminated 17,000 positions
since September

States have also taken other personnel actions such
as furloughs, early retirement, salary reduction, etc.
Source: Bureau of Labor Statistics
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Current Fiscal Situation:
Indicators
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State Budgets
General Fund Expenditure Growth (%)
12
10
8
6
* Average
4
%
2
0
-2
-4
-6
-8
*34-year historical average rate of growth is 5.6 percent
Source: NASBO Fall 2011 Fiscal Survey of States
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*Fiscal ‘12 numbers are appropriated
($ in billions)
FY 2012 Spending Remains $20
Billion Below FY 2008
* FY 2007 – 2010 are actual, FY 2011 is preliminary actual and FY 2012 is enacted.
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Medicaid Continues to Drive
General Fund Spending Growth
In Billions
Changes in General Fund Spending by Category Between FY 2011 and FY 2012
Data is based on comparative levels of enacted spending in FY 2011 and FY 2012
Source: NASBO Fall 2011 Fiscal Survey of States
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State Revenue Continues to Grow
in 3rd Quarter, but at Slower Rate
Year-Over-Year Real Change in
Quarterly State Tax Revenue
15
10
5
0
%
-5
1999
2000
2001
2002
2003
2004
2005
2006
-10
-15
-20
Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau
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2007
2008
2009
2010
2011
($ in billions)
Revenue Remains Below
Pre-Recession Levels
* FY 2007- -2010 are actual. FY 2011 is preliminary actual and FY 2012 is enacted.
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Minnesota GF Revenue:
1997-2011
(estimated)
Source: NASBO State Expenditure Report
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Total Balance Levels Remain Low
for Most States
(percentages)
Balances as a Percentage of Expenditures
* FY 2006 – FY 2010 are actual, FY 2011 is preliminary actual and FY 2012 is enacted.
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Balances in
MN and Selected States
Source: NASBO Dec. 2011 Fiscal Survey of States
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Mid-Year Budget Cuts Decline
Budget Cuts Made After the Budget Passed
($ millions)
*FY 2012 mid-year budget cuts are ongoing
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Source: NASBO Fall 2011 Fiscal Survey
Current Fiscal Situation:
Economic Overview
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Unemployment Rate
in MN and Selected States
Source: U. S. Department of Labor, Bureau of Labor Statistics
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National Unemployment Rate
Compared to MN
%
Source: U.S. Department of Labor, Bureau of Labor Statistics
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Who gets out first?
Historical Boost to State Earnings and
Employment due to Oil & Natural Gas
Source: Federal Reserve Bank of Kansas City, Economic Review, Fourth Quarter 2009
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Background on State
Spending Trends
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Spending by Funding Source
(Percentage)
Total State Expenditures By Funding Source, Estimated Fiscal 2011
Other State Funds
25.8%
Federal Funds
34.1%
Bonds
2.5%
General Funds
37.7%
Source: NASBO 2010 State Expenditure Report
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MN Spending by Funding
Source (Percentage)
Source: NASBO 2010 State Expenditure Report
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Total State Expenditures
Total Expenditures by Function, Estimated Fiscal 2011
All Other
33.9%
K-12
20.1%
Transportation
7.6%
Corrections
3.1%
Public Assistance
1.6%
Medicaid
23.6%
Higher Education
10.1%
Source: NASBO 2010 State Expenditure Report
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General Fund: Medicaid &
Education 64%
General Fund Expenditures by Function, Estimated Fiscal 2011
Transportation
0.5%
All Other
26.5%
Corrections
7.4%
Public Assistance
1.8%
Medicaid
17.4%
Elementary &
Secondary Education
35.0%
Higher Education
11.5%
Source: NASBO 2010 State Expenditure Report
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MN General Fund: Medicaid &
Education Over 73%
General Fund Expenditures by Function, Estimated Fiscal 2011
Transportation
Corrections 0.4%
2.9%
Public Assistance
1.1%
All Other
22.0%
Medicaid
19.2%
K-12
37%
Higher Education
17.5%
Source: NASBO 2010 State Expenditure Report
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MN General Fund Spending
Growth over 10 years
Sources: NASBO 2002 and 2010 State Expenditure Reports
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State Spending from
Federal Funds
Federal Funds Spending, Estimated Fiscal 2011
All Other
29.8%
Transportation
7.2%
Elementary &
Secondary Education
12.7%
Corrections
0.2%
Public Assistance
2.6%
Higher Education
3.9%
Medicaid
43.5%
Source: NASBO 2010 State Expenditure Report
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MN State Spending from
Federal Funds
Federal Funds Spending, Estimated Fiscal 2011
All Other
27.5%
Transportation
5.1%
Corrections
0.1%
K-12
12.4%
Public Assistance
3.1%
Higher
Education
0.6%
Medicaid
51.2%
Source: NASBO 2010 State Expenditure Report
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Focus on Outcomes

Focus on results and outcomes

Spend funds for effective programs

Improve management
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Outlook
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State Fiscal Outlook

State budgets dependent on economy

Health care reform, federal government will have an
impact

Tough competition for general funds and limited
federal funds

Dealing with long-term liabilities
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www.nasbo.org
Scott Pattison
(202) 624-8804
[email protected]
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