Deltek Sr. Analyst Chris Cotner reports.
The news for state government finance during the recession and slow recovery has been challenged, at best. States reported widespread problems meeting their budgetary obligations during the recession and enacted a variety of measures to remain solvent in the face of declining revenues. The bulk of the most challenging cuts came in 2011 and 2012, as states adjusted to winding down stimulus dollars. Figure 1 (below) illustrates the budget measures states took in efforts to balance their budgets.
The balancing strategies resulted in 2012 being one of the toughest fiscal years on record, with combined all funds budgets falling $42.1 billion (-2.4 percent) from 2011. It was the first all funds drop in state budgets since 1987 and dramatically juxtaposed to the $87.9 billion (+5.6 percent) overall state budget gains from FY 2010 to 2011. Putting the record 2012 state budget losses in perspective, the data includes the seminal 1987, 2000, and 2001 stock market losses and resulting economic declines (with 2012 still being the only overall loss).
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