State budget issues, 2009-2010

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State and local government budgets faced budget challenges following the nationwide economic downturn that began in 2008. In Fiscal Year 2009, tax revenues were lower than expected.[1] A 2010 report by the Government Accountability Office reported the state local gap at $9.9 trillion.[2]

The Government Accountability Office said,

" … closing the fiscal gap over the next 50 years would require action to be taken today and maintained for each and every year going forward equivalent to a 12.3 percent reduction in state and local government current expenditures. Closing the fiscal gap through revenue increases would require action of a similar magnitude ….[3] ”

A subsequent report by the National Governors Association and National Association of State Budget Officers found that FY2010 presented the most difficult challenge for states’ financial management since the Great Depression.[4]

In total, states faced a budget shortfall of $113.2 billion in FY 2009 and a projected shortfall of $142.6 billion in FY 2010.[5] The Government Accountability Office (GAO) said that state and local government could face a $10 trillion gap over the next several years.[6]

See also: Find your state budget

Declines in Spending

In FY2009, 43 states made a total of $31.3 billion in mid-year budget cuts, and 40 states made mid-year budget cuts to their fiscal 2010 budgets totaling $22 billion.[4]

For FY2009, states expected to spend an estimated $1.59 trillion from all sources (general funds, federal funds, other state funds and bonds). The general fund represented 41.7 percent of the total.[4]

Total State Spending for Estimated FY2009[4]

Kategorie % of total state spending
Elementary and secondary education 21.1%
Medicaid 21.0%
Higher education 9.8%
Transport 8.2%
Corrections 3.3%
Public assistance 1.6%
All other expenditures 34.9%

Tax revenues in FY2008 amounted to $541.4 billion. They declined 11.8% to $477.4 billion in FY2010.[4] In FY2009, 41 states brought in revenue amounts below their projections.[4]

Rainy Day Funds

Because prior economic downturns resulted in lower than anticipated revenue collections, states established “rainy day” accounts during times of economic expansion. The accounts were intended to help stabilize budgets from future declines in tax collections that could disrupt state services.[4]

Total Year-End Balances as a Percentage of Expenditures, Fiscal 2009 to Fiscal 2011 (number of states)[4] NOTE: The average for fiscal 2009 (actual) was 4.7 percent

Prozentualer Anteil Fiscal 2009 (Actual) Fiscal 2010 (Estimated) Fiscal 2011(Recommended)
Less than 1.0% 11 14 15
1.0% to 4.9% 16 16 17
5.0% to 9.9% 14 12 10
10% or more 9 8 8

Federal Stimulus

Under the American Recovery and Reinvestment Act of 2009 (ARRA), Congress awarded states and localities some $280 billion (35% of all stimulus dollars) to sustain employment, create jobs and promote economic activity and growth. About 85% of state and municipal outlays were designated for health, transportation, education and training programs. The federal share of total state spending increased from 26.3% in FY2008 to 30% in FY2009 due to the ARRA.[4]

In a Fiscal Survey of the States, the National Governors Association noted expectations of difficult state fiscal conditions for the next few years due to the loss of ARRA funds and anticipated slow recovery of state revenues.[4]

An accounting of stimulus funding by state was available at Recovery.gov, a Web site created by Congress as a repository for information related to stimulus spending.

The Government Accountability Office also issued a report on state compliance with maintenance of effort requirements.[7]

Public employee salaries impact on state budgets

Total state expenditures exceeded $2.2 trillion last year, of which wages and benefits amounted to $1.1 trillion.[8]

States fulfill health care and pension obligations through direct contributions as well as investment earnings on those contributions. A fundamental formula for the sustainability of health care and pension funds is: Contributions + Investments = Benefits + Expenses.

States’ investment losses, which exceeded $800 billion in 2008, worsened the budgetary pressures of pension obligations. For example, the state of Illinois borrowed $3.5 billion to meet its pension obligations. Estimates pegged the total unfunded liabilities of state and local pension plans between $1 trillion and $3 trillion.[9]

Charts

Fiscal Year 2010

The following chart lists state budget projections for the FY2010 as of October 9th, 2009[5][10] .


