Federal Issues

 

Information on federal legislation, mandates, programs, executive orders, and other actions that impact state finance. In fiscal year 2011, federal funds represented 34 percent of total state expenditures, although this percentage is likely to decline following the wind down of the funding provided through the Recovery Act. The possibility of future federal budget cuts combined with likely congressional changes to healthcare, K-12 education, tax policy, and other areas, has led to a significant level of uncertainty among state decision-makers.

Staff Contact: Kathryn Vesey White

NASBO Publications

  • The rise of internet sales and electronic commerce over the past fifteen years has prompted states and Congress to reconsider the issue of remote sales tax collection. After years of inaction on the issue, Congress now has three similar, though importantly distinct legislative proposals under consideration in both the House and Senate that would require out-of-state retailers to collect and remit sales taxes.
  • This report finds that the recent improvement in the national economy has not translated to strong growth in total state spending. This is largely due to the fact that state revenues have not increased as fast as Recovery Act funds have declined, leading to a unique situation in which total state expenditure growth has slowed during the same time that the national economy has been improving.
  • Although state fiscal conditions continue their slow improvement in fiscal 2012, they are likely to remain constrained due to the lack of a strong national economic recovery and the withdrawal of Recovery Act funds. This slow improvement in state finances is highlighted by the 38 states that reported general fund spending growth in 2011 and the 43 states that reported spending growth for 2012. However, 29 states still have lower general fund spending in fiscal 2012 compared to the pre-recession levels of fiscal 2008.