a look at state budgets wyoming taxpayers association october 20, 2010 cheyenne, wyoming

A Look at State BudgetsWyoming Taxpayers Association

October 20, 2010Cheyenne, Wyoming

Arturo PérezNCSL Fiscal Affairs Program

Denver, Colorado

Overview

State revenue performance is improving.

Sizeable budget gaps loom in many states.

States have reported a total estimated budget gap of $537.2 billion (FY 2008 through FY 2013).

Year-Over-Year Percent Real Change in Major Taxes

Source: The Nelson A. Rockefeller Institute of Government. State Revenue Report, August 30, 2010.

HI

OR

ND

SD

NE

KS

OK

MN

IA

MO

AR

MI

IL

OH

KY

GA

SC

NC

VAWV

VTNH

MA

RI

CT

NJ

DE

MD

Projected FY 2010 Revenues (Compared to FY 2009 Collections)

Source: NCSL survey of state legislative fiscal offices, 2009.

Higher n = 9Flat n = 1

Lower n = 40

Unknown n = 1

Puerto Rico

TN

HI

OR

ND

SD

NE

KS

OK

MN

IA

MO

AR

MI

ILOH

KY

GA

SC

NC

VAWV

VT

NH

MA

RI

CT

NJ

DE

MD

Projected FY 2011 Revenues (Compared to Estimated FY 2010 Collections)

Puerto Rico

Source: NCSL survey of state legislative fiscal offices, March 2010

Higher n = 42Flat n = 4

Lower n = 5

FY 2011 Total Tax Forecast(Compared to FY 2010 Collections)

Source: NCSL survey of state legislative fiscal offices, Summer 2010

Not available or no response: South Dakota, Utah and West Virginia.

FY 2011 Personal Income Tax Forecast (Compared to FY 2010 Collections)

N/A: 7 states do not levy a personal income tax. NH and TN have limited individual income taxes.No Response: Hawaii and Utah.


FY 2011 Sales and Use Tax Forecast (Compared to FY 2010 Collections)

N/A: 5 states do not levy a sales tax.No Response: Hawaii and Utah.


FY 2011 Corporate Income Tax Forecast (Compared to FY 2010 Collections)

N/A: 4 states do not have a corporate income taxNo Response: 4 states.


Long-Term Tax Forecasts (Projected Total Tax Collection Growth Rate)

Forecast Unavailable: FY 2012, 21 states; FY 2013, 24 states; FY 2014 29 states.No Response: California.


Peak in General Fund Revenue Collections

Source: NCSL survey of legislative fiscal offices, November 2009.

Projected Return to Peak Revenue Collections

N/A: North Dakota Not in the current forecast horizon: 19 statesNo Response: 2 states


HI

OR

ND

SD

NE

KS

OK

MN

IA

MO

AR

MI

IL

OH

KY

GA

SC

NC

VAWV

VTNH

MA,

RI

CT

NJ

DE

MD


Higher, n = 40Flat, n = 6

Lower, n = 1

Not Available, n= 3

FY 2011 Total Tax Forecast

$26.9

$72.1$64.3

$37.2

$12.8

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Bill

ions

of D

olla

rs

Fiscal Year

$79.0 $83.7

$37.0

$117.3

$174.1

$96.2

State Budget Gaps FY 2002-FY 2013 (projected)

No estimat

e

Amount After Fiscal Year Began

Amount Before Budget Adoption

Projected Amount

Source: NCSL survey of state legislative fiscal offices, various years.

State Actions to Close Budget Gaps

Budget cuts: All programs & services subject to cuts

Tax increases Other revenue increases Federal stimulus funds Wide array of other actions, many one-

time in nature Renewed focus on streamlining and

efficiency

Digging for DimesIn Bull Semen and Tacos

IDEAS THAT PREVAILED• Colorado lawmakers, aiming to recoup $100 million, removed several tax exemptions and credits, including the exemptions restaurants received for the cost of purchasing condiments and take-out containers; tax breaks ranchers got when buying pesticides and bull semen; and incentives bulk mailers enjoyed for printing coupon booklets. • Wisconsin adopted “Taco Tuesday” at all state prisons, saving 10 cents a meal. • Missouri clarified that yoga and Pilates classes are recreational rather than spiritual services and subject to a sales tax. • The Wisconsin Supreme Court determined symphony tickets are subject to the sales tax since a concert is more entertainment than education. • The Oklahoma State Penitentiary cut expenses for its annual prisoner rodeo to save $120,000.

IDEAS THAT STALLED• Tennessee lawmakers defeated a proposal to tax complimentary breakfasts offered by hotels. • The Illinois Senate voted against a proposal to eliminate free bus rides for seniors. A proposal there to sell the state’s executive air fleet for $22 million also failed. • Mississippi defeated a proposal to allow some advertisements on school buses. • Illinois’ governor backed off on a proposal to collect sales taxes on Internet downloads. • California considered the sale of digital advertising space on license plates.

