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STATES END 1998 FISCALLY STRONG

January 08, 1999

State governments are reaping the benefits of the strong economy and sound fiscal leadership, according to the December, 1998 edition of Fiscal Survey of States. The semi-annual report, released last week by the National Governors’ Association (NGA) and the National Association of State Budget Officers (NASBO), indicates states are maintaining healthy reserves to help manage economic uncertainties.

Year-end balances in approximately two-thirds of the states are projected to be 5 percent or more of spending in fiscal 1999.  Nineteen states anticipate balances in excess of 10 percent of 1998 spending.

According to the survey, states are holding down the rate of increase in general fund spending to 5.7 percent in fiscal 1998 and 6.3 percent in fiscal 1999, compared with a 6.5 percent average annual increase over the past twenty years. Only two states, Hawaii and Alaska, had to enforce budget cuts in 1998.

States reported that, on average, their revenues for fiscal 1998 exceeded budget estimates by 3.6 percent. States used the surplus funds in a variety of ways including bolstering "rainy day funds," investing in education, funding one-time capital construction for schools and roads, investing in technology especially for "Year 2000" computer projects, providing additional support to local governments, and supporting economic development projects.