state budget

The semi-annual survey reveals only four states were forced to reduce enacted budgets during FY 2006 because of revenues falling short of projections when budgets were enacted. The four were Indiana, Louisiana (post-Katrina), New Jersey and Rhode Island.

According to the report, two-thirds of the way through the fiscal year, state budgets are stable and states are putting their balances toward programs that havent seen many new resources during recent years of budget crisis. Between FY 01 and FY 05, states closed a collective budget gap that exceeded $265 billion. Fiscal offices in 42 states report that they expect to end FY 06 with a collective $28.9 billion year-end balance.

The report finds that the 46 states that are party to the Master Settlement Agreement reported receiving about $5.8 billion in fiscal year 2005 and expect to receive about $5.4 billion in fiscal year 2006. States reported that they used the largest portion of the fiscal year 2005 payments and proceeds (32 percent) to fund health-related programs and the next largest portion (24 percent) to fund debt service on securitized proceeds. States expect health programs to account for the same proportion of funds in fiscal year 2006, while they expect debt service to increase to 29 percent.

Findings from the policy alert indicate that even as many state and local governments close their current budget deficits with regular sources of revenue (and not short-term fixes), all 50 states will face a gap between projected revenue growth and the projected cost of public services. Additionally, projected state revenues will not support real increases in spending.

This study proposes a new growth rule (spending cap) that addresses the growing costs of health care, public safety and public administration. The study describes the spending rules for the states which have them and places Connecticut in context.

The budget process is increasingly considered key for reform efforts to improve fiscal outcomes. In this paper the authors embark on a political economy analysis of the budget process in Argentina, in the spirit of the IDB project “Political Institutions, Policymaking Processes and Policy Outcomes” in order to understand who determines budget outcomes in Argentina. In particular, they seek to characterize the institutional framework that regulates the budget preparation, approval, implementation and control.

The semi-annual survey reveals that many states still face tough budget challenges, despite the fact that extreme revenue shortfalls of the past have subsided. In FY 2005, resurgent revenue growth was tempered by a backlog of expenditure demands, the after-effects of the federal fiscal relief package, and general spending increases in nearly all major program areas, the report observes.

According to the report, state revenue performance is improving, but not enough to eradicate persistent budget gaps. Two-thirds of the states closed shortfalls entering fiscal year 2005. Although state finances seemed to stabilize during the year, the reprieve appears temporary. As lawmakers craft their budgets for FY 2006, half the states are facing another round of budget gaps.