While revenues have improved this year, states still face combined deficits of more than $86 billion for fiscal 2012, according to the National Conference of State Legislatures.
In its latest budget report, the NCSL estimates that 31 states and Puerto Rico will have shortfalls in fiscal 2012 totaling $86.1 billion, according to NCSL’s “State Budget Update: March 2011,” released Tuesday. In its November 2010 budget report, the NCSL pegged fiscal 2012 deficits among 35 states and Puerto Rico at $82.1 billion.
The NCSL now calculates state budget gaps for fiscal 2013 will total $30.9 billion, down from its $66 billion estimate in November.
As tax receipts for some states are coming in stronger than budgeted projections, many states will still face a gap between recurring revenue and spending needs. Unemployment still remains high for many jurisdictions and states must deal with rising Medicaid and retirement costs.
“Nearly two years into the U.S. economic recovery, following the end of the Great Recession, state finances are showing encouraging signs of revenue stability,” the March budget report said. “At the same time, budget gaps remain a daunting obstacle for some states. Much of the difficulty is explained by the significant drop in state revenue collections in the previous two fiscal years.”
“The steady but slow pace of revenue growth since has not been sufficiently robust to offset the loss of American Recovery and Reinvestment Act funds or the increases in caseloads and related costs in program areas such as Medicaid and K-12 education.”
The bulk of jurisdictions anticipate returning to peak revenue collection levels during fiscal 2012 through fiscal 2014.
Delaware and New York expect fiscal 2011 revenue collections will match their strongest collection levels from fiscal 2008 and fiscal 2006, respectively.
Arizona and Louisiana anticipate returning to peak revenue levels in fiscal 2016.
Overall, state revenues are making a comeback, thanks to stronger personal income tax and sales tax receipts. States collected $715 billion of tax revenue in 2010, 4.5%, or $30 billion, above their 2009 collections, according to a Rockefeller Institute of Government report released Tuesday.
