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					Fiscal Condition of the States
            Presentation to the
  Rhode Island House of Representatives
             Economic Forum
            December 1, 2009




            Arturo Pérez
        Fiscal Affairs Program
                NCSL
                   Overview
 The state fiscal situation is dire.
 The current revenue situation is nearly
  unprecedented, at least in recent decades.

 To date, states have reported a total estimated
  budget gap of $386.8 billion (FY 2008 through
  FY 2012).
  U.S. Business Cycle Downturns 1929-2009:
             Duration in Months




Source: National Bureau of Economic Research
                               FY 2010 Revenue Outlook



                                                                         Rhode
                                                                         Island
                                                                       Delawar
                                                                       e



                                                                       Puerto Rico
   Pessimistic n = 21
   Concerned n = 28
   Stable n = 1
   Optimistic n = 0
   No response n = 1
Source: NCSL survey of state legislative fiscal offices, April 2009.
 How Bad is the Revenue Situation?

 Florida reports that annual revenues today
    compare to FY 2001 levels and are not expected
    to return to peak levels (which occurred in FY
    2006) until FY 2013.
   Colorado reports that annual revenues today are
    similar to amounts collected in FY 2005.
   In Kansas, general funds revenues are coming
    in at FY 2006 levels.
                     Pre-Enactment FY 2010 Budget Gaps
                              as a Percentage of General Fund Budget




                                                                          Rhode
                                                                          Island

                                                                       Delaware




                                                                       Puerto Rico
   0.1% to 4.9%, n = 6
   5% to 9.9%, n = 5
   10% to 19.9%, n = 18
   More than 20% n= 17
   Not applicable or not reporting, n = 5
Source: NCSL survey of state legislative fiscal offices, 2009.
                    Use of Spending Cuts as Percentage of
        17.0%
                    Actions To Close FY 2010 Budget Gaps
                                 (preliminary)
           48.0%                                                                             VT- 25.0%     36.7%
                             100.0%
                                                          23.7%
        49.4%                                                                                    22.7%
                                                                    32.0%
                    43.0%

                                                              20.8%                  74.3%                 Rhode
                                                                                                           Island
                       44.7%
        48.0%                                                                                  58.0%
                                                 47.4%            40.0%            19.5%                 Delaware
                                                                                              36.4%
                                                                                 60.0%
                      4.1%       26.6%                45.1%                                  19.1%
                                                                          3.9%           40.0%           CT - 28.8%
45.5%                                                                                                    DE - 37.8%
                                                                  46.0%
                                                                                                         MD - 28.0%
                                                                                                         MA - 43.0%
                                                                                              15.8%      NJ-
  Used spending cuts, n = 39
                                                                                                         38.7%
                                                                                                         RI- 48.7%
  No Response, n = 5                                                       Puerto Rico- 61.8%
                                                                                                         WV- 60.0%
  Not Applicable, n = 7
 Source: NCSL survey of state legislative fiscal offices, 2009.
                     Use of ARRA Funds as Percentage of
        3.0%
                    Actions To Close FY 2010 Budget Gaps
                                 (preliminary)
            33.0%                                                                          VT- 62.0%       39.2%

                                                          30.2%
        24.3%                                                                                     27.1%
                                                                    29.0%
                    54.0%

                                                88.0%         57.3%                                         Rhode
                                                                                                            Island
                       26.0%
                                   28.6%                          60.0%                      30.0%
                                                  32.9%                           68.4%                   Delaware
        13.0%                                                                               30.7%
                                                                              25.0%
                                                      43.4%                                64.3%          CT - 21.7%
                      41.6%      61.4%
                                                                                      43.0%               DE - 29.0%
                                                                          45.5%
21.0%                                                                                                     MD - 47.0%
                                                                  40.0%                                   MA - 34.0%
                                                 96.7%
                                                                                                          NH- 41.1%
                                                                                                          NJ-
  Used ARRA funds, n = 40                                                                   44.7%         27.3%
                                                                                                          RI- 40.3%
  No Response, n = 5                                                         Puerto Rico- 17.9%           WV-
  Not Applicable, n = 6                                                                                   40.0%

 Source: NCSL survey of state legislative fiscal offices, 2009.
     35.0%       Tapped Rainy Day Funds and Other Funds
                 as Percentage of Actions To Close FY 2010 Budget
                                Gaps (preliminary)
          5.0%


        5.6%                                                                                 3.8%
                   3.0%

                                                              15.7                                    Rhode
                                                12.0                              3.1%
                                                              %                                       Island
                       1.0%                     %
                                   28.8
                                   %                                                                Delaware
                                                                                    3       5.5%
                                                                           3.0%
                                                       5.1%
                     8.4%         4.2%
                                                                        7.6%                        CT - 27.6%
                                                                                    15.0
                                                                                                    MD - 11.4%
                                                                 5.0%               %
                                                                                                    MA- 6.5%
Tapped Rainy Day Fund, n = 6
                                                                                                    NJ- 1.5%
Tapped Other Funds, n = 12
Tapped Rainy Day Fund & Other Funds, n = 5                                                 8.4%
No Response, n = 6                                                        Puerto Rico
Not Applicable, n = 22
Source: NCSL survey of state legislative fiscal offices, 2009.
                   Use of Tax Increases as Percentage of
                   Actions To Close FY 2010 Budget Gaps
                                (preliminary)
                                                                                       VT- 8.0%        6.8%