Source: State Legislatures, September, 2010.

Failed Tax Measure

The Romanian Senate rejected a proposal to regulate and tax fortune tellers and witches. A prominent witch had complained about potential record-keeping

burdens. One of the sponsors told the Associated Press that opposition came

from lawmakers who were "frightened of having spells and curses placed on them."

Net State Tax Changes by Year of Enactment

$15.4

$28.6

5.4% 3.7%

-5%-4%-3%-2%-1%0%1%2%3%4%5%6%7%8%9%10%11%

-$12-$10-$8-$6-$4-$2$0$2$4$6$8

$10$12$14$16$18$20$22$24$26$28$30

Billions of dollars

Percent of previous year's collections

Source: NCSL survey of legislative fiscal offices, various years.

*FY 2010 figures are preliminary

Net Tax Changes by Type of Tax 2009 & 2010

2009 ($28.6 Billion)

2010* ($4.0 Billion)

Personal Income Tax: a decline of $629 million.

Source: NCSL survey of legislative fiscal offices, 2009 & 2010. *2010 figures are preliminary

Quote of Note

"All the low-hanging fruit has been eaten."

Senator Joe Zarelli, Ranking Republican Member

Senate Ways & Means Committee

Washington

The State Budget Landscape is Mixed

Arizona: The fiscal situation appears to be stabilizing. Maine: A small revenue surplus will begin to

replenish reserves depleted during the last two years. Ohio: In recent months year-over-year comparisons

for major taxes have turned positive.


Montana: The revenue decline projected in February 2010 has not declined further; however, this does not change the fact that the next Legislature will have a significant task developing the biennial budget.

Tennessee: Recent signs indicate revenues are beginning to stabilize, but state economic news continues to give mixed signals that recovery is not yet firmly underway.


California: The state's fiscal situation will depend on whether the legislature and governor reach agreement on long-term fiscal reform or restructuring.

Colorado: The budget shortfall for FY 2012 could be as high as $1 billion (14 percent).

Illinois: For many reasons, both financial and political, the fiscal situation is tenuous at best.

Quote of Note

"The hole is so deep and the options so few, that even if tax collections tick up a bit, it's probably like drowning in 5,000 feet of water instead of 5,050 feet -- you don't really feel much difference."

Jack Hailey

Senate Committee on Human Services

California

Summary Comment of Note

Iowa: Officials are cautiously optimistic. Income and sales taxes dipped to very low levels and until the state experiences job growth, they will be slow to recover. The climb back to previous levels will take a long time.

Summary Comment of Note

Hawaii: We are cautioumistic.

Key Concerns Looking Ahead

Replacing federal stimulus funds Feasibility of further budget cuts Length of time before revenues bounce back Feasibility of raising more revenues Mounting spending pressures New, ongoing and deeper structural budget gaps

Total State Tax Collections 1989-2010

Source: U.S. Census Bureau

Recession

State Elections 2010

House Only, n=3No 2010 Elections, n=4

Governor Election, n=37

State Legislatures 2010

Democrat, n=27

Split, n=8

Nonpartisan, n=1

Republican, n=14

State Legislative Battlegrounds 2010

Democrat, n= 15

Split, n=2

Republican

Conclusion State revenues are starting to show growth. Many forecasts offer little room for error. States face at least two more years of budget gaps. Few states have concrete plans to address the end

of federal stimulus funding. The new political landscape will shape state

actions to deal with budget problems.

www.ncsl.org For more information

State Government 2010

Democrat, n=16

Split, n=25

Nonpartisan, n=1

Republican, n=8

Governor Elections 2010

Democrat, n=19

Republican, n=17

Independent, n=1

Open, n=24

Year-Over-Year Percent Real Change in Total State Tax Collections 1990-2010

Source: U.S. Census Bureau

Recession

HI

OR

ND

SD

NE

KS

OK

MN

IA

MO

AR

MI

ILOH

KY

GA

SC

NC

VAWV

VTNH

MA

RI

CT

NJ

DE

MD

Use of Spending Cuts as Percentage of Actions To Close FY 2010 & FY 2011 Budget Gaps

Source: NCSL survey of state legislative fiscal offices, July 2010

Used Spending Cuts in FY 2010 and FY 2011, n = 30Used Spending Cuts in FY 2011, n = 5

Used Spending Cuts in FY 2010, n = 10

Not Applicable, n= 6

HI

OR

ND

SD

NE

KS

OK

MN

IA

MO

AR

MI

IL

OH

KY

GA

SC

NC

VAWV

VTNH

MA,

RI

CT

NJ

DE

MD


Used Tax Increases in FY 2010 and FY 2011, n = 9Used Tax Increases in FY 2011, n = 4

Used Tax Increases in FY 2010, n = 12


Use of Tax Increases as Percentage of Actions To Close FY 2010 & FY 2011 Budget Gaps

