STATE BUDGET UPDATESTATE BUDGET UPDATEPresentation at thePresentation at thePresentation at the Presentation at the

Fiscal Leaders Seminar & Fall ForumFiscal Leaders Seminar & Fall ForumWashington, D.C. Washington, D.C.

Arturo PérezNational Conference of State Legislatures

OVERVIEWOVERVIEW

Better state fiscal conditions

Company

Better state fiscal conditionsFew budget gapsRevenues continue to improveCompany

LOGORevenues continue to improveYear-end balances are rising

Performance is uneven & statePerformance is uneven & state budgets remain vulnerable

F d l d fi it d ti tiFederal deficit reduction actionsSpending pressuresSl i h iSluggish economic recovery

FY 2013 TAX COLLECTIONS( C O M P A R E D W I T H T H E L A T E S T E S T I M A T E )

Company2Personal Income

2Sales & Use

2Corporate Income

Company

LOGO 13

15138 2

14

1515

5218116 2

1513 15 14

Above Estimate Below Estimate On Target

Tax Not Levied Not Available (NE & NM)

g

OTHER TAXESOTHER TAXES

Severance

Company

28 Real Estate TransferCompany

LOGO89

Real Estate Transfer

28

Miscellaneous 89

AK

2012 STATE TAX CHANGES

Company

WA ME

MT ND

MNCompany

LOGOIL NH

WI

PA

OR

OH

NY

WY

NEIA

MI

IN

WV

VT

SD

MN

NV

ID

CA

CT

NJAR

KY

MA

AZ

NC

WV

SC

RIHICO

UT

NM

KS

OK

MO

TN

VA

AL GAMS

FL

DC

DE

MDTX

LA

Increase of 1% or more n = 3PR

Increase of 1% or more, n 3

Decrease of 1% or more, n = 3

2012 BALLOT MEASURES: TAXES

Company

AR - Temporary sales tax increase of 0.5% for state highways

CA 2Company

LOGOCA - 2 measures-

Prop 30 temporarily increases sales tax & income tax on incomes over $250K; money to K-12 and community colleges Prop 39 Requires multistate businesses to pay income taxes based on percentage of their sales in California. Dedicates revenues for five years to clean/efficient energy projects.

OR - corporate tax refunds redirected to K-12

REVENUE OUTLOOK FORTHE REMAINDER OF THE FISCAL YEAR

34

Company30

35

nsCompany

LOGO20

25

risdi

ctio

10

15

20

6 7ber o

f Jur

5

10 64

Num

b

0Optimistic Stable Concerned Pessimistic

REVENUE OUTLOOK FORTHE REMAINDER OFTHE FISCAL YEAR

CompanyCompany

LOGONH

VT

CT

NJ

MA

RI

DC

DE

MD

Optimistic 6Stable 34Concerned 7Pessimistic 4

SPENDING OVERRUNS IN FY 2013

Company

Medicaid or other health care programs10 states compared with 6 at this time last year and

Company

LOGO20 two years ago

Education (K-12 & Higher Ed)5 states

Corrections ID, MD, MS, VT

SUMMARY OFCURRENT STATE FISCAL SITUATION

CompanyCompany

LOGO

RECOVERY( R E C E S S I O N A R Y I M P A C T O N G E N E R A L F U N D R E V E N U E C O L L E C T I O N S )

$350Recession of 1991

Company$250

$300

$350

Company

LOGO$150

$200

$250

of D

olla

rs

$50

$100

Billi

ons

o

$0

Fiscal Year

Recession Length: 8 months

RECOVERY( R E C E S S I O N A R Y I M P A C T O N G E N E R A L F U N D R E V E N U E C O L L E C T I O N S )

$560Recession of 2001‐02

Company$520

$540

$560

Company

LOGO$480

$500

of D

olla

rs

$420

$440

$460

Billi

ons

$420

Fiscal Year

Recession Length: 8 months

WEAKOVERY( R E C E S S I O N A R Y I M P A C T O N G E N E R A L F U N D R E V E N U E C O L L E C T I O N S )

