Which states have a budget deficit?

While North Carolina is waiting to see what the end result is from the tax reform changes and other economic impacts on the state’s revenue – why not take a look at what other states are dealing with so far in 2015. It doesn’t look like NC is the only state that is going to have to make hard decisions when it comes to the budget….

Arizona: A new legislature, a new governor and a budget shortfall. An expected $520 million budget deficit this year and a projection of a $1 billion deficit for the following year. If that wasn’t enough, according to news reports, “a Maricopa County Superior Court judge ordered the state to pay K-12 schools $336 million they were owed because Arizona failed to properly adjust funding for inflation during recent years in accordance with a voter-approved law.”

California: The governor has proposed a $164.7 billion spending plan, which includes a projected surplus. This includes a voter-approved temporary tax increase that is expected to increase state revenue by $4 billion or more. Ideas to use the surplus to pay down the debt and build up the ‘rainy day fund’ are falling on deaf ears. The governor said, “a third of the state’s spending is earmarked for the poorest among us. When the federal portion is added, he said, $120 billion will be spent on the third of the population at the low end of the economic ladder.” So what will California spend its money on – only time will tell.

Connecticut: A projection of a $1.3 billion deficit is expected for 2015, equal to about 7 percent of annual operating expenses. If the governor goes through with his new tax cuts to those with student loan debt and to urban businesses, we can add another $40 million to that hole. The governor has gotten a two-week extension on his deadline to send a budget to the legislature.

Indiana: The governor’s budget spends an additional $200 million in K-12, specifically for charter schools and vouchers. His budget overall would has a $167 surplus next year and $482 million the following. As a percentage, his two-year budget increases spending by 1.34 % each year.

Kansas: The legislature in Kansas will focus primarily on the budget during this session. The current budget is in a $280 million revenue shortfall and the next fiscal year has estimated a shortfall of $436 million at a minimum.

Maine: While Maine doesn’t have a looming budget deficit, they do have a process in place that spends money before it exists or is collected by the state. They call it a “funding cascade”. Funding projects and programs by using expected surplus funds, which is nothing more than money appropriated but not spent. The Governor plans to end this practice in his budget.

Maryland: This year Maryland is experiencing a $400 million shortfall. While former Gov. O’Malley is trying to fix this problem, it looks like it will fall on Gov-elect Hogan and the next budget. A projected $750 million shortfall is expected for next year’s budget. The new governor has already said budget cuts are on the horizon. Nearly a $1.2 billion revenue shortfall is projected over the next two-year period.

Massachusetts: A projected $500+ million ‘spending problem’ is expected for the current fiscal year. The new governor is a former state budget chief and has an intimate understanding of the execution of the state budget. Many are anxious to see how he handles health care expenditures, which account for 42 percent of the state’s $36 billion budget.

Michigan: Michigan’s big problems have been tax credits, resulting in a projected $454.4 million budget shortfall. “…the value of corporate tax credits has grown $1.6 billion, leaving Michigan taxpayers on the hook for $3.2 billion in refunds to businesses, the Senate Fiscal Agency said in a December report.”  The total shortfall is closer to $600 million, but there is some money left from last fiscal year to offset that, about $150 million.

West Virginia: The next fiscal year is expecting to see a $195 million shortfall. The governor plans to address this shortfall with specific reductions in spending and a withdrawal from the state’s Rainy Day Fund. Reasons for the shortfall have been blamed on falling energy prices and lower coal demand, weak wage growth, a 2013 federal payroll tax increase, and turmoil in the federal government and health care sectors.

Washington: The arguments focus on a baseline of which to start policy and spending decisions. According to news outlets, “Rep. Ross Hunter believes the state will not be able to meet all its obligations without raising taxes in some way. The chairman of the Senate Ways and Means Committee does not agree.”

Wisconsin: Gov. Scott Walker promises to cut property taxes, but that is where they stop. Lowering the personal or corporate income taxes is not a guarantee. The next fiscal year is expecting to see a $2.2 billion shortfall and will last for two years.

Sarah Curry

Sarah Curry is Director of Fiscal Policy Studies at the John Locke Foundation.

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