Survey Indicates Continued Slow Growth Across the States

A survey recently released by the National Association of State Budget Officers (NASBO) indicates that although states are expected to spend $22.7 billion more in the current fiscal year, growth is still slow compared to prior years. With the majority of this increase going to cover the rising costs of K-12 education and Medicaid, funding will continue to be limited for other parts of the budget. As reported by Governing,

More than two-thirds of the increased spending is going towards K-12 education and Medicaid. Thirty-nine states enacted general fund spending increases for K-12 education while 36 increased spending for Medicaid for their 2015 budgets. Public assistance was the one category that saw spending cuts; 12 states cut funding, resulting in a net decline of $590 million.

The chart below indicates increases in general fund spending by category.

Source: National Association of State Budget Officers 2014 Fiscal Survey of the States
Source: National Association of State Budget Officers 2014 Fiscal Survey of the States

Although spending is increasing, revenue growth has remained slow.

This year’s 3.1 percent spending increase is far below the 5.5 percent year-over-year average recorded over the 37 years NASBO has been conducting the budget survey. In fact, in no year since the recession has spending growth matched the nearly four-decade average. Even more alarming: This year’s total general fund spending of $748 billion is still 2 percent below the pre-recession peak, after accounting for inflation.

If this trend continues, states can expect limited funds for initiatives over the next few years.

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