NABE

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• NABE
• September 16, 2009
• Scott Pattison
• Executive Director
• National Association of State Budget Officers

444 North Capitol Street, NW, Suite 642
Washington, DC 20001 [phone]
www.nasbo.org
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Recent State Fiscal Situation

• Extremely difficult fiscal period for states
• States experiencing significant shortfalls
• 230B for fiscal years 2009-2011
• Large revenue declines
• Widespread budget cuts, layoffs/furloughs
• ARRA helping, but does not solve all fiscal
  problems

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Regions

• Nearly every state seeing decreasing revenue
• Large states (New York, California) in bad shape
• Housing bust states (Arizona, Florida, Nevada) in
  very bad shape
• Auto sector, manufacturing states hurting
• Small mountain and middle west states in
  relatively better shape but still seeing
  difficult fiscal situation and declining revenue

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This downturn vs. Post 01

• Last Time
• Housing sector strong in 01
• Primarily income tax decline
• This Time
• Broad economic decline Longer recession
• Localities will be hit this downturn

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Negative Spending in Both FY 2009 and FY 2010

32-year historical average rate of growth is 5.9
percent
Fiscal 09 numbers are estimated Fiscal 10
numbers are recommended
Source NASBO June 2009Fiscal
Survey of States
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State Revenue Down 12 in 1st Quarter Largest
Decline on Record
Source Fiscal Studies Program, Rockefeller
Institute of Government U.S. Census Bureau
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Revenue Forecasts
Fiscal 2008 numbers are actual
Sources Hawaii Council on
Revenues VT JFO Administration Forecast
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Balances Declining
32-year historical average is 5.8

Source NASBO June 2009 Fiscal Survey of
States
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Budget Cuts at Record Levels
Source June 2009 Fiscal Survey of States
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Combined Budget Gapsof 230B
37 states
24 states
Only 24 states have forecasted FY 2011 budget
gaps to date
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The Cliff Year-by-Year State Stimulus Spending
Source Stateline.org
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Long Term Spending Pressures

• Medicaid and Health Care
• K-12 and Higher Education
• Demographic Changes
• Corrections
• Infrastructure
• Pensions

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State Fiscal Outlook

• Much will depend on the length and severity of
  the recession
• Recovery for states at best in FY 2011 Revenues
  may not recover until FY 2012
• States will look for creative financing and
  revenue opportunities to meet these spending
  demands
• Opportunities for reform, restructuring,
  examining priorities

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www.nasbo.org

Scott Pattison [phone] spattison_at_nasbo.org