Report: State revenues stabilizing in 2011, but more budget gaps loom
State revenue sources are improving in fiscal year (FY) 2011, but the end of federal stimulus funds coupled with rising program costs will mean sizeable gaps in some state budgets by the next fiscal year, according to a report from the Washington-based National Conference of State Legislatures (NCSL). NCSL’s “State Budget Update: November 2010” found that 35 states and Puerto Rico, while they have not seen budget gaps during the first six months of FY 2011, are projecting gaps in FY 2012.
Despite some stabilization in revenue for the first half of FY 2011, some are still facing ongoing shortfalls because of weak revenue performance, less-than-anticipated federal funding for Medicaid and expenditure overruns. Through Nov. 15, some states have reported new FY 2011 budget gaps totaling $26.7 billion, on top of the $83.9 billion gap already resolved this fiscal year. Along with FY 2012, some officials are predicting additional budget gaps in FY 2013. “State legislators are being realistic about the budget situations facing their states, but how they balance their budgets could be filled with as many twists and turns as the latest Harry Potter movie,” said NCSL Executive Director William Pound in a statement.
Thirty-two of the 35 states that are projecting budget gaps in FY 2012 already face a gap of $83.2 billion, according to the report. The 19 states that are currently able to release an estimate for the gap they will face in FY 2012 project the cumulative total of the gap will be $65.4 billion. Fifteen states do not currently project a gap for FY 2012, and 26 states have not yet projected a gap for FY 2013.
Download a short version of the report.