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Arturo Pérez Fiscal Affairs Program NCSL

Fiscal Condition of the States Presentation to the Rhode Island House of Representatives Economic Forum December 1, 2009. Arturo Pérez Fiscal Affairs Program NCSL. Overview. The state fiscal situation is dire.

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Arturo Pérez Fiscal Affairs Program NCSL

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  1. Fiscal Condition of the StatesPresentation to the Rhode Island House of RepresentativesEconomic ForumDecember 1, 2009 Arturo Pérez Fiscal Affairs Program NCSL

  2. Overview • The state fiscal situation is dire. • The current revenue situation is nearly unprecedented, at least in recent decades. • To date, states have reported a total estimated budget gap of $386.8 billion (FY 2008 through FY 2012).

  3. U.S. Business Cycle Downturns 1929-2009: Duration in Months Source: National Bureau of Economic Research

  4. Rhode Island Delaware Concerned n = 28 Stable n = 1 Pessimistic n = 21 Puerto Rico Optimistic n = 0 No response n = 1 FY 2010 Revenue Outlook Source: NCSL survey of state legislative fiscal offices, April 2009.

  5. How Bad is the Revenue Situation? • Florida reports that annual revenues today compare to FY 2001 levels and are not expected to return to peak levels (which occurred in FY 2006) until FY 2013. • Colorado reports that annual revenues today are similar to amounts collected in FY 2005. • In Kansas, general funds revenues are coming in at FY 2006 levels.

  6. Rhode Island Delaware 5% to 9.9%, n = 5 10% to 19.9%, n = 18 0.1% to 4.9%, n = 6 Puerto Rico More than 20% n= 17 Not applicable or not reporting, n = 5 Pre-Enactment FY 2010 Budget Gapsas a Percentage of General Fund Budget Source: NCSL survey of state legislative fiscal offices, 2009.

  7. Use of Spending Cuts as Percentage of Actions To Close FY 2010 Budget Gaps (preliminary) Rhode Island Delaware Puerto Rico- 61.8% Not Applicable, n = 7 No Response, n = 5 Used spending cuts, n = 39 17.0% 36.7% 48.0% VT- 25.0% 100.0% 23.7% 49.4% 22.7% 32.0% 43.0% 20.8% 74.3% 44.7% 58.0% 48.0% 47.4% 40.0% 19.5% 36.4% 60.0% 45.1% 19.1% 4.1% 26.6% 40.0% 3.9% CT - 28.8% 45.5% DE - 37.8% 46.0% MD - 28.0% MA - 43.0% NJ- 38.7% 15.8% RI- 48.7% WV- 60.0% Source: NCSL survey of state legislative fiscal offices, 2009.

  8. Use of ARRA Funds as Percentage of Actions To Close FY 2010 Budget Gaps (preliminary) Rhode Island Delaware Puerto Rico- 17.9% Not Applicable, n = 6 Used ARRA funds, n = 40 No Response, n = 5 3.0% 33.0% 39.2% VT- 62.0% 30.2% 24.3% 27.1% 29.0% 54.0% 57.3% 88.0% 26.0% 28.6% 30.0% 60.0% 32.9% 68.4% 13.0% 30.7% 25.0% 64.3% 43.4% 61.4% 41.6% 43.0% CT - 21.7% 45.5% 21.0% DE - 29.0% 40.0% MA - 34.0% 96.7% MD - 47.0% NH- 41.1% 44.7% NJ- 27.3% WV- 40.0% RI- 40.3% Source: NCSL survey of state legislative fiscal offices, 2009.

  9. Tapped Rainy Day Funds and Other Funds as Percentage of Actions To Close FY 2010 Budget Gaps (preliminary) Rhode Island Delaware Puerto Rico Tapped Rainy Day Fund & Other Funds, n = 5 No Response, n = 6 Not Applicable, n = 22 Tapped Other Funds, n = 12 Tapped Rainy Day Fund, n = 6 35.0% 5.0% 5.6% 3.8% 3.0% 15.7% 3.1% 12.0% 1.0% 28.8% 3 5.5% 3.0% 5.1% 8.4% 4.2% 7.6% 15.0% 5.0% MA- 6.5% CT - 27.6% MD - 11.4% 8.4% NJ- 1.5% Source: NCSL survey of state legislative fiscal offices, 2009.

  10. Use of Tax Increases as Percentage of Actions To Close FY 2010 Budget Gaps (preliminary) Rhode Island Delaware Puerto Rico- 15.7% Not Applicable, n = 25 Raised Taxes, n = 22 No Response, n = 4 6.8% VT- 8.0% 2.1% 18.3% 39.3% 26.0% 7.3% 0.7% 3 24.0% 21.6% 7.0% CT - 17.3% 14.8% DE - 24.0% 12.1% MA - 12.3% MD - 0.3% NH- 22.6% NJ- 13.5% RI- 9.5% Source: NCSL survey of state legislative fiscal offices, 2009.

  11. 2009 Net State Tax Changes by Type of Tax Source: National Conference of State Legislatures, 2009. Figures represent 47 reporting states. States not included are: MI, PA, and RI.

  12. Net State Tax Changes by Year of Enactment Source: NCSL survey of legislative fiscal offices, various years. 2009 figures represent 47 reporting states. States not included are: MI, PA, and RI.

  13. Federal Outlays for Major Provisions of ARRA Affecting State and Local Governments ($ in billions) Source: Congressional Budget Office

  14. Amount Before Budget Adoption Amount After Fiscal Year Began Projected Amount 43 states 45 states 42 states 33 states 26 states 1 state 20 states * 44 states* 46 states* 28 states** 16 states*** State Budget Gaps FY 2002-FY 2012 (projected) No estimate * Includes Puerto Rico ** 33 states and Puerto Rico forecast FY 2011 gaps. The amount shown for FY 2011 indicates the 28 states that provided gap estimates. *** 24states forecast FY 2012 gaps. The amount shown for the FY 2012 indicates the 16 states that provided gap estimates. Source: NCSL survey of legislative fiscal offices, various years

  15. Post-Enactment FY 2010 Budget Gaps Rhode Island Delaware Puerto Rico New Budget Gap, n = 31 Not Applicable, n = 20 3 Source: Various media and government outlets, July through November 2009.

  16. Rhode Island Delaware 10% to 19.9%, n = 11 More than 20.0%, n = 6 Puerto Rico 0.1% to 9.9%, n = 9 Budget gap projected, amount unknown, n= 8 Not applicable or not reporting, n = 17 FY 2011 Budget Gapsas a Percentage of General Fund Budget Source: NCSL survey of state legislative fiscal offices, various years.

  17. Rhode Island Delaware 10% to 19.9%, n = 9 More than 20.0%, n = 2 Puerto Rico 0.1% to 9.9%, n = 5 Budget gap projected, amount unknown, n= 8 Not applicable or not reporting, n = 27 FY 2012 Budget Gapsas a Percentage of General Fund Budget Source: NCSL survey of state legislative fiscal offices, various years.

  18. Budget Gap NumbersPast and Current Recession Source: NCSL survey of state legislative fiscal offices, various years.

  19. Conclusion • The states are facing a "cliff" once ARRA funding ends. • State governments will face budgetary problems at least 12 months after the US recession ends. • States are bracing for prolonged fiscal problems.

  20. www.ncsl.org For more information

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