May 24 (Reuters) – For some U.S. states the new fiscal year
will bring an old problem: shortfalls.
Budget gaps totaling $54 billion emerged in state budgets
for fiscal 2013, according to a the Center on Budget and Policy
Priorities, a think tank that tracks state fiscal issues.
Not all states are created equal when it comes to budgets as
not all have fiscal years starting in July and not all are
drafting their budgets.
Still some “30 states have projected – and in many cases
have already closed – budget gaps,” the center said. “These
shortfalls are all the more daunting because states’ options for
addressing them are fewer and more difficult than in recent
years.”
The picture is an improvement from a year ago, when the
center put the total shortfall at more than $100 billion for
fiscal 2012 and the National Conference of State Legislatures at
$91 billion.
With the exception of Vermont, all states must end their
fiscal years with balanced budgets.
Finding balance may be tough, as states gutted their budgets
and enacted temporary tax hikes when their revenues began
collapsing in 2009. Budget shortfalls for fiscal 2009 through
fiscal 2012 totaled more than $530 billion, CBPP noted.
State revenues remain 7 percent below pre-recession levels
“and are not growing fast enough to recover fully soon,” the
CBPP said.
“Meanwhile states’ education and healthcare obligations
continue to grow,” it added. “Next year, states expect to
educate 350,000 more K-12 students and 1.7 million more public
college and university students in the upcoming school year than
in 2007-08.”
At the same time, states expect 5.6 million more people to
become eligible for the Medicaid health insurance program for
the poor, which states run with reimbursements from the federal
government and which already takes up a third of some states’
budgets.
Going into the final five-week stretch to fiscal 2013,
states are facing a variety of different budget scenarios. While
the recession spared few states, the recovery has been far less
uniform.
New Jersey’s governor, Chris Christie, proposed a $260
million cut in transportation spending on Wednesday in the face
of estimates that the state’s cash shortfall for fiscal 2012 and
2013 could reach $1.3 billion.
In a webcast on Thursday, Jeff Saviano, director of indirect
and U.S. state and local tax at Ernst & Young LLP, said that
states are not suffering in the aggregate but there are still
pockets of struggle.
“While the totality of state revenues have finally surpassed
the pre-recession levels there are still 17 states that have
collection levels that have not reached the prerecession peaks,”
he said. “This is a developing trend.”
Earlier this month, the National Conference of State
Legislatures said that Arizona, Georgia, Maine, South Carolina,
California and Michigan do not project their tax collections
returning to the highs reached before the 2007-09 recession
until at least fiscal 2016.
It also said nearly half the states, 21, will end this
fiscal years with surpluses.
“We’re using a word we haven’t used in years: we now have
surpluses in some of the states,” he said.
