A grim report that shows 36 states already in deficit as of November does not even include billions of dollars state governments owe their employees for retirement benefits.
The National Conference of State Legislatures State Budget Update says, “The state revenue nightmare continues. … Not only have revenues continued to fall below expectations, they are projected to be anemic for years to come.”
NCSL said Friday the study does not include any data from the Supplemental Required Information about real costs not included in budgets and expenditures which now must be noted in annual Comprehensive Annual Financial Reports.
Those costs add billions of dollars to the official deficits. And the report does not deduct billions of federal “stimulus” dollars states used to achieve nominally balanced budgets for this fiscal year.
Federal American Recovery and Reinvestment Act funding ends in 2010, half way through most states 2022 fiscal years.
Even excluding those factors, “Now, midway through FY 2010 for most states, new gaps have opened. And that will not be the end of it. The longest economic downturn in decades appears to be well entrenched and is manifesting itself in multi-year budget shortfalls. Many states already foresee budget gaps in FY 2011 and FY 2012. It is hard to see when they will end.”
Data from state fiscal officers in November show “imbalances” in 36 states totaling $28.2 billion just five months into this fiscal year.
“So far, 20 states have gaps in excess of 5 percent of their general fund budgets, and five of these states have gaps greater than 10 percent. The largest shortfalls are in Oklahoma (18.5 percent) and Arizona (18 percent).
“Sixteen states have gaps between 4.9 percent (Montana and Nebraska) and 0.3 percent (West Virginia).”
The report points out that “Anemic revenue performance continues to explain the bulk of state imbalances, although some states note that expenditure overruns are contributing to the problem.”
Even though revenue declines for this fiscal year and last are steep compared to 2008, the report notes, “For most states FY 2009 general fund revenues matched the years between FY 2005 and FY 2007,” when there was no crisis.
The Government Accounting Standards Board requires states to eventually begin including all costs, such as annual payments required to meet underfunded and unfunded promises for state employee retirement benefits, but those costs are not included in current “balanced” budget calculations.
By Frank Keegan, Editor of Watchdog.org
Contact Frank: frank.keegan@franklincenterhq.org
