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On June 13, 2019, the National Association of State Budget Officers (NASBO) released their semi-annual report, The Fiscal Survey of States: Spring 2019. The report updates information on the states’ fiscal conditions and presents aggregate and individual data on the states’ general fund receipts, expenditures, and balances. The survey was conducted by NASBO and completed by the governors’ state budget officers in all 50 states over the period from February 2019 through April 2019.

The NASBO reports that most state fiscal conditions are stable overall and governors have recommended budgets with moderate state spending and revenue growth in Fiscal Year (FY) 2020. State general fund spending is estimated to increase 3.7% in FY 2020, totaling $916 billion across all 50 states.

According to the report, the states’ general fund revenues are projected to increase by 4.0% in FY 2020, as compared with an estimated 2.7% gain in FY 2019. Since most governors’ state budgets were released before states were able to incorporate the April tax collections, it is expected that estimated revenue growth in FY 2019 is understated.

General fund expenditures are projected to be $916 billion in FY 2020, up from an estimated $883 billion in FY 2019. In FY 2020, governors recommended spending increases across all program areas totaling $31 billion. This reflects a strong state fiscal environment. Most states are allocating additional funding for K-12 and higher education, which comprise the largest state general fund expenditures, totaling $18 billion or 58% of the new money for FY 2020.

The survey also reported on “total balances” which include year-end general fund balances and any budget stabilization (or “rainy day”) funds that the states have set aside for use during a financial downturn. In FY 2010, total state balances reached a low of 1.6% due to the severe decline in revenues and increase in expenditures due to the recession. In FY 2019, total balances are estimated at $98.7 billion. For FY 2020, the governors have recommended decreasing total balances slightly to $93.8 billion. The balances in states’ rainy day funds (used to respond to an economic downturn or other unforeseen event) are expected to total about $68.2 billion in FY 2019 and reach $74.7 billion in FY 2020.

The report also discusses Medicaid spending growth that is estimated with a median growth rate of 5.3% across all fund sources in FY 2019. In addition, Medicaid spending growth is expected to slow slightly in FY 2020 to an estimated median rate of 4.0%. State fund spending is projected to grow by 3.1% and federal fund spending is expected to increase 4.5%.

The report concludes, “Despite favorable revenue conditions, governors and other state officials are mindful that some of the recent revenue gains…are likely temporary, and therefore, are choosing to direct some new money in fiscal 2020 budgets towards one-time expenditures including paying down debt and making extra pension fund contributions. State officials are also continuing to bolster their states’ rainy day fund balances in anticipation of the next economic downturn.”

The full report and summary are available here.