Industry News

On November 18, 2022, the National Association of State Budget Officers (NASBO) released its 2022 State Expenditure Report: Fiscal Years 2020-2022. This annual report examines spending in the various areas of state budgets including: elementary, secondary and higher education; public assistance; Medicaid; corrections; transportation; and other areas. It also includes data on capital spending and revenue sources in state general funds.  

According to the 2022 report, total state spending has been severely affected by a combination of federal COVID-19 pandemic aid and rising state tax collections over the past two years.

Some of the key findings include:

• In fiscal year 2022, total state spending (including general funds, other state funds, bonds, and federal funds) is estimated to increase 7.3%, which is mainly driven by additional general fund spending;
• General fund spending increased 18.1%, which is the highest rate over the past 36-year history of the State Expenditure Report. The increase is primarily due to states spending down surplus funds following two consecutive years of strong revenue growth;
• Federal funds declined by 0.2% although their levels remained elevated. The decrease is largely due to the high baseline established in fiscal year 2021, declining federal fund spending from several heavily populated states, and reduced unemployment insurance benefit payments;
• Spending from the states’ own funds (general funds and other state funds combined, excluding bonds) is estimated to increase 12.3%;
• The “transportation” category is estimated to have the largest gain in total state spending at 19.5%; and
• State general fund revenue experienced strong growth for two consecutive years. In fiscal year 2022, it is estimated to increase 15.9% while revenues increased 16.6% in fiscal year 2021.

The report is available here.