Industry News

On December 6, 2023, the National Association of State Budget Officers (NASBO) released its 2023 State Expenditure Report: Fiscal Years 2021-2023. 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 2023 report, total state spending (including general funds, other state funds, bonds, and federal funds) has been significantly affected by a combination of federal COVID-19 pandemic aid and rising state tax collections over the past three years. In fiscal 2023, total state spending is estimated to reach $2.96 trillion, up from $2.78 trillion in fiscal 2022. This represents an increase of 6.5%, which is mainly driven by additional general fund spending.

Other key findings include: 

• In fiscal 2022, general fund spending increased 14.3%, which is the highest rate over the past 37-year history of the State Expenditure Report. However, in fiscal 2023, the growth in general fund spending slightly declined to 11.3%. The increase is primarily due to: 1) states spending down surplus funds following two consecutive years of strong revenue growth in fiscal 2021 and fiscal 2022; and 2) more modest revenue surpluses in fiscal 2023.
• Spending from the states’ own funds (general funds and other state funds combined, excluding bonds) increased 12.3% in fiscal 2023.
• In fiscal 2022, the “Medicaid” program category had the largest gain in total state spending at 11.5% while the “transportation” category is estimated to have the highest growth in fiscal 2023 at 12.9%.

The report is available here.