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State Fiscal Outlook: Minnesota and the Nation

State Fiscal Outlook: Minnesota and the Nation. ONE MINNESOTA January 25, 2012 Scott Pattison Executive Director National Association of State Budget Officers. 444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org. Current Fiscal Situation:

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State Fiscal Outlook: Minnesota and the Nation

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  1. State Fiscal Outlook: Minnesota and the Nation ONE MINNESOTA January 25, 2012 Scott Pattison Executive Director National Association of State Budget Officers 444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org

  2. Current Fiscal Situation: Overview

  3. State Fiscal Outlook • Revenue improvement • Still not yet pre-recession • Spending pressures • Health care reform • Limited federal funds

  4. State and Local Employment Continues to Decline • State and local employment has declined 665,000 from the start of the recession through December • State employment declined 132,000 from Aug. 2008-Dec. 2011 • Local employment declined 533,000 from Sept. 2008-Dec. 2011 • State governments have eliminated 17,000 positions since September • States have also taken other personnel actions such as furloughs, early retirement, salary reduction, etc. Source: Bureau of Labor Statistics

  5. Current Fiscal Situation: Indicators

  6. State Budgets * Average *34-year historical average rate of growth is 5.6 percent *Fiscal ‘12 numbers are appropriated Source: NASBO Fall 2011 Fiscal Survey of States

  7. FY 2012 Spending Remains $20 Billion Below FY 2008 ($ in billions) * FY 2007 – 2010 are actual, FY 2011 is preliminary actual and FY 2012 is enacted.

  8. Medicaid Continues to Drive General Fund Spending Growth Changes in General Fund Spending by Category Between FY 2011 and FY 2012 In Billions Data is based on comparative levels of enacted spending in FY 2011 and FY 2012 Source: NASBO Fall 2011 Fiscal Survey of States

  9. State Revenue Continues to Grow in 3rd Quarter, but at Slower Rate Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau

  10. Revenue Remains Below Pre-Recession Levels ($ in billions) * FY 2007- -2010 are actual. FY 2011 is preliminary actual and FY 2012 is enacted.

  11. Minnesota GF Revenue:1997-2011 (estimated) Source: NASBO State Expenditure Report 11

  12. Total Balance Levels Remain Low for Most States Balances as a Percentage of Expenditures (percentages) * FY 2006 – FY 2010 are actual, FY 2011 is preliminary actual and FY 2012 is enacted.

  13. Balances inMN and Selected States Source: NASBO Dec. 2011 Fiscal Survey of States

  14. Mid-Year Budget Cuts Decline Budget Cuts Made After the Budget Passed ($ millions) *FY 2012 mid-year budget cuts are ongoing Source: NASBO Fall 2011 Fiscal Survey

  15. Current Fiscal Situation: Economic Overview

  16. Unemployment Ratein MN and Selected States Source: U. S. Department of Labor, Bureau of Labor Statistics

  17. National Unemployment Rate Compared to MN % Source: U.S. Department of Labor, Bureau of Labor Statistics

  18. Who gets out first? Historical Boost to State Earnings and Employment due to Oil & Natural Gas Source: Federal Reserve Bank of Kansas City, Economic Review, Fourth Quarter 2009

  19. Background on State Spending Trends

  20. Spending by Funding Source(Percentage) Source: NASBO 2010 State Expenditure Report

  21. MN Spending by Funding Source (Percentage) Source: NASBO 2010 State Expenditure Report

  22. Total State Expenditures Source: NASBO 2010 State Expenditure Report 22

  23. General Fund: Medicaid & Education 64% Source: NASBO 2010 State Expenditure Report

  24. MN General Fund: Medicaid & Education Over 73% Source: NASBO 2010 State Expenditure Report 24

  25. MN General Fund Spending Growth over 10 years Sources: NASBO 2002 and 2010 State Expenditure Reports 25

  26. State Spending from Federal Funds Source: NASBO 2010 State Expenditure Report 26

  27. MN State Spending from Federal Funds Source: NASBO 2010 State Expenditure Report 27

  28. Focus on Outcomes • Focus on results and outcomes • Spend funds for effective programs • Improve management

  29. Outlook

  30. State Fiscal Outlook • State budgets dependent on economy • Health care reform, federal government will have an impact • Tough competition for general funds and limited federal funds • Dealing with long-term liabilities

  31. www.nasbo.org Scott Pattison (202) 624-8804 spattison@nasbo.org

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