state fiscal outlook: minnesota and the nation one minnesota january 25, 2012 scott pattison...
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State Fiscal Outlook: Minnesota and the Nation
ONE MINNESOTA
January 25, 2012
Scott PattisonExecutive Director
National Association of State Budget Officers
444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org
NASBO 2
Current Fiscal Situation:
Overview
NASBO 3
State Fiscal Outlook
Revenue improvement Still not yet pre-recession Spending pressures Health care reform Limited federal funds
NASBO 4
State and Local Employment Continues to Decline
State and local employment has declined 665,000 from the start of the recession through December
State employment declined 132,000 from Aug. 2008-Dec. 2011 Local employment declined 533,000 from Sept. 2008-Dec. 2011
State governments have eliminated 17,000 positions since September
States have also taken other personnel actions such as furloughs, early retirement, salary reduction, etc.
Source: Bureau of Labor Statistics
NASBO 5
Current Fiscal Situation:
Indicators
NASBO
State Budgets
-8
-6
-4
-2
0
2
4
6
8
10
12
%
General Fund Expenditure Growth (%)
*34-year historical average rate of growth is 5.6 percent *Fiscal ‘12 numbers are appropriated Source: NASBO Fall 2011 Fiscal Survey of States
* Average
NASBO
FY 2012 Spending Remains $20 Billion Below FY 2008
($ in
bil
lion
s)
* FY 2007 – 2010 are actual, FY 2011 is preliminary actual and FY 2012 is enacted.
NASBO
Medicaid Continues to Drive General Fund Spending Growth
8
Data is based on comparative levels of enacted spending in FY 2011 and FY 2012Source: NASBO Fall 2011 Fiscal Survey of States
In B
illion
s
Changes in General Fund Spending by Category Between FY 2011 and FY 2012
NASBO
State Revenue Continues to Grow in 3rd Quarter, but at Slower Rate
-20
-15
-10
-5
0
5
10
15
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011%
Year-Over-Year Real Change inQuarterly State Tax Revenue
Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau
NASBO
* FY 2007- -2010 are actual. FY 2011 is preliminary actual and FY 2012 is enacted.
($ in
bil
lion
s)
Revenue Remains Below Pre-Recession Levels
NASBO 11
Minnesota GF Revenue:1997-2011
Source: NASBO State Expenditure Report
(estimated)
NASBO
Balances as a Percentage of Expenditures
* FY 2006 – FY 2010 are actual, FY 2011 is preliminary actual and FY 2012 is enacted.
(per
cen
tage
s)Total Balance Levels Remain Low for Most States
NASBO 13
Balances inMN and Selected States
Source: NASBO Dec. 2011 Fiscal Survey of States
NASBO
Budget Cuts Made After the Budget Passed ($ millions)
*FY 2012 mid-year budget cuts are ongoing Source: NASBO Fall 2011 Fiscal Survey
Mid-Year Budget Cuts Decline
NASBO 15
Current Fiscal Situation:
Economic Overview
NASBO 16
Unemployment Ratein MN and Selected States
Source: U. S. Department of Labor, Bureau of Labor Statistics
NASBO
National Unemployment Rate Compared to MN
17
%
Source: U.S. Department of Labor, Bureau of Labor Statistics
NASBO
Who gets out first? Historical Boost to State Earnings and Employment due to Oil & Natural Gas
18
Source: Federal Reserve Bank of Kansas City, Economic Review, Fourth Quarter 2009
NASBO 19
Background on State Spending Trends
NASBO 20
Spending by Funding Source(Percentage)
General Funds37.7%
Federal Funds34.1%
Other State Funds25.8% Bonds
2.5%
Total State Expenditures By Funding Source, Estimated Fiscal 2011
Source: NASBO 2010 State Expenditure Report
NASBO 21
MN Spending by Funding Source (Percentage)
Source: NASBO 2010 State Expenditure Report
NASBO 22
Total State Expenditures
K-1220.1%
Higher Education10.1%
Medicaid23.6%
Public Assistance1.6%
Corrections3.1%
Transportation7.6%
All Other33.9%
Total Expenditures by Function, Estimated Fiscal 2011
Source: NASBO 2010 State Expenditure Report
NASBO 23
General Fund: Medicaid & Education 64%
Elementary & Secondary Education
35.0%
Higher Education11.5%
Medicaid17.4%
Public Assistance1.8%
Corrections7.4%
Transportation0.5%
All Other26.5%
General Fund Expenditures by Function, Estimated Fiscal 2011
Source: NASBO 2010 State Expenditure Report
NASBO 24
MN General Fund: Medicaid & Education Over 73%
K-1237%
Higher Education17.5%
Medicaid19.2%
Public Assistance1.1%
Corrections2.9%
Transportation0.4%
All Other22.0%
General Fund Expenditures by Function, Estimated Fiscal 2011
Source: NASBO 2010 State Expenditure Report
NASBO 25
MN General Fund Spending Growth over 10 years
Sources: NASBO 2002 and 2010 State Expenditure Reports
NASBO 26
State Spending from Federal Funds
Elementary & Secondary Education
12.7%
Higher Education3.9%
Medicaid43.5%
Public Assistance2.6%
Corrections0.2%
Transportation7.2%
All Other29.8%
Federal Funds Spending, Estimated Fiscal 2011
Source: NASBO 2010 State Expenditure Report
NASBO 27
MN State Spending from Federal Funds
K-1212.4%
Higher Education
0.6%
Medicaid51.2%
Public Assistance3.1%
Corrections0.1%
Transportation5.1%
All Other27.5%
Federal Funds Spending, Estimated Fiscal 2011
Source: NASBO 2010 State Expenditure Report
NASBO 28
Focus on Outcomes
Focus on results and outcomes
Spend funds for effective programs
Improve management
NASBO 29
Outlook
NASBO 30
State Fiscal Outlook
State budgets dependent on economy
Health care reform, federal government will have an impact
Tough competition for general funds and limited federal funds
Dealing with long-term liabilities
