Although states experienced stable finances in 2007, overall revenue growth has slowed and tighter fiscal conditions are expected in 2008, according to the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO).
In a report released Dec. 5, The Fiscal Survey of States, NGA and NASBO found that although most states experienced healthy revenue growth during FY07, some states already have seen significant deterioration of their fiscal conditions and expect revenue and expenditure growth to slow significantly in FY08. States expect continued expenditure pressures from a variety of sources, including increased funding demands related to health care and Medicaid and to long-term challenges such as demographic shifts, employee pensions, and infrastructure.
States’ single largest expenditure for FY07 was health care, which accounts for nearly one-third of total state spending. Medicaid alone makes up about 22 percent of total state spending, and with a projected spending growth rate of 8 percent annually for the next decade, the program will continue to strain state budgets. Meanwhile, states face significant challenges in funding and providing health care in FY08, including expanding the State Children’s Health Insurance Program to reduce the number of uninsured children in their states, reductions at the federal level for public and other health programs, and the impact of the aging population on long-term care financing. Download the report.
