FY08 marked a turning point in state finances, with a significant increase in the number of states experiencing fiscal difficulties after several years of relative stability, according to the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO).
In a report released June 19, The Fiscal Survey of States, NGA and NASBO found that while fiscal conditions varied dramatically across states, overall expenditure growth rates declined in FY08 and the number of states experiencing revenue shortfalls increased. States expect continued expenditure pressures from a variety of sources, including health care and Medicaid, employee pensions, and infrastructure.
States’ largest expenditure for FY08 was health care, which accounts for nearly one-third of total state spending; Medicaid alone comprises about 22 percent of total state spending. With a projected growth rate of 8 percent annually through FY18, healthcare spending will continue to strain state budgets. Meanwhile, about half of governors included proposals to expand healthcare coverage for the uninsured in their proposed FY09 budgets. Approaches include using traditional Medicaid expansion and flexibilities offered under the Deficit Reduction Act, expanding the State Children’s Health Insurance Program, and using public-private partnerships to increase coverage. Read the report.
