State Government Fiscal Stress and Federal Assistance

by Sabrina I. Pacifici on December 5, 2012

State Government Fiscal Stress and Federal Assistance, Robert Jay Dilger, Senior Specialist in American National Government. December 3, 2012

  • “No two state budgets are alike. States have different budget cycles, different ways of preparing revenue estimates and forecasts, different requirements concerning their operating and capital budgets, different roles for their governors in the budget process, and different policies concerning the carrying over of operating budget deficits into the next fiscal year. Although no two state budgets are alike, all 50 states have experienced fiscal stress in recent years, especially during FY2009 and FY2010. The national economic recession, which officially lasted from December 2007 to June 2009, led to lower levels of economic activity throughout the nation and reduced state tax revenues. State tax revenues from all sources, including sales, personal, and corporate income tax collections, fell from $680.2 billion in FY2008 to $609.8 billion in FY2010, a decline of 10.3%. The decline in state tax revenue, coupled with increased demand for social services and state-balanced operating budget requirements, created what the National Association of State Budget Officers (NASBO) characterized as “one of the worst time periods in state fiscal conditions since the Great Depression.”
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