The fiscal picture has grown worse for many states, according to a survey from the National Governors Association and National Association of State Budget Officers. The report, released Dec. 15, says that because of the ailing national economy, cumulative state operating spending is projected to fall in fiscal 2009, by 0.1%, the first spending decrease since 1983.
The study, NGA and NASBO's biannual Fiscal Survey of States, also says that since their 2009 fiscal year started on July 1, 31 states have reported that they face budget shortfalls totaling $29.7 billion.
The report focuses on states' operating budgets, but revenue declines also have hurt their capital spending. More than a dozen states have put on hold transportation projects, or are considering doing so.
The NGA-NASBO survey adds that in fiscal 2009 so far, 22 states have cut their enacted budgets by a total of $12.1 billion and another five states are forecasting that they will make spending reductions. By comparison, in fiscal 2008, 13 states trimmed their enacted budgets by a total of $3.6 billion.
NGA Executive Director Raymond C. Scheppach said, "Given the continued stall in credit availability, rising unemployment rates and increasing demand for state services such as Medicaid and welfare as people lose their jobs, the fiscal outlook for states is likely to get worse."
Three governors made a pitch for help in the expected economic-stimulus plan in an appearance Dec. 11 before the House Appropriations Committee. New Jersey Gov. Jon Corzine (D) told the committee, "Any federal stimulus package targeted to the states must include, in my view, help on both the operating side and the job-creation side."
Corzine said states still support including aid for infrastructure in the stimulus, but added that if states are unable to fix their operating budgets, any gains from public-works spending will be offset by cuts in areas like social services and education.
Corzine said that in February he will propose to the legislature a budget cut of $2 billion, or 12%. That comes after of a nearly $2-billion reduction made for fiscal 2008, which ended in June. Corzine said that to make up for decreased revenue, "we've had to cut through the fat and frankly I think we're dangerously into the bone."
Exceptions to the gloomy picture include oil-producing states. NGA and NASBO said that Texas, for example, is anticipating its 2009 budget balance will reach $12.01 billion, roughly triple its 2008 balance of $4.02 or billion.