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State Fiscal Conditions Continue Downward Spiral, Survey Says
The number of states reporting cost overruns, budget cuts and use of their fiscal reserves has grown significantly over the last three months, according to a report released last week by the National Conference of State Legislatures (NCSL).
State Fiscal Outlook for FY 2002 - January Update addresses budget problems in FY 2002 and looks at fiscal developments affecting FY 2003 budgets. Data collected from state legislative fiscal offices by NCSL indicate that more than three-quarter of the states have implemented budget cuts or holdbacks and more than half are tapping their rainy-day accounts.
All but five of the 50 states report that revenues are below projections. The future offers little hope for a quick recovery, as 37 states already report budget gaps in next year's revenue forecasts. Tax proposals to help balance FY 2003 budgets are under consideration in 19 states.
Fifteen states already have tapped reserve funds, the report says, with another 10 reporting that they may have to take such action to balance their budgets. At least eight states have, or will, consider using tobacco settlement funds to meet their state's balanced budget requirements.
The report, the third issued by NCSL since October, says 30 states have implemented other belt-tightening measures, such as hiring freezes, delaying tax cuts and delaying, reducing or canceling capital projects.
On a positive note, the report held that five states — Louisiana, North Dakota, Texas, West Virginia and Wyoming — have revenues on or slightly above target. Wyoming has revised its forecast up slightly, due to higher than anticipated sales and use tax revenues.
State Fiscal Outlook for FY 2002 - January Update is available for free to NCSL constituents and for $25 to non-constituents. Please call Lisa Houlihan at (303) 830-2200 ext. 160 to order a copy. A press release, including a link to the report's executive summary, is available at: http://www.ncsl.org/programs/press/pr020207.htm