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NESTOA September 16, 2011 Scott Pattison Executive Director National Association of State Budget Officers

NESTOA September 16, 2011 Scott Pattison Executive Director National Association of State Budget Officers. 444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org. Current Fiscal Situation. State Fiscal Outlook. Revenue Improvement Spring

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NESTOA September 16, 2011 Scott Pattison Executive Director National Association of State Budget Officers

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  1. NESTOA September 16, 2011 Scott Pattison Executive Director National Association of State Budget Officers 444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org

  2. Current Fiscal Situation

  3. State Fiscal Outlook • Revenue Improvement Spring • Spending Pressure • Health care reform • Limited federal funds • Significant restructuring

  4. Medicaid In Millions Fiscal 2011 data is based on enacted budgets and fiscal 2012 data is based on governors’ proposed budgets Source: NASBO Spring 2011 Fiscal Survey of States

  5. National Economic Indicators • 2nd Quarter GDP grows 1.0% • 8th straight quarter of some growth; grew 0.4% in 1st Q. • Growth forecasts revised downward • CBO revises GDP forecast to 1.5% in 2011 and 2.5% in 2012 • NABE revises GDP forecast to 1.7% in 2011 and 2.3% in 2012 • Other economic figures: • Unemployment rate unchanged at 9.1% in August • CBO projects it will remain near 9% through 2012 • 12 Federal Reserve Districts report modest or slow growth • Manufacturing grows for 25th straight month in August, although growth slows • Home Sales fell in July; still higher than last year

  6. State and Local Employment Continues to Decline • State and local employment has declined 620,000 from the start of the recession through July • State employment declined 145,000 from Aug. 2008-July 2011 • Local employment declined 475,000 from Sept. 2008-July 2011 • State governments eliminated 23,000 positions in July alone • States have also taken other personnel actions such as furloughs, early retirement, salary reduction, cuts to state employee benefits, etc. Source: Bureau of Labor Statistics

  7. State Debt Level Remains Comparatively Low Debt-to-GDP: U.S. States Compared to Advanced G20 Nations – Moody’s Investor Services & International Monetary Fund %

  8. Tax and Fee Increases

  9. Current Fiscal Situation: Indicators

  10. BudgetImprovement * Average *34-year historical average rate of growth is 5.7percent *Fiscal ‘12 numbers are recommended Source: NASBO Spring 2011 Fiscal Survey of States

  11. Mid-Year Budget Cuts Decline Budget Cuts Made After the Budget Passed ($ millions) *FY 2011 mid-year budget cuts are ongoing Source: NASBO Spring 2011 Fiscal Survey

  12. FY 2012 Proposed Spending Still Less than FY 2008 ($ in billions) * FY 2007, 2008, 2009 and 2010 are actual. FY 2011 is estimated and FY 2012 is proposed..

  13. 6 Quarters of Revenue Growth Following 5 Quarters of Declines Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau

  14. Revenue Remains Below Pre-Recession Levels ($ in billions) * FY 2007, 2008, 2009 and 2010 are actual. FY 2011 is estimated and FY 2012 is proposed.

  15. Balance Levels are Below Historical Average for Most States Balances as a Percentage of Expenditures (percentages) * FY 2006, 2007, 2008, 2009, 2010 are actual, FY 2011 is estimated and FY 2012 is proposed.

  16. Background on State Finance Trends

  17. Spending by Funding Source(Percentage) Source: NASBO 2009 State Expenditure Report

  18. Total State Expenditures Source: NASBO 2009 State Expenditure Report 19

  19. General Fund: Medicaid & Education Over 63% Source: NASBO 2009 State Expenditure Report

  20. Percentage Change in Medicaid Spending and Enrollment % Adopted Source: Kaiser Commission on Medicaid and the Uninsured

  21. What Can Be Done? • Financial Management • Ask performance questions • Ask for outcome data • Use performance information to justify changes to programs

  22. Outlook

  23. Major Challenges to State Budgets • Spending Demands and Some Revenue Growth • Dependent on Economic Growth • Health Care Cost Pressures • Wind Down of Recovery Funds (Planned For) • Dealing with Long Term Liabilities • Court Cases/Federal Government Mandates

  24. Tough Decisions to Make… Source: New York Times, 6/12/11

  25. www.nasbo.org Scott Pattison (202) 624-8804 spattison@nasbo.org

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