State Fiscal Update

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State Fiscal Update

• NASC Annual Conference
• Denver, CO
• March 12, 2008
• 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

• Slowing spending growth overall
• Some states experiencing significant shortfalls
• Across the board budget cuts for some
• Economic woes impacting many
• The flip side weak dollar and energy prices help
  some states

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FY 2008 Budgetary Issues

• Slowing Economy and Revenues for Many
• Medicaid Health Care Costs
• SCHIP
• Universal Health Care
• Infrastructure/Transportation
• Search for Alternative Revenue Sources Gaming
  Leases/Privatization
• Education Spending

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Slowing Fiscal 08 Expenditure Growth

30-year historical average rate of growth is 6.4
percent Fiscal 08 numbers are estimated
Source NASBO December 2007 Fiscal Survey of
States
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Expected Shortfalls

• Recent Survey
• 14.6 Billion 19 states FY 08
• 32.2 Billion 22 states FY 09

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Some States Likely will Face Mid-Year Fiscal 08
Budget Cuts
Source December 2007 Fiscal Survey of States
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Balances Incremental Decline
30-year historical average is 5.7 Source
NASBO December 2007 Fiscal Survey of States
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Medicaid Spending a Concern
2010 percentage projected by Health Management
Associates Source NASBO
State Expenditure Report
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Federal Funds to States Medicaid Consuming
Larger Share
Source NASBO, 1990, 1995, 2000 and 2006 State
Expenditure Reports
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Long Term Challenges GAO Report (Jan. 2008)

• Tax receipts would need to rise considerably
  faster than historical experience to enable the
  operating balance to remain in the historical
  range.
• Substantial policy changes would be needed to
  prevent the fiscal decline in the state and local
  government sector.

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State Fiscal Outlook

• Spending growth likely to slow, budget cuts for
  many states
• States will face pressure to fund growing health
  care, infrastructure and education
• States will look for creative financing
  opportunities to meet spending demands

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