                                                          2.1%
      18.3%
                                                                 26.0%                        39.3%


                                                                                                        Rhode
                                                                                                        Island
                                   7.3%
                                                 0.7%                                                 Delaware
    24.0%
                                                                           7.0%
                                                                                  3      21.6%
                                                                                                      CT - 17.3%
                                                                                                      DE - 24.0%
                                                                   14.8%                              MD - 0.3%
12.1%                                                                                                 MA - 12.3%
                                                                                                      NH- 22.6%
                                                                                                      NJ-
Raised Taxes, n = 22                                                                                  13.5%
                                                                                                      RI- 9.5%
No Response, n = 4                                                       Puerto Rico- 15.7%
Not Applicable, n = 25
Source: NCSL survey of state legislative fiscal offices, 2009.
                      2009 Net State Tax Changes
                                          by Type of Tax

         Type of Tax                   Dollars (in millions)                    Percent of Total
  Personal Income                            $11,340.7                              41.6%

  Corporate Income                           $1,696.8                                6.2%
  Sales & Use                                $7,003.2                               25.7%
  Health Care Providers                      $1,995.5                                7.3%
  Cigarette & Tobacco                        $1,750.5                                6.4%
  Motor Fuel                                 $1,866.8                                6.8%
  Alcoholic Beverage                          $215.3                                 0.8%
  Miscellaneous                              $1,409.0                                5.2%
  Net Change                                 $27,277.8                               100%



Source: National Conference of State Legislatures, 2009. Figures represent 47
reporting states. States not included are: MI, PA, and RI.
                 Net State Tax Changes by Year of
                            Enactment




Source: NCSL survey of legislative fiscal offices, various years. 2009 figures represent 47 reporting states.
States not included are: MI, PA, and RI.
      Federal Outlays for Major Provisions of ARRA Affecting
                  State and Local Governments
                                      ($ in billions)




Source: Congressional Budget Office
              State Budget Gaps FY 2002-FY 2012
                                                    (projected)
                          Amount Before Budget Adoption
                          Amount After Fiscal Year Began
                          Projected Amount




                                                                   No
                                                                estimate


              43 states 45 states 42 states 33 states 26 states             1 state 20 states* 44 states* 46 states* 28
             states** 16 states***
* Includes Puerto Rico
** 33 states and Puerto Rico forecast FY 2011 gaps. The amount shown for FY 2011 indicates the 28 states that provided gap
estimates.
*** 24states forecast FY 2012 gaps. The amount shown for the FY 2012 indicates the 16 states that provided gap estimates.
Source: NCSL survey of legislative fiscal offices, various years
                   Post-Enactment FY 2010 Budget Gaps




                                                                                   Rhode
                                                                                   Island

                                                                                 Delaware
                                                                             3




New Budget Gap, n = 31
Not Applicable, n = 20                                             Puerto Rico

Source: Various media and government outlets, July through November 2009.
                              FY 2011 Budget Gaps
                       as a Percentage of General Fund Budget




                                                                             Rhode
                                                                             Island

                                                                          Delaware




                                                                          Puerto Rico
   0.1% to 9.9%, n = 9
   10% to 19.9%, n = 11
   More than 20.0%, n = 6
   Budget gap projected, amount unknown, n= 8
   Not applicable or not reporting, n = 17
Source: NCSL survey of state legislative fiscal offices, various years.
                              FY 2012 Budget Gaps
                       as a Percentage of General Fund Budget




                                                                             Rhode
                                                                             Island

                                                                          Delaware




                                                                          Puerto Rico
   0.1% to 9.9%, n = 5
   10% to 19.9%, n = 9
   More than 20.0%, n = 2
   Budget gap projected, amount unknown, n= 8
   Not applicable or not reporting, n = 27
Source: NCSL survey of state legislative fiscal offices, various years.
                             Budget Gap Numbers
                                  Past and Current Recession
                  Past Recession                                          Current Recession
     Fiscal Year                       Amount                   Fiscal Year             Amount
                                     (in Billions)                                    (in Billions)
          2002                            $37.2                    2008                  $12.8
          2003                            $79.0                    2009                 $116.7
          2004                            $83.7                    2010                 $145.3*
          2005                            $37.0                    2011                 $65.1**
          2006                            $26.9                    2012                 $46.9**
          Total                          $263.8                    Total                $386.8*

Past Recession: March 2001 to November 2001 (8 months)
Current Recession: Began December 2007 to present (21 months)
*Preliminary figure
** Projected figure


Source: NCSL survey of state legislative fiscal offices, various years.
                  Conclusion

 The states are facing a "cliff" once ARRA
  funding ends.

 State governments will face budgetary problems
  at least 12 months after the US recession ends.

 States are bracing for prolonged fiscal problems.
www.ncsl.org
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