In a preliminary review of the biannual report The Fiscal Survey of States, officials from the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO) forecasted continued fiscal difficulties for states for most of the next decade.
In FY09, states were forced to reduce General Fund expenditures by 4.8 percent and are expected to reduce FY10 General Fund expenditures by at least 4.0 percent, marking the first time that state spending has declined in back-to-back years. As state revenue collections historically lag any national economic recovery, state revenues will remain depressed throughout FY10 and likely into FY11 and FY12, according to the report.
The weakening of state fiscal conditions is reflected in the $250 billion in budget gaps faced by states between FY09 and FY11. Of the $250 billion, states closed $72.7 billion in budget gaps during FY09 and $113.1 billion before the enactment of their FY10 budgets to bring them into balance with drastically declining revenues.
"These are the worst numbers we’ve ever seen in the decades of putting together this report," said NASBO Executive Director Scott D. Pattison in a news release. "States have been forced to lay off and furlough employees, raise taxes, drain rainy day funds and sharply cut state spending in ways that impact every part of state government."
