Budget & Taxes
STATE BUDGETS BETTER...FOR NOW: This year was a good one for most state budgets, with revenues up by over 5 percent, far better than most observers predicted. That's the good news. The less good news is that, according to a report issued last week by the National Conference of State Legislatures, growth is expected to fall back below 2 percent in FY 2014.
General Fund revenue outpaced growth in expenditures by almost a full percentage point — 5.3 percent for revenue compared to 4.4 percent in expenditure growth. A variety of things contributed to that, most notably many taxpayers pushing their tax obligations into FY 2012 in anticipation of higher federal tax rates in 2013. In all, 41 states, the District of Columbia and Puerto Rico had year-over-year revenue growth in FY 2013, with five growing by 10 percent or more. States' cumulative balance, which combines General Fund closing balances with rainy day funds, rose from $54.2 billion in FY 2012 to $66.6 billion in FY 2013.
State also took significant action on taxes, cumulatively implementing $1.3 billion in tax cuts this year, or about .2 percent of last year's collections. Most were in the category of personal income taxes, with Ohio's $1.2 billion cut leading the way. But NCSL also notes that figure is misleading, saying it does not indicate the full level of legislative action.
The rosy picture is also expected to dim a bit in FY 2014, with revenue growth projection pegged at only 1.3 percent. Expenditure, meanwhile, are expected to climb by 3.9 percent, led by greater spending on higher education and Medicaid. (STATE NET, NCSL)
- Compiled by RICH EHISEN
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