NASBO State Expenditure Report shows increases in spending and revenue collections

The National Association of State Budget Officers (NASBO) is reporting that total state spending rose in FY 2018, exceeding $2 trillion for the first time. While spending increased in both FY 2017 (3.8 percent) and 2018 (4.6 percent), it was still below the historical average of 5.6 percent, with the strongest growth in spending reported in the far West and Southeast. All program areas experienced an increase in total state spending, with Medicaid showing the largest percentage increase. Higher education expenditures increased by 3.2 percent in estimated FY 2018, and by 3.1 percent in FY 2017. NASBO reports that the average higher education annual general fund spending growth has been 3.4 percent from fiscal 2013 to fiscal 2018, compared to total general fund spending on all program areas, which has grown by an average annual rate of 3.7 percent over the same period.

General fund revenue grew more rapidly in FY 2018, a 6.2 percent increase over FY 2017 and the highest rate of growth since FY 2011. The strong growth is attributed to unusually high income tax payments from non-withholding income sources along with continued growth in the national economy. States are analyzing those numbers to determine how much of the growth may be of a one-time nature.