State budget Spending Transparency Estimated Shortfall Estimated Percent of General Fund Budget
Alabama budget No $1.2 billion[11]
Alaska budget Partial $1.35 billion[5] 31%[5]
Arizona budget No $1.4 billion[12]
Arkansas budget No no shortfall[5] n/a[5]
California budget No $41.6 billion[13]
Colorado budget No $560.7 million[10]
Connecticut budget No $4.1 billion[5] 22.2%
Delaware budget No $300 million[14] 12.9%[5]
District of Columbia budget No
Florida budget No $6 billion[5] 27%[5]
Georgia budget Yes $900 million[10]
Hawaii budget No $1.41 billion[5] 25.4%[5]
Idaho budget No $151 million
Illinois budget Partial $7.29 billion[5] %21.2[5]
Indiana budget No $569 million[5]
Iowa budget No $779 million[5]
Kansas budget Yes $1.11 billion[5] 17%[5]
Kentucky budget Yes $1.08 billion[5]
Louisiana budget Yes $2.02 billion[5] %19.8[5]
Maine budget No $640 million[5] 18.8%[5]
Maryland budget Partial $1.95 billion[10]
Massachusetts budget No $400-600 million[10]
Michigan budget No $1.2 billion[5] 12.3%[5]
Minnesota budget No $2.6 billion[5] 14.7%[5]
Mississippi budget Partial no shortfall[10] n/a[10]
Missouri budget Yes $388 million[5] %5.3[5]
Montana budget $67.1 million[5] 3.6%[5]
Nebraska state budget and finances Yes no shortfall[10]
Nevada budget Yes $1.24 billion[5] 31.6%[5]
New Hampshire budget No $12.2 million[5] .8%[5]
New Jersey budget No $8.71 billion[5] 24.4%[5]
New Mexico budget No $440 million[10]
New York budget Partial $2.9 - 3.5 billion[10]
North Carolina budget No $4.6 billion[5] %20.8[5]
North Dakota budget no shortfall[5] n/a[5]
Ohio budget No $1.29 billion[5] %.48[5]
Oklahoma budget Yes no shortfall[10] n/a[10]
Oregon budget No $1.6 billion[5] %18[5]
Pennsylvania budget No $3.97 billion[5] 13.5%[5]
Rhode Island budget Yes $587 million[5] 19.6%[5]
South Carolina budget Yes $797 million[5]
South Dakota budget Yes
Tennessee budget No $1.04 billion[5]
Texas budget Yes $3.3 billion[5] 7.6%[5]
Utah budget No $685 million[5] 13.5%[5]
Vermont budget Partial $28 million[10]
Virginia budget Partial $1.35 billion[10]
Washington budget Yes no shortfall[10] n/a[10]
West Virginia budget Partial $200 million[5] 4.5%
Wisconsin budget No $3.1 billion[5] 20.1%[5]
Wyoming budget No no shortfall[5] N/A[5]

Fiscal Year 2009

Fiscal 2009 General Fund, Actual (Millions)[4]

