Budget Blog

As expected following strong growth in April tax collections , most states ended fiscal 2022 with both year-over-year revenue growth and revenues exceeding forecast. Fiscal 2022 marked the second consecutive year in which states experienced rapid growth in tax collections following declines in fiscal 2020. A number of factors contributed to fiscal 2022’s revenue growth including economic gains following the initial effects of the pandemic, the role of federal COVID-19 relief aid, and the impact of inflation on both salaries and the price of goods. Year-over-year gains were seen in most major sources of state tax ... More

Early indications are that most states continued the recent trend of strong growth in tax collections in April, led by gains in personal income taxes. States saw growth in payroll withholding, estimated and final tax payments in April. The gains are likely due to several factors including employment growth, salary increases, and strong stock market performance in 2021. Similarly, most states also reported increases in corporate income taxes due to higher corporate profits. Part of the year-over-year increase in income taxes is due to 2021’s tax deadline being pushed back to May, which led to less April tax collections ... More

Introduction Before the COVID-19 crisis, state rainy day funds and total balances were at an all-time high, after a decade of rebuilding reserves following the Great Recession. In spring 2020, when the pandemic first hit, this financial cushion softened the immediate blow for states facing revenue shortfalls and helped them to close budget deficits by the end of the fiscal year – something most states are required by law to do.  At the same time, as state revenue projections were plummeting further, concerns grew that states might end up depleting the rainy day funds they had worked so hard to build in recent years. ... More

One area of state budget processes that has received a lot of attention in recent years, including during the COVID-19 pandemic and recession, is state rainy day funds. In the 2021 edition of Budget Processes in the States , all 50 states reported having at least one rainy day fund for the first time in history. In the years following the Great Recession, a number of states made deliberate choices to strengthen their reserves by increasing deposits and reforming the laws and policies that govern these funds. This blog looks at recent process changes states made to bolster their rainy day funds before the pandemic, ... More

The  Coronavirus State and Local Fiscal Recovery Funds , authorized by the  American Rescue Plan Act of 2021  (ARPA), allocated $195.3 billion for states and the District of Columbia and $4.5 billion for territories. In addition to Fiscal Recovery Funds, ARPA also sent other funds to states for a variety of purposes, including K-12 education, rental assistance, child care, capital projects and more. Planning, administering, and reporting on these significant additional federal resources will require a great deal of statewide leadership, coordination and oversight. On October 18, NASBO released an issue brief describing ... More

Today, NASBO released a new issue brief examining states’ processes for allocating Coronavirus State Fiscal Recovery Funds, authorized by the American Rescue Plan Act of 2021 , and planned uses of these funds. This analysis is based strictly on what states and territories reported to the U.S. Treasury Department in their Recovery Plan Performance Reports, which were due on August 31, 2021. To date, NASBO has compiled links to recovery plan performance reports for 39 states, the District of Columbia, and two territories. The brief presents a high-level look at how states are making decisions about the use ... More