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
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State Budgets
Capital Campus PennsylvaniaMercatus Center
George Mason UniversityHarrisburg, PA
January 26, 2009
Scott PattisonExecutive Director
National Association of State Budget Officers
444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org
NASBO 2
Current Fiscal Situation
NASBO 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
NASBO 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
NASBO
State Tax Revenue Growth by Source
Source: Fiscal Studies Program, Rockefeller Institute of Government
NASBO 6
Budget Cuts
Source: December 2008 Fiscal Survey of States
NASBO 7
Balances Declining
*31-year historical average is 5.7% Source: NASBO December 2008 Fiscal Survey of States
NASBO 8
Limited Tools to deal with Critical Budgetary Issues
NASBO 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
NASBO 10
NASBO 11
Enrollees Expenditures
68% of Medicaid Spending on Benefits in 2007 is for Elderly and Disabled
Children = 19%
Elderly = 22%
Disabled = 46%
Adults = 13%Children = 48%
Elderly = 9%
Disabled = 17%
Adults = 26%
2007 U.S. Total = 62.2 million U.S. Total = $305 billion in 2007
26% 68%
Source: Vernon Smith, Health Management Associates