Region/State Beginning Balance Revenues Adjustments Total Resources Expenditures Adjustments Ending Balance Budget Stabilization Fund
NEW ENGLAND
Connecticut $0 $15,701 $179 $15,880 $16,828 $0 -$948 $1,382
Maine 1 2,855 244 3,100 3,018 56 26 0
Massachusetts 2,406 25,994 0 28,400 27,384 0 1,017 841
New Hampshire 17 1,375 0 1,393 1,472 -80 0 9
Rhode Island -41 3,023 -45 2,937 2,999 0 -62 80
Vermont 0 1,103 66 1,168 1,146 22 0 60
MID-ATLANTIC
Delaware 526 3,148 0 3,674 3,296 0 379 186
Maryland 487 12,901 1,015 14,403 15,080 -764 87 692
New Jersey 1,304 29,060 562 30,926 30,312 0 614 0
New York 2,754 53,801 0 56,555 54,607 0 1,948 1,206
Pennsylvania 583 24,305 166 25,054 27,084 0 -2,030 755
GREAT LAKES
Illinois 141 27,551 1,593 29,285 26,982 2,023 280 276
Indiana 1,050 13,063 0 14,113 13,019 130 964 365
Michigan 458 7,161 1,014 8,633 8,456 0 177 2
Ohio 1,682 26,685 0 28,367 27,362 0 735 0
Wisconsin 131 12,113 573 12,817 12,744 -17 90 0
PLAINS
Iowa 0 5,889 45 5,934 5,934 0 0 519
Kansas 527 5,587 0 6,114 6,064 0 50 0
Minnesota 1,920 15,388 0 17,308 16,861 0 447 395
Missouri 836 7,451 425 8,712 8,449 0 263 260
Nebraska 584 3,351 -182 3,752 3,329 0 424 576
North Dakota 453 1,354 0 1,807 1,237 208 362 325
South Dakota 0 1,141 13 1,154 1,153 0 0 107
SOUTHEAST
Alabama 219 6,753 529 7,501 7,735 -340 105 188
Arkansas 0 4,435 0 4,435 4,435 0 0 0
Florida 321 23,971 0 24,292 23,661 0 631 274
Georgien 2,217 17,842 251 20,310 18,572 0 1,738 217
Kentucky 86 8,553 625 9,263 9,158 66 40 7
Louisiana 866 9,386 119 10,370 9,382 912 76 854
Mississippi 37 4,955 0 4,992 4,984 0 8 315
North Carolina 599 19,146 0 19,745 19,653 0 92 150
South Carolina 324 5,544 0 5,869 5,748 0 121 0
Tennessee 348 9,869 676 10,893 10,804 89 0 557
Virginia 313 15,791 0 16,104 15,943 0 161 575
West Virginia 550 3,902 27 4,479 3,980 18 481 473
SOUTHWEST
Arizona 1 6,966 1,307 8,274 8,754 0 -481 2
New Mexico 735 5,748 264 6,747 6,046 313 389 389
Oklahoma 291 6,147 131 6,568 6,542 0 26 597
Texas 6,815 38,817 -870 44,763 42,411 -75 2,427 6,726
ROCKY MOUNTAIN
Colorado 284 6,743 813 7,840 7,396 0 444 148
Idaho 240 2,466 15 2,720 2,720 0 0 128
Montana 434 1,808 8 2,250 1,858 0 392 0
Utah 0 4,567 470 5,038 5,016 0 22 419
Wyoming 10 1,745 0 1,755 1,750 0 5 398
FAR WEST
Alaska 0 5,858 -401 5,457 5,732 1,175 -1,451 8,898
California 4,071 82,772 -1,757 85,086 90,940 0 0
Hawaii 330 5,008 0 5,338 5,375 0 -37 60
Nevada 316 3,673 0 3,989 3,777 0 212 0
Oregon 5 5,849 -20 5,834 5,834 0 0 113
Washington 790 13,089 928 14,807 14,617 0 189 21
TERRITORIES
Puerto Rico 0 5,008 0 11,250 11,250 0 0 0
Total $36,017 $621,402 - $666,202 $657,908 - $4,458 $29,546

The following chart lists state budget information for the Fiscal Year 2009[5]. If information is in italics, it was based on April, 2009 data. Otherwise, information for a state's budget is from June and July of 2009 surveys, which is after Fiscal year 2009 ended.

