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State Budgets

State Budgets. Capital Campus Pennsylvania Mercatus Center George Mason University Harrisburg, PA January 26, 2009 Scott Pattison Executive Director National Association of State Budget Officers.

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State Budgets

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  1. State Budgets Capital Campus Pennsylvania Mercatus Center George Mason University Harrisburg, PA January 26, 2009 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. Recent State Fiscal Situation • Flat spending/declining revenue • Shortfalls in the billions • Across the board budget cuts, layoffs • Credit crisis impacting short- and long-term borrowing • Most states in recession • All states at some risk

  4. Flat and Declining Expenditure Growth *31-year historical average rate of growth is 6.3 percent**Fiscal 08 numbers are preliminary actual ***Fiscal 09 numbers are appropriated Source: NASBO December 2008 Fiscal Survey of States

  5. State Tax Revenue Growth by Source Source: Fiscal Studies Program, Rockefeller Institute of Government

  6. Budget Cuts Source: December 2008 Fiscal Survey of States

  7. Balances Declining *31-year historical average is 5.7% Source: NASBO December 2008 Fiscal Survey of States

  8. Limited Tools to deal with Critical Budgetary Issues

  9. FY 2009-2010Budgetary Issues • Recession: • Revenue and spending declining • States recover slower because of the “lag” • Concerns over High Expenditure Areas: • K-12 • Medicaid & Health Care Costs • Other High Cost Needs: • Infrastructure/Transportation • Corrections • Higher Education

  10. Tax & Fee Increases Spending Cuts Budget Toolbox Debt Outsourcing P3 Tolls

  11. 68% of Medicaid Spending on Benefits in 2007 is for Elderly and Disabled Elderly = 9% 26% Elderly = 22% Disabled = 17% 68% Adults = 26% Disabled = 46% Children = 48% Adults = 13% Children = 19% U.S. Total = $305 billion in 2007 2007 U.S. Total = 62.2 million Source: Vernon Smith, Health Management Associates

  12. Financial Management

  13. Volatile Financial Management • Spending fluctuations • Higher education cycle • Budget cuts

  14. Financial Management Practices • Adding flexibility to the process • Contingencies • Prudent use of debt • Rainy day funds • One time only • Use of performance information

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

  16. Financial Management and Performance

  17. Use of Performance Information • Focus on results and outcomes • Accountability • Spend funds for effective programs • Efficiency • Improve management

  18. What Should Be Done? • Ask performance questions • Use performance information to make the case • Ask for outcome data • Use performance information to justify changes to programs • Ideas are already there -- Encourage state employees to think about goals and outcomes

  19. Fiscal Outlook

  20. State Fiscal Outlook • Much will depend on the national economy • Expect significant drops in revenue and spending • States will face dramatic budget cuts • States will look for creative financing and revenue opportunities to meet these spending demands • Recovery for states at best in FY ‘11

  21. Silver Lining? • Efficiencies • Priorities • Public-private partnerships • Outsourcing • Necessary reforms

  22. www.nasbo.org

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