On December 14, 2017, the National Association of State Budget Officers (NASBO) released their semi-annual report, Fiscal Survey of States, Fall 2017.  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 2017 through October 2017.

According to the report, after two consecutive years of relatively weak revenue growth, the states enacted cautious budgets for fiscal 2018.  The fiscal conditions continue to vary significantly among states based on demographic trends, economic performance and state policies.

Total general fund revenues increased 2.3% in fiscal 2017 with 27 states having revenue collections below budget forecasts.  In fiscal 2018, general fund revenues are projected to increase by 4.0% to $830 billion, up from $812 billion in fiscal 2017.

In addition, enacted state budgets for fiscal 2018 show general fund expenditures increasing 2.3% to $830 billion.  The NASBO report indicates that increases in state general fund spending for fiscal 2018 totaling $12.7 billion will be directed mainly to K-12 education.  Enacted 2018 budgets also indicate aggregate spending increases in all areas of state budgets, including higher education, corrections, transportation and public assistance.

The survey also reported on “total balances” which include year-end balances and any budget stabilization funds that the states have set aside for use in a financial downturn.  In fiscal 2017, total balances decreased to $71.3 billion since some states drew down prior year ending balances and/or used rainy day funds to help with spending demands or budget shortfalls.  In fiscal 2018, total balances are expected to further decline to $67.0 billion.

Most state balances in rainy day funds have been improving.  In fiscal 2018, total rainy day fund balances are expected to increase, while the median as a share of expenditures declines slightly to 5.1%.  The median state’s rainy day fund balance was 5.2% of general fund expenditures in fiscal 2017 as compared to 1.9% in fiscal 2011.

In addition, the report found that 22 states enacted net mid-year budget tax cuts totaling $3.5 billion in fiscal 2017, marking the highest number of states reporting net tax cuts since fiscal 2010.  States’ enacted tax and fee changes are estimated to total $9.9 billion in additional revenues. Those with the largest increases in taxes and fees were California and Illinois.  Most of the new revenues were due to personal and corporate income tax increases in Illinois totaling $4.4 billion. The majority of tax decreases enacted were modest with the most significant cuts in Maine, Minnesota and Tennessee.

Fiscal 2018 budgets expect revenues to improve in conjunction with moderate economic growth.  The report concludes, “States also continue to face uncertainty with respect to the federal budget and tax policy changes that can have numerous implications for state budgets in both the short and longer terms.”

The full report and summary are available here.