As of July 12, 49 states have enacted full year budgets for fiscal 2017, while Illinois has enacted a six-month budget. Thirty-two states enacted their fiscal 2017 budget during the 2016 legislative session, while 17 states enacted budgets last year covering both fiscal 2016 and fiscal 2017. Fiscal 2017 began on July 1 for 46 states (New York began its fiscal year on April 1, Texas begins on September 1, and Alabama and Michigan begin on October 1).
As NASBO’s recently released Spring 2016 Fiscal Survey of States noted, governors in 43 states called for higher general fund spending in their fiscal 2017 budget recommendations compared to fiscal 2016 estimated levels. Fiscal 2017 is expected to be the seventh straight year that general fund spending has increased, following consecutive declines in fiscal 2009 and fiscal 2010. However, new spending is expected to be constrained by limited revenue growth, with few additional dollars available to address competing spending demands. Once again, governors’ proposed budgets for fiscal 2017 direct most additional dollars to boost funding for K-12 education and Medicaid, the two largest areas of state general fund expenditures. Overall, fiscal 2017 budget proposals assume revenue growth of 2.9 percent and recommend spending growth of 2.5 percent.
Since the time that the Spring 2016 Fiscal Survey of States data was collected, a number of states have reported disappointing revenue collection figures in April and May. While most states are still expecting to see positive revenue growth for fiscal 2016, in some states the growth will likely be less than originally projected. This may place additional pressure on certain states as they work to complete their fiscal 2017 budgets. Some of the reasons for the recent slow growth in revenue include the impact of low oil prices on energy states, weaker April tax collections due to the declining stock market in calendar year 2015, and the continued modest growth in the national economy.
Nearly all states were able to finalize their fiscal 2017 budget by July 1. As discussed in NASBO's Budget Processes in the States, a number of states have statutory procedures in place if no budget is approved by the beginning of the fiscal year. The National Conference of State Legislatures (NCSL) has also detailed state actions in the event of a late budget including approving a temporary appropriation bill or continuing resolution, implementing various procedures that ensure the continuous operation of the state government, or a partial shutdown of the state government.
For the most current information on states’ budget status, please visit NASBO’s state-by-state listing of proposed and enacted budgets.