State budgets

Strong rainy-day funds remain a key buffer, but states that rely on volatile revenues or face rising Medicaid, education and infrastructure costs may have less room to absorb the next shock, writes Market Intelligence analyst Jeff Lipton.

The outlook revision to positive from stable is the second this year for the state after Moody's Ratings took similar action in May.

The White House has cut funding to states via curtailed disaster relief, paused infrastructure funding, and changes to the Medicaid program.

With the effects of added Medicaid requirement looming next year, some states are already seeing stress cracks in their reserve fund balances and revenue levels.

KBRA approves of New Jersey's pension progress and budget management.

State budget writers are under increased pressure to allocate resources to struggling hospitals as the effects of expiring health care tax credits leave more people uninsured.

A successful court challenge yanked a measure from the Nov. 3 ballot that sought guardrails and accountability for the state's costly universal voucher program.

The effects of higher yields on Treasury bonds are cascading down into tax revenue levels that could raise the stakes for state and local governments facing higher borrowing costs.

California's fall issuance plans bring a big name into the market at a time when high muni issuance levels have withstood higher interest rates.

With a general obligation bond deal in the works, Illinois can tout Moody's upgrade to A1 of the state's issuer, GO and Build Illinois sales tax bond ratings.

Democrats say the shift is part of a pattern by Republican state legislators to shift power into their own hands regardless of what is legitimate.

While the threat of shifting more costs from the federal government looms in the background, the end of the fiscal year is revealing stabilized tax revenue for most states.

Proposals for reforming the Federal Emergency Management Agency are attracting attention from the ratings agencies.

The Save America Act remains at a chokepoint, pitting President Trump against Senate Majority Leader Thune, while counties weigh in against the measure.

With federal costs and an election on the horizon, Massachusetts, Pennsylvania and New Jersey opted for "maintenance budgets."

The ongoing dispute between the states and the Federal Emergency Management Agency is heading to court as 25 states are suing the agency over charges that it's withholding grants based on immigration policies.

In fiscal 2026, Indiana saw 6.8% year-over-year growth in state revenue amid a 27.7% surge in corporate tax revenue, leading to a surplus of $1.85 billion.

The state's Republican governor and legislative leaders ordered 3% cuts for the next biannual budget as they announced their priorities for the 2027 session.

Discretionary termination of grants allowed under the rule would pose a particular risk, issuer advocates said.

State budgets are in a state of flux due to aging populations and changes in federal spending policies that are affecting revenue and reserve funds.