Internet Explorer 11 is not supported

For optimal browsing, we recommend Chrome, Firefox or Safari browsers.

The Current State of State Budgets

A new report shows how states are managing their money.

State budgets continue to record modest growth but often not enough to keep pace with the cost of K-12 education, health care and other escalating items. That’s according to a report released Tuesday by the National Association of State Budget Officers (NASBO) detailing estimated fiscal 2015 financial figures and governors’ budget proposals for each state.

Overall, state spending is set to continue to climb in the new fiscal year, but at a slower rate than before. The NASBO survey finds general fund expenditures are projected to grow 3.1 percent in fiscal 2016 without accounting for inflation, down from a 4.6-percent gain the prior year.

Total state spending has grown each year since 2011 following cuts that states incurred in the aftermath of the Great Recession. Still, though, aggregate state spending remains slightly below its 2008 peak after adjusting for inflation.

This map shows states' proposed fiscal year 2016 expenditures compared to estimated totals for 2015, in nominal terms.

Illinois Gov. Bruce Rauner’s budget calls for spending cuts exceeding $3 billion -- more than any other state, according to the report. Some of the largest proposed cuts are aimed at Medicaid costs, along with higher education spending and state aid to local governments.

Winners, Losers in Budget Proposals

Governors in most states have presented budgets amounting to spending increases that exceed the current rate of inflation. 

One area where the vast majority of states plan to increase investment is K-12 education. The NASBO survey indicated funding adjustments in this area account for roughly a third of the total increase in state spending for fiscal 2016, with governors in only six states proposing cuts. Higher education, by contrast, didn’t fare quite as well, with 15 governors’ budgets outlining cuts.

Transportation appears to be the big loser in budgets as it’s the only program area identified in the report slated for a decline in aggregate state funding. Fourteen governors have recommended transportation funding cuts, while only nine state budgets include increases (two of which are only $1 million).


Shifting State Revenues

A handful of states have become more reliant on sales taxes in recent years as other revenue sources declined. Changes have been most pronounced in states controlled by Republican governors who’ve sought additional sales tax collections to offset a portion of lost revenues stemming from income tax cuts. Ohio Gov. John Kasich’s budget proposal calls for a net increase in sales taxes of $1.1 billion, along with $2.4 billion in income tax cuts.

Governors in nine states have also targeted tobacco products for tax increases. So far, lawmakers have passed cigarette tax hikes in Kansas, Louisiana and Nevada. In Alabama, Gov. Robert Bentley has proposed tripling the state’s cigarette tax -- currently one of the nation’s lowest -- to help close a sizable budget gap. Lawmakers in Alabama and other states continue to weigh cigarette tax increases, but those approving measures will likely raise taxes less than the rate increases proposed by their governors.

Corporate income taxes are not projected to fluctuate much, with only Connecticut (+$273 million) and Pennsylvania (-$249 million) proposing notable changes for the upcoming fiscal year.

Governors in 16 states have proposed net increases in total taxes and fees for fiscal 2016. Twelve other governors presented budgets that would result in net tax declines: Arkansas, Florida, Idaho, Indiana, Maryland, Massachusetts, Minnesota, Mississippi, North Carolina, North Dakota, Ohio and Texas.

State Budget Strategies

Governors’ proposals outline a range of different strategies in balancing budgets. The NASBO report tallies the various budget strategies, grouping them into categories:


Mike Maciag is Data Editor for GOVERNING.
Special Projects
Sponsored Stories
Workplace safety is in the spotlight as government leaders adapt to a prolonged pandemic.
While government employees, students and the general public had to wait in line for hours in the beginning of the pandemic, at-home test kits make it easy to diagnose for the novel coronavirus in less than 30 minutes.
Governments around the nation are working to design the best vaccine policies that keep both their employees and their residents safe. Although the latest data shows a variety of polarizing perspectives, there are clear emerging best practices that leading governments are following to put trust first: creating policies that are flexible and provide a range of options, and being in tune with the needs and sentiments of their employees so that they are able to be dynamic and accommodate the rapidly changing situation.
Service delivery and the individual experience within health and human services (HHS) is often very siloed and fragmented.
In this episode, Marianne Steger explains why health care for Pre-Medicare retirees and active employees just got easier.
Government organizations around the world are experiencing the consequences of plagiarism firsthand. A simple mistake can lead to loss of reputation, loss of trust and even lawsuits. It’s important to avoid plagiarism at all costs, and government organizations are held to a particularly high standard. Fortunately, technological solutions such as iThenticate allow government organizations to avoid instances of text plagiarism in an efficient manner.
Creating meaningful citizen experiences in a post-COVID world requires embracing digital initiatives like secure and ethical data sharing, artificial intelligence and more.
GHD identified four themes critical for municipalities to address to reach net-zero by 2050. Will you be ready?
As more state and local jurisdictions have placed a priority on creating sustainable and resilient communities, many have set strong targets to reduce the energy use and greenhouse gases (GHGs) associated with commercial and residential buildings.