Tags: state | finances | revenue | fund

State Finances Generate Positive Turnaround

By Dan Weil   |   Tuesday, 02 Jul 2013 08:03 AM

The financial condition of states looked dire after the 2008-09 financial crisis, but now things are starting to look up.

In 32 states for which data are available, state tax collections in the first 10 months of fiscal year 2013 were 5.7 percent higher on average than in the same period last year, according to a June report from the Center on Budget and Policy Priorities.

Just a year ago the Center wrote that "states' ability to fund services remains hobbled by slow economic growth." At that point, 31 states still suffered from budget deficits, CNBC reports.

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States appear to be handling their increased revenue wisely. State "rainy day" funds surged to $57.7 billion, or 8.3 percent of spending, in fiscal 2013, from $32.5 billion, or 5.2 percent of spending in fiscal 2010, according to the National Association of State Budget Officers.

To be sure, most of that increase came from just two states — Alaska and Texas.

And experts caution that many states remain financially vulnerable.

"State operating budgets likely will be constrained by elevated expenditure pressures and slow revenue growth in the upcoming fiscal year," the National Association of State Budget Officers said.

Former New York Lt. Gov. Richard Ravitch, co-chairman of the State Budget Crisis Task Force, told Yahoo his "biggest concern" about state finances is the federal government's refusal to address them.

"In fact, if you look at the sheer politics, no member of Congress' election or re-election is dependent on whether or not the [local] school district lays off 20 percent of teachers because the congressperson will blame the state government," he said.

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