Transcript Fiscal State of the States
State Fiscal Conditions: Temporary Downturn or New Normal?
MAGNY
March 15, 2013
New York 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
NASBO
Current Fiscal Situation: Overview
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Major Challenges to State Budgets - Spring 2013
Improved revenue growth, but not enough to go around…
Federal government
Health care changes, implementation
Dealing with long term liabilities NASBO
Federal Overhang…
Sequester
Debt ceiling
Many program authorizations set to expire
“Grand bargain” tax reform?
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National Economic Indicators
4th Quarter GDP grows a modest 0.1%
3 rd Quarter GDP increased 3.1% 14 th straight quarter of at least some growth
Federal Reserve projects 2.3%-3.0% growth in 2013
Other economic figures:
Unemployment rate at 7.7% in February Manufacturing grows for 3 rd consecutive month in February New Home Sales rose 15.6% in January
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“… the still-moderate underlying pace of economic growth…” - Federal Reserve Chairman Ben Bernanke, 2/26/13 NASBO
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Current Fiscal Situation: Indicators
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GF Growth General Fund Expenditure Growth (%) 4 % 2 0 -2 -4 -6 -8 12 10 8 6
*35-year historical average rate of growth is 5.6 percent Source: NASBO Fall 2012 Fiscal Survey of States
NASBO * Average
*Fiscal ‘13 numbers are appropriated
FY 2013 Appropriated Spending Still $5.9 Billion Below FY 2008
Source: NASBO Fall 2012 Fiscal Survey of States
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FY 2013 General Fund Revenue is Expected to Surpass FY 2008 by $13B General Fund Revenue: FY 2007-FY 2013 $700 $680 $660 $640 $620 $600 $580 $560 $655 $680 $626 $610 $650 $667 $693 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
Source: NASBO Fall 2012 Fiscal Survey of States
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State Revenue Continues to Grow in 4th Quarter Year-Over-Year Real Change in Quarterly State Tax Revenue 15 10 5 0 % -5 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -10 -15 -20 Total
Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau
NASBO
States Continue To Rebuild Budgetary Reserves After Recession
14,0% 12,0% 10,0% 8,0% 11,5% 10,0% 10,1% 8,2% 8,6% 9,0% 7,6% 7,1% 6,0% 4,0% 6,0% 5,7% 5,2% 5,0% 4,2% 3,8% 2,0% 2,4% 2,4% 0,0% FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 All 50 States Not Including Alaska & Texas
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Minimal Midyear Budget Cuts in FY 2012, 8 States Cut $1.7 Billion Budget Cuts Made After the Budget Passed ($ millions)
Source: NASBO Fall 2012 Fiscal Survey
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Strategies Used to Reduce or Eliminate Budget Gaps, FY 2013
Reduce Local Aid: 8 states
Layoffs: 9 states
Furloughs: 3 states
Cuts to Employee Benefits: 9 states
Across-the-Board Cuts: 13 states
Targeted Cuts: 21 states
Rainy Day Fund: 4 states
Reorganize Agencies: 10 states
Source: NASBO Fall 2012 Fiscal Survey of States
NASBO
States and Locals Continue to Eliminate Positions
State and local employment has declined 753,000 from the start of the recession through this February
State employment declined 195,000 from Aug. 2008-Feb. 2013 Local employment declined 558,000 from Aug. 2008-Feb. 2013
State governments eliminated 8,000 positions in February; local employment declined by 2,000
Source: Bureau of Labor Statistics
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Personnel Strategies Used to Reduce or Eliminate Budget Gaps
Fiscal 2010 Layoffs: 26 states
Furloughs: 22 states
Early Retirement: 6 states
Salary Reductions: 12 states
Cuts to Employee Benefits: 9 states
Source: NASBO Fiscal Survey of States
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Fiscal 2013 Layoffs: 9 states
Furloughs: 3 states
Early Retirement: 2 states
Salary Reductions: 4 states
Cuts to Employee Benefits: 9 states
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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 2012 Other State Funds 26.5% Bonds 2.5% Federal Funds 31.2% General Funds 39.8%
Source: NASBO State Expenditure Report
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Total State Expenditures
Total Expenditures by Function, Estimated Fiscal 2012 All Other 33.7% Transportation 8.1% Corrections 3.2% Public Assistance 1.4% Medicaid 23.9%
Source: NASBO State Expenditure Report
NASBO K-12 19.8% Higher Education 9.9%
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Total Expenditures Percentage Growth in Spending Categories Over 10 Years Percentage Growth in Spending Categories Between Fiscal 2003 and Fiscal 2012 (Total Funds) 70 60 50 40 % 30 20 10 0 -10 Public Assist.
31.8
-5 Higher Ed K-12 33.9
34.5
Corrections 44.8
Transport.
47.7
Total 59.7
60.9
All Other Medicaid
Sources: NASBO State Expenditure Reports
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General Fund: Medicaid & Education 64.3%
General Fund Expenditures by Function, Estimated Fiscal 2012 Transportation 0.5% Corrections 7.0% Public Assistance 1.5% All Other 26.6% Medicaid 19.6% Elementary & Secondary Education 34.7% Higher Education 10.0%
Source: NASBO State Expenditure Report
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General Fund Percentage Growth in Spending Categories Over 10 Years Percentage Growth in Spending Categories Between Fiscal 2003 and Fiscal 2012 (General Funds) 60 50 40 30 % 20 10 0 -10 -20 Public Assist.
-10.1
Higher Ed 8 11.7
Transport.
30.6
K-12 31.5
Corrections 34.4
Total 45.8
53.2
All Other Medicaid
Sources: NASBO State Expenditure Reports
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State Spending from Federal Funds
Federal Funds Spending, Estimated Fiscal 2012 All Other 30.9% Transportation 8.0% Elementary & Secondary Education 10.9% Corrections 0.2% Public Assistance 2.6% Higher Education 3.5% Medicaid 43.9%
Source: NASBO State Expenditure Report
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Outlook
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State Fiscal Outlook
Below average state budgets for at least the next several years
Health care reform implementation
Tough competition for general funds and limited federal funds
Dealing with infrastructure, long-term liabilities
States will continue to make some painful choices NASBO
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www.nasbo.org
Scott Pattison (202) 624-8804 [email protected]
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