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On December 17, 2019, the National Association of State Budget Officers (NASBO) released their semi-annual report, Fiscal Survey of States, Fall 2019.  The report updates information on the states’ fiscal conditions, including aggregate and individual state data on general fund receipts, expenditures, and balances.  The survey was conducted by NASBO and completed by state budget officers in all 50 states over the period from August 2019 through October 2019.

According to the report, state fiscal year (FY) conditions are solid and stable in the aggregate.  In FY 2020, states have enacted budgets that mark the tenth consecutive year of moderate state spending and revenue growth.  The fiscal conditions tend to vary significantly among states based on demographic trends, economic performance and state policies.  

Total general fund revenues increased 5.4% in FY 2019 with 46 states having revenue collections above budget forecasts, which is the highest number to do so since FY 2006.  In FY 2020, general fund revenues are projected to increase by 2.6%.

In addition, enacted state budgets for FY 2020 show general fund expenditures increasing 4.8% to $913.2 billion.  The NASBO report indicates that increases in state general fund spending for FY 2020 totaling $39.1 billion will be directed mainly to elementary and secondary education receiving $14.8 billion, and higher education receiving $4.4 billion.  Enacted 2020 budgets also indicate aggregate spending increases in Medicaid, corrections, public assistance and transportation with the largest appropriations in the “all other” category.  This category received $10.8 billion in appropriations for various expenditures including housing programs, other health programs besides Medicaid, reserve fund deposits, pension fund contributions, public safety, environment and conservation projects, among others.  

The survey also reported on “total balances” which include year-end balances and any budget stabilization funds or “rainy day funds” that the states have set aside for use in a financial downturn.  In FY 2019, total balances reached a record high in nominal dollars of $113.2 billion.  In FY 2020, the median total balance is expected to decline to $93.2 billion since states plan to spend down a portion of their accumulated end balances in the current budget cycle largely for one-time expenditures.

Most state balances in rainy day funds have been improving.  In FY 2020, total rainy day fund balances are expected to continue to increase, and the median as a share of expenditures is expected to reach 8.0%.  The median state’s rainy day fund balance reached an all-time high of 7.6% of general fund expenditures in FY 2019 as compared with 1.6% in FY 2010. 

In addition, the report found that mid-year budget actions indicate strong state fiscal conditions.  Importantly, there were no states that made mid-year reductions due to a revenue shortfall.   In FY 2019, 27 states made mid-year spending increases totaling $10.7 billion, for a net mid-year increase of $10.6 billion in general fund spending.

The report concludes, “Overall, state budgets demonstrate a cautious approach to ongoing spending commitments, a practice of directing non-recurring revenues to one-time expenditures, and a focus on promoting structural balance.” 

The full report and summary are available here.