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Fiscal State of the States - Minnesota State Legislature

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					State Fiscal Outlook:
Minnesota and the Nation



                        One Minnesota
                        January 9, 2013

                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:
               Overview



NASBO                               2
                    State Fiscal Overview
  q     The “Great Recession” was an extremely difficult fiscal
        period for states in all regions

  q     Fiscal 2013 projections show aggregate expenditures
        and revenues continue to improve
        q   For many states, general fund revenues and expenditures still
            below fiscal 2008


  q     States recovering, but not recovered; resources
        remain tight

  q     Federal uncertainty in a number of areas
        q   Federal spending expected to decline
NASBO                                                                       3
                Federal Overhang…

  n     Sequestration Cuts now scheduled for March
        1, 2013

  n     Debt Ceiling will need to be raised in
        February or March

  n     Many program authorizations set to expire

  n     “Grand bargain” Tax Reform?


NASBO                                                4
        Current Fiscal Situation:
              Indicators



NASBO                               5
                                       3 Years of Slow GF Growth
                                       Following 2 Years of Declines




                                                                               * Average




*35-year historical average rate of growth is 5.6 percent    *Fiscal ‘13 numbers are appropriated
Source: NASBO Fall 2012 Fiscal Survey of States

NASBO
                                  FY 2013 Appropriated Spending
                                  Still $5.9 Billion Below FY 2008




Source: NASBO Fall 2012 Fiscal Survey of States

NASBO                                                                7
                                      State Revenue Continues to Grow
                                      in 3rd Quarter, but at Slower Rate




Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau
NASBO
                                  FY 2013 General Fund Revenue is
                                  Expected to Surpass FY 2008 by $13B




Source: NASBO Fall 2012 Fiscal Survey of States

NASBO                                                                   9
                                   Minnesota GF Revenue:
                                   1997-2012




                                                           (estimated)



Source: NASBO State Expenditure Report

NASBO                                                                10
        States Enact $6.9 Billion in
        Additional Taxes and Fees




NASBO                                  11
        States Continue To Rebuild
        Budgetary Reserves After Recession




NASBO                                    12
                                     Balances in
                                     MN and Selected States




Source: NASBO Dec. 2011 Fiscal Survey of States
NASBO                                                         13
                                    Minimal Midyear Budget Cuts in
                                    FY 2012, 8 States Cut $1.7 Billion
                                 Budget Cuts Made After the Budget Passed
                                              ($ millions)




Source: NASBO Fall 2012 Fiscal Survey

NASBO
                                    Strategies Used to Reduce or
                                    Eliminate Budget Gaps, FY 2013
       n     Reduce Local Aid: 8 states

       n     Layoffs: 9 states

       n     Furloughs: 3 states

       n     Cuts to Employee Benefits: 9 states

       n     Across-the-Board Cuts: 13 states

       n     Targeted Cuts: 21 states

       n     Rainy Day Fund: 4 states

       n     Reorganize Agencies: 10 states
Source: NASBO Fall 2012 Fiscal Survey of States
NASBO
        Current Fiscal Situation:
          Economic Overview



NASBO                               16
                                       Unemployment Rate
                                       in MN and Selected States




Source: U. S. Department of Labor, Bureau of Labor Statistics
NASBO                                                           17
                                          National Unemployment Rate
                                          Compared to MN




     %




Source: U.S. Department of Labor, Bureau of Labor Statistics

NASBO                                                                  18
        Background on State
         Spending Trends



NASBO                         19
                                    Spending by Funding Source
                                    (Percentage)




Source: NASBO State Expenditure Report
NASBO                                                            20
                                    MN Spending by Funding
                                    Source (Percentage)




Source: NASBO State Expenditure Report
NASBO                                                        21
                                   MN Total State Expenditures




Source: NASBO State Expenditure Report

NASBO                                                            22
                                     Total Expenditures Percentage
                                     Growth in Spending Categories
                                     Over 10 Years




Sources: NASBO State Expenditure Reports
NASBO                                                                23
                                   General Fund: Medicaid &
                                   Education 64.3%




Source: NASBO State Expenditure Report

NASBO                                                         24
                                   MN General Fund: Medicaid &
                                   Education 76.4%




Source: NASBO State Expenditure Report

NASBO                                                        25
                                     General Fund Percentage
                                     Growth in Spending Categories
                                     Over 10 Years




Sources: NASBO State Expenditure Reports
NASBO                                                                26
                                   State Spending from
                                   Federal Funds




Source: NASBO State Expenditure Report

NASBO                                                    27
                                   MN State Spending from
                                   Federal Funds




Source: NASBO State Expenditure Report

NASBO                                                       28
        Promising Practices




NASBO                         29
                Promising Financial
                Management Practices
  n     Use contingencies
  n     Prudent use of debt
  n     Rainy day funds and reserves
  n     One time only revenue for one time only!
  n     Use of performance information
  n     Avoiding bad practices in good times




NASBO                                              30
               Focus on Outcomes


    n   Focus on results and outcomes

    n   Spend funds for effective programs

    n   Improve management




NASBO                                        31
        Model: The “Drilling Rig”




NASBO                               32
        Outlook




NASBO             33
                  State Fiscal Outlook
  n     Austere state budgets for at least the next several
        years (Slow revenue growth, ARRA declines,
        economic uncertainty)

  n     Health care reform, federal government will have an
        impact

  n     Tough competition for general funds and limited
        federal funds

  n     Dealing with long-term liabilities

  n     States will continue to make painful choices
NASBO                                                         34
  www.nasbo.org

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




NASBO                   35

				
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posted:7/17/2013
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