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State Budgets Strengthen, But Not Yet to Pre-Recession Level

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States’ fiscal pictures continue to show slow improvement, but still haven’t rebounded to where they were before the recession struck, a new survey says.

The National Governors Association (NGA) and National Association of State Budget Officers (NASBO) latest Fiscal Survey of States, released on Nov. 29, reports that states’ projected general-fund revenue collections are up for the second-straight year, rising 1.6% for fiscal 2012, to $659.4 billion.

But that still leaves states’ cumulative revenue $20.8 billion below the 2008 total.

Scott Pattison, NASBO executive director, said in a conference call for reporters the biannual survey indicates that “We have growth, but it is slow, it is tepid growth. And most importantly, we are not yet back, as far as state budgets and revenues, to pre-recession levels.”

Moreover, Pattison says, the modest gains are not enough to make up for the loss of aid provided to states by the 2009 American Recovery and Reinvestment Act and states’ increased costs for supporting the Medicaid program.

The NGA-NASBO report focuses on states’ general funds, not their capital budgets, which finance most state infrastructure programs.

But Pattison says that in terms of states’ capital spending, “What I’m hearing is there is a fair amount of uncertainty and that’s had an impact.”

The survey reports that only two states, Colorado and Missouri, have cut their transportation spending since fiscal year 2012 began this summer. Missouri’s reduction was $73.7 million; Colorado's wasn't specified.

By comparison, in 2011, seven states imposed mid-fiscal-year reductions in transportation, totaling $392.4 million—including $352.7 million in Californina.

Asked about the outlook for state bond activity, NGA Executive Director Dan Crippen says there is a reticence among states to issue bonds and obligate future funds, given continued uncertainty about their revenue and federal funding.

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