State fiscal conditions are modestly improving in fiscal 2014 with spending and revenues projected to rise above fiscal 2013 levels. Signs of fiscal distress continue to subside, and most states expect revenue and spending growth in fiscal 2014. Tax collections outperformed projections in fiscal 2013, and revenues experienced steady gains in most states. Although revenues are expected to increase in fiscal 2014, states are not projecting a rise in tax collections comparable to the gains in fiscal 2013. Revenues increased by 5.7 percent in fiscal 2013, while states project revenues to rise by only 0.8 percent in fiscal 2014. This potential softening in revenue collections may pose budgetary pressures for states in areas directly impacted by sluggish growth in the economy such as health care, higher education, and aid to local governments. Fiscal challenges from the modest economic recovery are likely to linger, but these setbacks are not expected to cause significant budget volatility for states in fiscal 2014. Overall, state fiscal trends indicate continued modest growth and stability.
Fiscal Survey of States, Fall 2013