NASBO Fiscal Survey shows 14.5% growth in general fund revenues

The National Association of State Budget Officers’ (NASBO) Fall 2022 Fiscal Survey of States, released last month, reflects a more positive fiscal environment than last year and found that FY 2022 general fund spending grew a record breaking 18.3%, slightly higher than previous estimates, although when adjusted for inflation, spending grew at a rate of 9.6%. Alongside rising general fund expenditures, general fund revenue grew 14.5% to $1.17 trillion in FY 2022 (slightly lower than FY 2021’s 16.6% increase). Rainy day funds reached record highs, growing an additional 10.43% in FY 2022, from $121.8 to $134.5 billion, building off of FY 2021’s 58% increase over the prior year.

The data used in NASBO’s Fiscal Survey of States was compiled through surveys of executive state budget officers between August and November 2022. As noted by NASBO, with some exceptions, FY 2021 data represents actual figures, FY 2022 preliminary actual (not all states have certified their 2022 actuals, or may still be relying on enacted budgets), and FY 2023 reflect a given states’ enacted budget.

Comparing FY 2022 data to FY 2021 data reveals that on average, states increased general fund expenditures by a nominal (non-inflation adjusted) 11.13%, with California having experienced the highest growth (+49.8%) and Georgia the largest decline (-7.1%). Twenty-five states increased general fund expenditures at double digit rates, while a total of six states experienced declining general fund expenditures (West Virginia, Wisconsin, Arkansas, Florida, Arizona and Georgia). However, as the percentage calculations are not adjusted for inflation, much of the growth is likely exaggerated and should be interpreted with caution.

FY 2022 represents the second consecutive year that states general fund revenue grew by double digit amounts; revenue grew by 16.6% in FY 2021 (12.7% adjusted for inflation) and 14.5% In FY 2022 (5.8% adjusted).

NASBO has an optimistic view of future revenue growth, saying that “recent collections data for fiscal 2023 suggest that general fund revenues will continue to grow year-over-year, albeit at a slower rate compared to the rapid growth observed over the past two years.”

Preliminary FY 2022 data shows an average general fund revenue growth of 14.51% across all states, with Alaska’s 129.6% increase dwarfing the state with the second largest growth by nearly 100% (Montana, +31.3%). Of the 45 states that experienced increased revenues, 28 grew by double digit percentages with 10 experiencing growth over 20%.

Four states experienced decreased general fund revenues: Georgia (-0.1%), Oregon (-3.1%), Idaho (-3.6%) and Kansas (-10.7%). However, it is important to note that all four of these states saw large, double digit increases in the prior year (+12.2%, +84.5%, +24.2% and +28.5% respectively).

Last year’s coverage of NASBO’s Fiscal Survey of States can be found here.

Current and past editions of NASBO’s Fiscal Survey of States are available here.