The June* 2010 Fiscal Survey of States offers a sobering look at the 50 States 2010 and 2011 budgetary conditions and predicts that, “states are expected to take up to several years after the recession to fully recover and begin expansion.” While there has been great political attention as to who is to blame for South Dakota’s structural deficit and whether it is a “crisis” or not, this Report clearly shows that the “crisis” nationwide is much more threatening. Compounding the national economy’s steep decline are policies coming out of Washington which are creating great business uncertainty and further job loss. While South Dakota has challenges ahead, our low tax, conservative, and business-friendly environment provides us a buffer from some of the harsher realities other States face.
Here are just a few of those realities from the *Report which was prepared by the National Governors’ Association and the National Association of State Budget Officers. The full report can be found at: www.nasbo.org.
1) The number of States experiencing revenue shortfalls increased in fiscal 2010 with revenues from all sources below projections in 46 States.
2) States’ total fiscal 2011 budgets are reflecting an 8.4% decline in revenue from FY 08 (South Dakota expects a 1% decline). FY 08 (July 1, 2007-June 30, 2008) was the last full year prior to the national recession.
3) In the 2011 budgets 34 States are either reducing or freezing provider payments for Medicaid patients. (S.D. froze provider payments)
4.) In the 2011 budget, 31 States will cut K-12 spending; 31 States will cut Higher Ed spending. (In FY 2011 S.D.’s per student allocation will remain at last year’s level, but the legislature did change the manner in which it counts students resulting in increasing state aid for growing schools.) 35 States had already cut K-12 spending in the current FY 2010 budget. (South Dakota did not.)
5) 32 States expect FY 2011 “rainy day” balances to be less than 5% of their expenditures; 15 of those States’ balances are below 1%. (S.D. budgeted for a 9.2% “rainy day” balance) South Dakota’s relatively larger fund balance reflects the concern stated in the Report, “because states recognize that this economic downturn may last at least in 2012, they are reluctant to deplete balances.”
6) States are recommending an average increase of 3.6% in 2011 spending over 2010. (S.D. budgeted for a 2.9% increase, all of which is Medicaid. In South Dakota’s FY 2011 budget, total state expenditures will increase by $32.5 million; Medicaid and Social Services alone will increase by $35.9 million.)
Here are just a few of those realities from the *Report which was prepared by the National Governors’ Association and the National Association of State Budget Officers. The full report can be found at: www.nasbo.org.
1) The number of States experiencing revenue shortfalls increased in fiscal 2010 with revenues from all sources below projections in 46 States.
2) States’ total fiscal 2011 budgets are reflecting an 8.4% decline in revenue from FY 08 (South Dakota expects a 1% decline). FY 08 (July 1, 2007-June 30, 2008) was the last full year prior to the national recession.
3) In the 2011 budgets 34 States are either reducing or freezing provider payments for Medicaid patients. (S.D. froze provider payments)
4.) In the 2011 budget, 31 States will cut K-12 spending; 31 States will cut Higher Ed spending. (In FY 2011 S.D.’s per student allocation will remain at last year’s level, but the legislature did change the manner in which it counts students resulting in increasing state aid for growing schools.) 35 States had already cut K-12 spending in the current FY 2010 budget. (South Dakota did not.)
5) 32 States expect FY 2011 “rainy day” balances to be less than 5% of their expenditures; 15 of those States’ balances are below 1%. (S.D. budgeted for a 9.2% “rainy day” balance) South Dakota’s relatively larger fund balance reflects the concern stated in the Report, “because states recognize that this economic downturn may last at least in 2012, they are reluctant to deplete balances.”
6) States are recommending an average increase of 3.6% in 2011 spending over 2010. (S.D. budgeted for a 2.9% increase, all of which is Medicaid. In South Dakota’s FY 2011 budget, total state expenditures will increase by $32.5 million; Medicaid and Social Services alone will increase by $35.9 million.)