State budget Spending Transparency Shortfall Percent of General Fund Budget
Alabama budget No $269 million[5] 13%[5]
Alaska budget Partial $1.52 billion[5] 21%[5]
Arizona budget No $2.43 billion[5] 24.2%[5]
Arkansas budget No no shortfall[5] n/a[5]
California budget No $19.64 billion[5] 18.8%[5]
Colorado budget No $1.19 billion[5] 15.1%[5]
Connecticut budget No $1.35 billion[5] 7.9%[5]
Delaware budget No $236 million[5] 6.8%[5]
District of Columbia budget No
Florida budget No $3.18 billion [5] 12.3% [5]
Georgia budget Yes $2.93 billion[5] 14.1%[5]
Hawaii budget No $639 million[5] 11.1%[5]
Idaho budget No $405 million[5] 14.8%[5]
Illinois budget Partial $4.32 billion [5] 13.7%[5]
Indiana budget No $973 million[5] 7%[5]
Iowa budget No $35 million[5] .50%[5]
Kansas budget Yes $186 million [5] 2.9% [5]
Kentucky budget Yes $456 million[5] 5.1%[5]
Louisiana budget Yes $341 million[5] 3.5%[5]
Maine budget No $270 million[5] 8.7%[5]
Maryland budget Partial $1.38 billion[5] 9.5%[5]
Massachusetts budget No $2.59 billion [5] 10.5%[5]
Michigan budget No $313 million[5] 3.2%[5]
Minnesota budget No $426 million[5] 1.2%[5]
Mississippi budget Partial $407 million[5] 8%[5]
Missouri budget Yes $779 million[5] 10.4%[5]
Montana budget no shortfall[5] n/a[5]
Nebraska budget Yes $5.3 million[5] .20%[5]
Nevada budget Yes $1.09 billion[5] 28.1%[5]
New Hampshire budget No $250 million[5] 10%[5]
New Jersey budget No $4.4 billion[5] 13.3%[5]
New Mexico budget No $454 million[5] 7.5%[5]
New York budget Partial $1.7 billion[5] 3.4%[5]
North Carolina budget No $2.2 billion[5] 10.3%[5]
North Dakota budget no shortfall[5] n/a
Ohio budget No $1.18 billion[5] 6.1%[5]
Oklahoma budget Yes $6.8 million[5] 0.10%[5]
Oregon budget No $755 million[5] 10.4% [5]
Pennsylvania budget No $2.6 billion[5] 9.2% [5]
Rhode Island budget Yes $449 million[5] 13.7%[5]
South Carolina budget Yes $1.18 billion[5] 17.6%[5]
South Dakota budget Yes $71.4 million[5] 6.2%[5]
Tennessee budget No $1.07 billion [5] 11.5%[5]
Texas budget Yes[5] no shortfall[5] n/a
Utah budget No $875 million[5] 15.6%[5]
Vermont budget Partial $75 million[5] 6.5%[5]
Virginia budget Partial $1.66 billion[5] 9.8%[5]
Washington budget Yes $1.37 billion[5] 8.0%[5]
West Virginia budget Partial no shortfall[5] n/a[5]
Wisconsin budget No $942 million[5] 6.8%[5]
Wyoming budget No no shortfall[5] n/a[5]


ARRA

The chart lists the amount of money states were awarded from the American Recovery and Reinvestment Act and the amount received as of October 21st, 2009[15].


