The latest edition of NASBO’s State Expenditure 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.
This annual report examines spending in the functional areas of state budgets: elementary and secondary education, higher education, public assistance, Medicaid, corrections, transportation, and all other. It also includes data on the State Children’s Health Insurance Program and on revenue sources in state general funds.
Without question, state expenditures have been significantly impacted by the national recession that began in December 2007. The economic downturn has created a unique and in some ways unprecedented fiscal situation for states. Spending from state funds (general funds and other state funds combined) declined in both fiscal 2009 and estimated fiscal 2010, marking the first occurrences in the 23-year history of the State Expenditure Report. The decline in spending from state funds was precipitated by a rapid reduction in state revenue.
The National Association of State Budget Officers