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NASACT Burlington August 16, 2011 Scott Pattison Executive Director

NASACT Burlington August 16, 2011 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. State Fiscal Outlook. Revenue Improvement Spring

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NASACT Burlington August 16, 2011 Scott Pattison Executive Director

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  1. NASACT Burlington August 16, 2011 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

  3. State Fiscal Outlook • Revenue Improvement Spring • Spending Pressure • Health care reform • Limited federal funds • Significant restructuring

  4. Medicaid In Millions Fiscal 2011 data is based on enacted budgets and fiscal 2012 data is based on governors’ proposed budgets Source: NASBO Spring 2011 Fiscal Survey of States

  5. National Economic Indicators • 2nd Quarter GDP grows 1.3% • 8th straight quarter of at least moderate growth • Federal Reserve projects 2.7%-2.9% growth in 2011, 3.3%-3.7% in 2012 (June 22nd forecast) • Other economic figures: • Unemployment rate at 9.1% in July: June was 9.2% • Manufacturing grows for 24th straight month in July, although growth slows • Foreclosure notices in June continue to fall, partly due to delays in foreclosure processes

  6. Recent Market Volatility

  7. U.S. Economic Growth by Sector IHS Global Insight (Percent change unless otherwise noted)

  8. State and Local Employment Continues to Decline • State and local employment has declined 620,000 from the start of the recession through July • State employment declined 145,000 from Aug. 2008-July 2011 • Local employment declined 475,000 from Sept. 2008-July 2011 • State governments eliminated 23,000 positions in July alone • States have also taken other personnel actions such as furloughs, early retirement, salary reduction, cuts to state employee benefits, etc. Source: Bureau of Labor Statistics

  9. State Debt Level Remains Comparatively Low Debt-to-GDP: U.S. States Compared to Advanced G20 Nations – Moody’s Investor Services & International Monetary Fund %

  10. Tax and Fee Increases

  11. Current Fiscal Situation: Indicators

  12. BudgetImprovement * Average *34-year historical average rate of growth is 5.7percent *Fiscal ‘12 numbers are recommended Source: NASBO Spring 2011 Fiscal Survey of States

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

  14. FY 2012 Proposed Spending Still Less than FY 2008 ($ in billions) * FY 2007, 2008, 2009 and 2010 are actual. FY 2011 is estimated and FY 2012 is proposed..

  15. 5 Quarters of Revenue Growth Following 5 Quarters of Declines Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau * 1st Quarter CY 2011 data is preliminary

  16. Revenue Remains Below Pre-Recession Levels ($ in billions) * FY 2007, 2008, 2009 and 2010 are actual. FY 2011 is estimated and FY 2012 is proposed.

  17. Balance Levels are Below Historical Average for Most States Balances as a Percentage of Expenditures (percentages) * FY 2006, 2007, 2008, 2009, 2010 are actual, FY 2011 is estimated and FY 2012 is proposed.

  18. Background on State Finance Trends

  19. Spending by Funding Source(Percentage) Source: NASBO 2009 State Expenditure Report

  20. Total State Expenditures Source: NASBO 2009 State Expenditure Report 20

  21. General Fund: Medicaid & Education Over 63% Source: NASBO 2009 State Expenditure Report

  22. Percentage Change in Medicaid Spending and Enrollment % Adopted Source: Kaiser Commission on Medicaid and the Uninsured

  23. What Can Be Done? • Financial Management • Ask performance questions • Ask for outcome data • Use performance information to justify changes to programs

  24. Outlook

  25. Major Challenges to State Budgets • Spending Demands and Some Revenue Growth • Dependent on Economic Growth • Health Care Cost Pressures • Wind Down of Recovery Funds (Planned For) • Dealing with Long Term Liabilities • Court Cases/Federal Government Mandates

  26. Tough Decisions to Make… Source: New York Times, 6/12/11

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

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