HI

OR

ND

SD

NE

KS

OK

MN

IA

MO

AR

MI

ILOH

KY

GA

SC

NC

VAWV

VTNH

MA,

RI

CT

NJ

DE

MD


Used ARRA Funds in FY 2010 and FY 2011, n = 26Used ARRA Funds in FY 2011, n = 4

Used ARRA Funds in FY 2010, n = 15


Use of ARRA Funds as Percentage of Actions To Close FY 2010 & FY 2011 Budget Gaps

HI4.0%

OR7.9%

ND

SD

NE

KS

OK

MN

IA

MO

AR

MI

IL

OH2.1%

KY, 1.6%

GA

SC

NC4.4%

VAWV

VT1.5%

NH4.2%

MA, 4.4%

RI, 2.1%

CT, 6.0%

NJ, 3.8%

DE, 8.2%

MD

Increase of 5% or more, n= 7

2009 Net State Tax Increases as a Percentage of 2008 Tax Collections

Increase of 1% to 4.9%, n= 17

No tax increase, n= 17Increase of less than 1%, n= 9


HI

OR

ND

SD

NE

KS5.5%

OK1.9%

MN

IA

MO

AR

MI

IL

OH

KY

GA

SC1.7%

NC

VAWV

VTNH

MA,

RI

CT

NJ

DE

MD


2010 Net State Tax Increases as a Percentage of 2009 Tax Collections

(Preliminary)

Increase of 5% or more, n= 3Increase of 1% to 4.9%, n= 7

No tax increase, n= 30Increase of less than 1%, n= 10

FY 2010 Personal Income Tax Collections*

Above Target, 5(01, 2)

On Target, 14(6, 2)

Below Target, 20(8, 2 )

No personal income tax, 9

*Compared to the latest Estimate forecast increased; forecast reducedCalifornia and New York did not provide information. Source: NCSL survey of state legislative fiscal offices, July 2010.

FY 2010 General Sales Tax Collections*

Above Target, 15 (7 , 1 )

On Target, 13(6 , 1 )

Below Target,13(3 , 1 )

No general sales tax, 5

*Compared to the latest Estimate. forecast increased; forecast reducedCalifornia, Florida, New York and Washington did not provide this information. Source: NCSL survey of state legislative fiscal offices, July 2010.

FY 2011 Tax Forecast(Compared to FY 2010 Collections)


Budget Stabilization Funds(Percentage of General Fund Appropriations)


States with no budget stabilization fund: Arkansas, Kansas and Montana. No Response: California.

Budget Stabilization Funds


States with no budget stabilization fund: Arkansas, Kansas and Montana. No Response: California.

State Year-End Balances*as a Percentage of General Fund Spending

* 45 states reporting for FY 2009-FY2011. Balances for FY 2010 and FY 2011 are projections.Source: NCSL survey of state legislative fiscal offices, Various Years

HI16.5%

OR

ND

SD19.0%

NE22.6%

KS24.0%

OK15.0%

MN25.4%

IA41.7%

MO34.0%

AR

MI

IL

OH

KY, 40.9%

GA42.0%

SC21.5%

NC36.4%

VA55.0%

WV33.0%

VT, 29.0%

NH, 23.6%

MA, 35.0%RI, 64.1%CT, 21.5%NJ, 93.1%DE

MD, 9.0%

Use of Spending Cuts as Percentage of Actions To Close FY 2011 Budget Gaps

(preliminary)


Used spending cuts, n = 33No Response, n = 4Not Applicable, n = 13

HI9.3%

OR

ND

SD1.5%

NE6.2%

KS11.4%

OK18.2%

MN17.1%

IA19.8%

MO4.5%

AR

MI13.0%

IL22.2%

OH2.2%

KY, 4.5%

GA5.7%

SC14.9%

NC25.0%

VA13.9%

WV4.8%

VT, 23.0%

NH 7.6%

MA, 10.0%

RI, 13.3%

CT, 4.1%

NJ, 28.0%

DE, 2.6%

MD, 17.2%

10% to 19.9%, n = 165% to 9.9%, n = 10

0.1% to 4.9%, n = 7

More than 20% n= 8Not applicable, n= 8; not reporting, n = 1

Pre-Enactment FY 2011 Budget Gaps as a Percentage of General Fund Budget

Source: NCSL survey of state legislative fiscal offices, July 2010.

2009 Net Tax Changes by Type of Tax ($28.6 Billion)

Source: National Conference of State Legislatures, 2009.

*FY 2010 figures are preliminary

2010 Net Tax Changes by Type of Tax ($4.0 Billion)

Source: NCSL survey of legislative fiscal offices, 2010

Personal Income Tax: a decline of $629 million.

a look at state budgets wyoming taxpayers association october 20, 2010 cheyenne, wyoming

Documents

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estimated fy

state revenue report

sales tax

corporate income tax

personal income tax

total tax forecastcompared

use tax forecast