$670The Great Recession

Company$640

$650

$660

$670

rsCompany

LOGO$610

$620

$630

$640

ons

of D

olla

r

$580

$590

$600

$

Billi

o

$570

Fiscal YearRecession Length: 18 months

Fiscal Year

RECOVERY GROWTH RATEOF GENERAL FUND REVENUES INOF GENERAL FUND REVENUES IN

COMPARISON TO PREVIOUSRECOVERIES

Company

RECOVERIES

Company

LOGONH

VT

CT

NJ

MA

RI

Below 27In Line 10Ab 4

DC

DE

MD

Above 4Not Applicable 9

RETURN OR PROJECTED RETURNRETURN OR PROJECTED RETURNTO PEAK REVENUE COLLECTIONS

Company12

14 13

Company

LOGO

6

8

10

6 6 6

2

4

6 4

1 0 10

FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

0

Unknown: 11 statesNot Applicable: AK, DC and ND

RETURN OR PROJECTED RETURNRETURN OR PROJECTED RETURNTO PEAK REVENUE COLLECTIONS

CompanyCompany

LOGONH

VT

CT

NJ

MA

RI

FY 2018 / FY 2019 1

FY 2011 / FY 2012 19

FY 2013 6

DC

DE

MD

FY 2018 / FY 2019 1

Unknown 11

Not Applicable 3

0 3 6

FY 2014 / FY 2015 10

FY 2016 / FY 2017 1

STATE YEAR-END BALANCESF Y 2 0 0 7 T O F Y 2 0 1 3 ( P R O J E C T E D )

Company12.0%

12%

14%

ture

s

All JurisdictionsCompany

LOGO8.0%

8%

10%

12%

GF

Expe

ndit

4.8%

4%

6%

EB a

s a

% o

f

0%

2%

2006 2007 2008 2009 2010 2011 2012 2013

YE

Fiscal Year

Source: NCSL survey of state legislative fiscal offices, various years.

STATE YEAR-END BALANCESF Y 2 0 0 7 T O F Y 2 0 1 3 ( P R O J E C T E D )

Company

F Y 2 0 0 7 T O F Y 2 0 1 3 ( P R O J E C T E D )

11 0%10%

12%

ture

s

Without: AK and TXCompany

LOGO11.0%

8%

10%

GF

Expe

ndit

4.4%4%

6%

EB a

s a

% o

f

1.8%0%

2%

2006 2007 2008 2009 2010 2011 2012 2013

YE

Fiscal Year

Source: NCSL survey of state legislative fiscal offices, various years.

STATE YEAR END BA ANCESSTATE YEAR-END BALANCESF Y 2 0 0 7 T O F Y 2 0 1 3 ( P R O J E C T E D )

Company 11 4%10%

12%

ture

s

Without: AK, CA, IL and TXCompany

LOGO11.4%

8%

10%

GF

Expe

ndit

4.1%5.1%4%

6%

EB a

s a

% o

f

0%

2%

2006 2007 2008 2009 2010 2011 2012 2013

YE

Fiscal Year

Source: NCSL survey of state legislative fiscal offices, various years.

STATE YEAR-END BALANCESF Y 2 0 0 7 T O F Y 2 0 1 3 ( P R O J E C T E D )

Company

F Y 2 0 0 7 T O F Y 2 0 1 3 ( P R O J E C T E D )

12.0%

11.4%12%

14%

ture

s

Company

LOGO 8.0%

11.0%

8%

10%

GF

Expe

ndit

4.8%

4.4%4.1%

5.1%

4%

6%

EB a

s a

% o

f

1.8%0%

2%

2006 2007 2008 2009 2010 2011 2012 2013

YE

Fiscal Year

Source: NCSL survey of state legislative fiscal offices, various years.

C S B GCUMULATIVE STATE BUDGET GAPS: FY 2002-FY 2014

Company $28.2$160

$180

$200

s

Amount Before Budget Adoption Amount After Budget Adoption Projected

Company

LOGO

$100

$120

$140

of D

olla

rs

$145.9

$ $91 0

$29.9

$5.3 $77.0$12.3 $6.8

$60

$80

$100

Bill

ions

o

$49.1$78.4

$36.3 $26.9$40.3

$83.9 $91.0

$37.2

$0.7

$12.8$32.2

$12.2$0

$20

$40

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

B

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: NCSL survey of state legislative fiscal offices, various years.

TOP FY 2013 CHALLENGES

CompanyCompany

LOGO

CONCLUSION

CompanyCompany

LOGOImproving revenuesYEBs are risingBudget gaps are rare

Performance is unevenMedicaidFederal actions

Spending is stableIncreased flexibility

UnemploymentLackluster revenue growth

FOR MORE INFORMATION

Company

NCSL Homepage: www.ncsl.org

Budget & Tax: www ncsl org/fiscalCompany

LOGOBudget & Tax: www.ncsl.org/fiscal

State Budget Update: Summer 2012 (available online)

State Budget Update: Fall 2012 (available December 2012)

Weakcovery (available December 2012)

Additional Questions?Additional Questions?

Arturo Arturo PérezPérezarturo perez@ncsl orgarturo.perez@ncsl.org 303-856-1493