State Budgets See Meager Growth, More Fiscal Uncertainty in 2014

State Budgets See Meager Growth, More Fiscal Uncertainty in 2014

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State budgets are expected to undergo only modest improvements and continued financial challenges in FY 2014, according to a report from the National Association of State Budget Officers (NASBO). Revenue is projected to increase by only 0.8 percent in FY 2014 as a result of federal tax rate increases in 2013 and tax cuts in states in 2014. “The lingering effects of the recession are still present, as a number of states have yet to surpass pre-recession revenue and spending levels in nominal terms,” the report authors find. A meager spending increase will represent an improvement from the 26-year low reached in 2012, but “for most states, spending growth will be very limited and there will be few additional budget dollars available.”

These continued fiscal strains could limit or negatively affect the programs that support the work of nonprofits in many states. “For many states, operating budgets also face pressure from spending needs in such areas as transportation and infrastructure, as well as pensions and retiree health care,” the NASBO report states. For example, the Kentucky Legislature is facing a major budget gap that is likely to trigger cuts, with $600 million in required expenditures and only $230 million in increased revenue. Similarly, Pennsylvania officials anticipate major battles over the 2014-2015 budget due in part to increased pension and medical assistance costs amid meager revenue growth. Governments in California, Florida, Illinois, Indiana, Michigan, Nevada, New Hampshire, New Jersey, New York, and Rhode Island are also expecting budget pressures in 2014. 

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