State ARRA Funds Awarded ARRA Awarded Per Capita ARRA Funds Received
Alabama $178.58 million[15] $38[15] $14.82 million[15]
Alaska $260.03 million[15] $379[15] $25.53 million[15]
Arizona $139.39 million[15] $21[15] $29.60 million[15]
Arkansas $59.15 million[15] $21[15] $6.68 million[15]
California $1.14 billion[15] $31[15] $157.92 million[15]
Colorado $553.78 million[15] $112[15] $48.33 million[15]
Connecticut $47.24 million[15] $13[15] $1.04 million[15]
Delaware $30.29 million[15] $35[15] $4.81 million[15]\
District of Columbia $562.32 million[15] $950[15] $22.45 million[15]
Florida $334.59 million[15] $18[15] $48.00 million[15]
Georgien $209.48 million[15] $22[15] $19.20 million[15]
Hawaii $122.43 million[15] $95[15] $12.54 million[15]
Idaho $477.89 million[15] $314[15] $82.19 million[15]
Illinois $473.75 million[15] $37[15] $21.65 million[15]
Indiana $146.37 million[15] $23[15] $12.04 million[15]
Iowa $79.31 million[15] $26[15] $3.13 million[15]
Kansas $118.09 million[15] $42[15] $20.75 million[15]
Kentucky $225.46 million[15] $53[15] $22.82 million[15]
Louisiana $115.02 million[15] $26[15] $33.3 million[15]
Maine $22.62 million[15] $17[15] $16.28 million[15]
Maryland $590.51 million[15] $105[15] $48.24 million[15]
Massachusetts $335.24 million[15] $52[15] $47.62 million[15]
Michigan $315.02 million[15] $12[15] $149.57 million[15]
Minnesota $90.98 million[15] $17[15] $33.00 million[15]
Mississippi $138.94 million[15] $47[15] $10.03 million[15]
Missouri $144.14 million[15] $103[15] $11.45 million[15]
Montana $99.22 million[15] $103[15] $11.45 million[15]
Nebraska $48.44 million[15] $27[15] $1.55 million[15]
Nevada $70.84 million[15] $27[15] $15.51 million[15]
New Hampshire $16.32 million[15] $12[15] $427 thousand[15]
New Jersey $208.11 million[15] $24[15] $29.73 million[15]
New Mexico $514.91 million[15] $259[15] $263.56 million[15]
New York $750.77 million[15] $39[15] $59.97 million[15]
North Carolina $121.27 million[15] $13[15] $11.91 million[15]
North Dakota $95.45 million[15] $149[15] $16.91 million[15]
Ohio $259.27 million[15] $22[15] $23.53 million[15]
Oklahoma $79.86 million[15] $22[15] $10.21 million[15]
Oregon $105.69 million[15] $28[15] $48.57 million[15]
Pennsylvania $626.54 million[15] $50[15] $29.24 million[15]
Rhode Island $7.59 million[15] $7[15] $540,798[15]
South Carolina $253.84 million[15] $57[15] $219.56 million[15]
South Dakota $33.79 million[15] $42[15] $4.64 million[15]
Tennessee $1.11 billion[15] $179[15] $75.58 million[15]
Texas $524.02 million[15] $22[15] $47.08 million[15]
Utah $194.36 million[15] $71[15] $17.37 million[15]
Vermont $12.58 million[15] $20[15] $495 thousand[15]
Virginia $366.32 million[15] $47[15] $80.01 million[15]
Washington $2.22 billion[15] $339[15] $228.82 million[15]
West Virginia $58.19 million[15] $32[15] $4.37 million[15]
Wisconsin $46.16 million[15] $8[15] $12.29 million[15]
Wyoming $18.38 million[15] $35[15] $585 thousand[15]

