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Fiscal State of the States - NASACT - The National Association of

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					State Fiscal Outlook




                                      NASC
                            March 21, 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 Economic and Fiscal
             Situation



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        We’re in the New Norm




NASBO                           3
                   New Normal


  n     “No two recessions are alike…the more
        recent recessions of 1990-1 and 2001 were
        characterized as jobless recoveries with
        sluggish or nonexistent job growth even as
        the GDP recovered.”
        q   “The New Normal?”, Region Focus,
            Richmond Federal Reserve Newsletter, First
            Quarter, 2010

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                    Economy
  n     Though modest improvement is likely, it
        appears that growth will continue to be
        restrained through 2012…
        q   Federal Reserve, EconSouth, Fourth Quarter 2011
  n     Deleveraging: “The U.S. still has a few years
        to go and the EU could have a decade…
        We’re not in the endgame, we’re in the
        middle game”
        q   Kenneth Rogoff, co-author of This Time is Different, quoted
            in the Financial Times, February 4, 2012

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        The Forecast




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                   State Government
                   Challenges

  n     Tighter Resources
  n     Demographic Changes
  n     Debt
  n     State Revenue
        q   Will future revenue reflect economy?
        q   Enough for infrastructure?
  n     Federal Spending Decline
        q   Direct - Decreased Federal Funds and Contracts
        q   Indirect – Defense Cuts

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         State Debt Not the Problem
        Debt-to-GDP: U.S. States Compared to Advanced G20 Nations –
          Moody’s Investor Services & International Monetary Fund




%




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                                        Who’s best positioned?




Source: Federal Reserve Bank of Kansas City, Economic Review, Fourth Quarter 2009

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        Current Fiscal Situation:
              Indicators



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                                         Medicaid Continues to Drive
                                         General Fund Spending Growth
                                        Changes in General Fund Spending by Category Between FY 2011 and FY 2012




Data is based on comparative levels of enacted spending in FY 2011 and FY 2012
Source: NASBO Fall 2011 Fiscal Survey of States

NASBO                                                                                                              11
                                       Budget Growth




                                                                              * 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

NASBO                                                                                              12
                                          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.

NASBO                                                                                13
                                      6 Quarters of Revenue Growth
                                      Following 5 Quarters of Declines




Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau

NASBO                                                                                     14
                                           Revenue Remains Below
                                           Pre-Recession Levels
($ in billions)




  * FY 2007- -2010 are actual. FY 2011 is preliminary actual and FY 2012 is enacted.

NASBO                                                                                  15
                                            State Balance Levels Recovering




   In
Billions




* Fiscal 2011 totals are preliminary actual nd fiscal 2012 are enacted   **34-year historical average is 5.8%
Source: NASBO Fall 2011 Fiscal Survey

NASBO                                                                                                           16
                               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.

NASBO                                                                                    17
                                        Mid-Year Budget Cuts

                                     Budget Cuts Made After the Budget Passed
                                                  ($ millions)




*FY 2012 mid-year budget cuts are ongoing                                Source: NASBO Fall 2011 Fiscal Survey

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                                     Taxes




Source: NASBO Fall 2011 Fiscal Survey of States

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             FY 11-12
        Background on State
         Spending Trends



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                                    Spending by Funding Source
                                    (High Percentage Federal)




Source: NASBO 2010 State Expenditure Report
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                                   Total State Expenditures:
                                   Medicaid Grows Again




Source: NASBO 2010 State Expenditure Report

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                                   General Fund: Growing
                                   Medicaid & Education 64%




Source: NASBO 2010 State Expenditure Report

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               Trend Continues:
               Focus on Outcomes


    n   Focus on results and outcomes

    n   Spend funds for effective programs

    n   Improve management




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        Outlook




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         State Fiscal Outlook


  n Trends positive
  n Back to pre-recession levels?

  n Spending pressures will continue

  n Federal funds decline




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  www.nasbo.org

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




NASBO                   27

				
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