Overview - Spring 2022
Governors’ budgets for fiscal 2023 call for a 4.2 percent increase in general fund spending. This follows fiscal 2022, when states are estimating spending growth of 13.6 percent, the highest annual increase in more than 40 years. Adjusted for inflation, spending in fiscal 2022 is estimated to increase 7.0 percent.
Other key highlights from the report:
- No states reported making net mid-year budget cuts due to a revenue shortfall in fiscal 2022, while 22 states reported net mid-year spending increases.
- 49 states reported fiscal 2022 general fund revenue collections are exceeding original budget forecasts.
- Fiscal 2022 general fund revenue is estimated to grow 3.2 percent, though final collections are likely to come in higher than estimated in this survey.
- Governors’ budgets are based on forecasted general fund revenue growth of 1.4 percent in fiscal 2023 compared to estimated fiscal 2022 levels.
- Governors proposed net tax cuts that would reduce revenue in fiscal 2023 by an estimated $15 billion for all state funds, including a $14.1 billion reduction in general fund revenue (1.3 percent of forecasted general fund revenue).
- Rainy day fund balances continued to grow in fiscal 2022 after increasing by 62 percent in fiscal 2021, and the median balance as a share of general fund spending is projected to be 11.4 percent in fiscal 2023.
- Medicaid spending growth is expected to slow considerably as states plan for the end of the enhanced federal matching rate, with total Medicaid spending projected to increase 0.8 percent on a median basis in fiscal 2023 after growth of 10.6 percent in fiscal 2022.