See also

Footnotes

  1. ↑ Watchdog, State and Local Government Spending Outpaces Private Sector, Aug 18, 2010
  2. ↑ West Virginia Watchdog, GAO: State, Local Governments ‘Will Steadily Decline’, Sept. 13, 2010
  3. ↑ Watchdog, GAO: State, local governments ‘will steadily decline’, Aug. 26, 2010
  4. ↑ 4.00 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10 "The Fiscal Survey of States" National Governors Association and National Association of State Budget Officers June 2010
  5. ↑ 5.000 5.001 5.002 5.003 5.004 5.005 5.006 5.007 5.008 5.009 5.010 5.011 5.012 5.013 5.014 5.015 5.016 5.017 5.018 5.019 5.020 5.021 5.022 5.023 5.024 5.025 5.026 5.027 5.028 5.029 5.030 5.031 5.032 5.033 5.034 5.035 5.036 5.037 5.038 5.039 5.040 5.041 5.042 5.043 5.044 5.045 5.046 5.047 5.048 5.049 5.050 5.051 5.052 5.053 5.054 5.055 5.056 5.057 5.058 5.059 5.060 5.061 5.062 5.063 5.064 5.065 5.066 5.067 5.068 5.069 5.070 5.071 5.072 5.073 5.074 5.075 5.076 5.077 5.078 5.079 5.080 5.081 5.082 5.083 5.084 5.085 5.086 5.087 5.088 5.089 5.090 5.091 5.092 5.093 5.094 5.095 5.096 5.097 5.098 5.099 5.100 5.101 5.102 5.103 5.104 5.105 5.106 5.107 5.108 5.109 5.110 5.111 5.112 5.113 5.114 5.115 5.116 5.117 5.118 5.119 5.120 5.121 5.122 5.123 5.124 5.125 5.126 5.127 5.128 5.129 5.130 5.131 5.132 5.133 5.134 5.135 5.136 5.137 5.138 5.139 5.140 5.141 5.142 5.143 5.144 5.145 5.146 5.147 5.148 5.149 5.150 5.151 5.152 5.153 5.154 5.155 5.156 5.157 5.158 5.159 Cite error: Invalid <ref> tag; no text was provided for refs named NCSL July
  6. ↑ Watchdog, GAO: $10 trillon gap threatens government services, Aug. 25, 2010
  7. ↑ Government Accountability Office, Planned Efforts and Challenges in Evaluating Compliance with Maintenance of Effort and Similar Provisions, November 2009
  8. ↑ US Bureau of Economic Analysis, Table 6.2D. Compensation of Employees by Industry, August 20, 2009
  9. ↑ Government Accountability Office, STATE AND LOCAL GOVERNMENT RETIREE HEALTH BENEFITS, November 2009
  10. ↑ 10.00 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 10.11 10.12 10.13 10.14 10.15 National Conference of State Legislatures, FY 2010 Post-Enactment Budget Gaps & Budget Cuts
  11. ↑ Center on Budget & Policy Priorities, “New Fiscal Year Brings No Relief From Unprecedented State Budget Problems,” September 3, 2009
  12. ↑ The Arizona Republic, "Few options left for fixing Arizona budget," January 11, 2010
  13. ↑ California Department of Finance, “Governor’s Message,” January 9, 2009
  14. ↑ The News Journal, "Delaware lawmakers return, once again facing tough choices with budget shortfall," January 10, 2010
  15. ↑ 15.000 15.001 15.002 15.003 15.004 15.005 15.006 15.007 15.008 15.009 15.010 15.011 15.012 15.013 15.014 15.015 15.016 15.017 15.018 15.019 15.020 15.021 15.022 15.023 15.024 15.025 15.026 15.027 15.028 15.029 15.030 15.031 15.032 15.033 15.034 15.035 15.036 15.037 15.038 15.039 15.040 15.041 15.042 15.043 15.044 15.045 15.046 15.047 15.048 15.049 15.050 15.051 15.052 15.053 15.054 15.055 15.056 15.057 15.058 15.059 15.060 15.061 15.062 15.063 15.064 15.065 15.066 15.067 15.068 15.069 15.070 15.071 15.072 15.073 15.074 15.075 15.076 15.077 15.078 15.079 15.080 15.081 15.082 15.083 15.084 15.085 15.086 15.087 15.088 15.089 15.090 15.091 15.092 15.093 15.094 15.095 15.096 15.097 15.098 15.099 15.100 15.101 15.102 15.103 15.104 15.105 15.106 15.107 15.108 15.109 15.110 15.111 15.112 15.113 15.114 15.115 15.116 15.117 15.118 15.119 15.120 15.121 15.122 15.123 15.124 15.125 15.126 15.127 15.128 15.129 15.130 15.131 15.132 15.133 15.134 15.135 15.136 15.137 15.138 15.139 15.140 15.141 15.142 15.143 15.144 15.145 15.146 15.147 15.148 15.149 15.150 15.151 15.152 15.153 http://www.recovery.gov/pages/textview.aspx?data=homeMapRecipient&datasource&datasource=recipient Recovery.org, State And Agency Data Reported by Federal Contract Recipients]
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