The National Association of Budget Officers (NASBO) and National Governors Association's (NGA) most recent survey of state fiscal health is not particularly encouraging. Although the Spring 2012 update, released last week, indicates state revenues are finally returning to their pre-recession levels, budgetary spending levels are not. General fund revenues are projected to increase by 4.1 percent in fiscal year 2013, while general fund spending is expected to increase by just 2.2 percent. "Despite some improvement in state budgets since the depths of the recession, state budget growth is still significantly below average - growing at less than half the average growth of the past few decades," according to Scott Pattison, NASBO's executive director. Medicaid, meanwhile, is continuing to eat up more and more of state's money. State Medicaid spending increased by 20 percent in FY 2012 - following a 23 percent jump in FY 2011 - while federal Medicaid spending dropped 8 percent, due to the expiration of the higher matching rates temporarily set by the American Recovery and Reinvestment Act (ARRA). Over the past decade, the growth of Medicaid spending has outpaced that of every other category of state spending, actually doubling the rate of states' biggest expenditure - at least for now - K-12 education. "With the growth of Medicaid expenditures, spending priorities will again face competition for state budget dollars this fiscal year," said Dan Crippen, NGA's executive director. "States have undertaken numerous actions to contain Medicaid costs, including reducing provider payments, cutting prescription drug benefits, limiting benefits, reforming delivery systems, expanding managed care and enhancing program integrity efforts. These efforts alone, however, cannot stop the growth of Medicaid." (NATIONAL GOVERNORS ASSOCIATION, NATIONAL ASSOCIATION OF STATE BUDGET OFFICERS, WASHINGTON POST)
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