State budget issues, 2010-2011

State and local government budgets faced budget gaps as the recession led to lower than anticipated revenues from taxes. States faced a combined gap of at least $127 billion through fiscal year 2012. Yolanda Kodrzycki, an economist at the Federal Reserve Bank of Boston, told the National Governors Association meeting in July 2010 that budgeting for next year would be "just as tough" for state budget makers.

• See also: State budget issues, 2009-2010

See also: Find your state budget

State deficits data

Aggregate state debt exceeded $1.8 trillion according to State Budget Solutions.

As displayed in the following tables, "research by State Budget Solutions reveals the total official financial liability for each state according to the latest comprehensive annual data available. The research included total debt outstanding, recent budget shortfalls, pension and retirement health care liabilities, and Unemployment Trust Fund loans. The research also looks at the overall financial landscape for each state by considering top income tax rates, past economic performance, and economic outlook."

The Securities and Exchange Commission conducted hearings about municipal bond financial disclosures as part of concern about accuracy, timeliness, and fiscal transparency. The Meredith Whitney Advisory Group recently published a report saying that municipal spending had doubled since 2000. The following municipalities have even considered declaring bankruptcy: Los Angeles, Detroit, Harrisburg, PA, and Jefferson County, AL.

2010 State Budget Gap in Millions

Per capita

As of 2009, total state debt averaged almost $17,000 for each of the 107 million private sector workers in the United States. .

Income tax rates were obtained from the Federation of Tax Administrators and state rankings are from the American Legislative Exchange Council’s 2010 report “Rich States, Poor States.” Outstanding debt and outstanding debt per capita were obtained from each state’s Comprehensive Annual Financial Report, which may have lagged data by one to three years.

State	Max Personal Income Tax Rate (%)1	Max Corporate Income Tax Rate (%)2	Economic Outlook Ranking3	Economic Performance Ranking4	Debt Per Capita5	Debt Per Capita Ranking	Outstanding Debt (In Thousands)6
Alabama	5	4.23	17	26	$357	5	$1,663,232
Alaska	N/A	9.4	22	9	$2,936	43	$1,995,349
Arizona	4.54	6.97	3	8	$1,249	22	$8,115,545
Arkansas	7	6.5	13	17	$902	20	$2,598,939
California	10.55	8.84	46	38	$2,808	41	$107,092,107
Colorado	4.63	4.63	2	15	$1,247	21	$5,972,627
Connecticut	6.5	7.5	36	45	$5,181	50	$18,137,626
Delaware	6.95	9.98	37	30	$2,984	44	$2,614,869
Florida	N/A	5.5	5	6	$1,495	30	$28,128,000
Georgia	6	6	9	27	$1,354	25	$13,110,432
Hawaii	11	6.4	39	16	$4,375	49	$5,651,975
Idaho	7.8	7.6	7	10	$661	10	$1,015,845
Illinois	3	7.3	47	48	$1,837	32	$23,610,974
Indiana	3.4	8.5	20	47	$201	3	$1,286,107
Iowa	8.98	9.9	28	41	$780	16	$2,342,414
Kansas	6.45	7.05	25	40	$1,934	34	$5,450,878
Kentucky	6	8.2	40	31	$1,292	23	$5,515,889
Louisiana	6	5.2	16	34	$2,541	38	$11,111,263
Maine	8.5	8.93	44	19	$698	12	$942,407
Maryland	9.3	8.25	29	20	$2,482	37	$13,983,112
Massachusetts	5.3	9.5	32	43	$3,340	47	$21,536,894
Michigan	4.35	9.01	26	50	$855	18	$8,549,000
Minnesota	7.85	9.8	38	36	$863	19	$5,443,002
Mississippi	5	5	18	42	$1,483	29	$4,358,761
Missouri	6	5.81	15	35	$668	11	$3,950,022
Montana	6.9	6.75	33	2	$401	6	$387,480
Nebraska	6.84	7.81	34	29	$24	1	$42,692
Nevada	N/A	N/A	11	13	$1,501	31	$3,903,469
New Hampshire	N/A	8.5	30	28	$798	17	$1,059,968
New Jersey	10.75	9	48	39	$4,073	48	$51,216,527
New Mexico	4.9	7.6	35	5	$3,010	46	$6,050,683
New York	10.5	15.95	50	37	$2,693	40	$52,493,000
North Carolina	7.75	6.9	21	23	$768	15	$7,207,211
North Dakota	4.86	4.23	12	11	$2,682	39	$1,720,591
Ohio	8.24	5.14	42	49	$1,438	28	$16,519,326
Oklahoma	5.5	6	14	7	$575	7	$2,122,197
Oregon	11	11.55	41	25	$2,830	42	$10,816,228
Pennsylvania	3.07	13.97	43	46	$743	14	$9,254,592
Rhode Island	9.9	9	45	33	$3,000	45	$2,730,259
South Carolina	7	5	31	24	$1,847	33	$8,320,109
South Dakota	N/A	N/A	4	12	$617	8	$496,029
Tennessee	N/A	6.5	10	32	$229	4	$1,429,427
Texas	N/A	5.56	19	3	$1,368	26	$33,945,000
Utah	5	5	1	18	$1,415	27	$3,970,000
Vermont	9.4	8.5	49	22	$737	13	$457,890
Virginia	5.75	6	8	4	$638	9	$5,003,955
Washington	N/A	5.22	24	14	$2,479	36	$16,533,000
West Virginia	6.5	8.5	27	21	$1,319	24	$2,393,715
Wisconsin	7.75	7.9	23	44	$2,024	35	$11,393,755
Wyoming	N/A	N/A	6	1	$88	2	$46,970
Total	N/A	N/A	N/A	N/A	N/A	N/A	$553,691,342

Pension & unemployment data

Pension and OPEB liabilities were obtained from PEW’s “Trillion Dollar Gap” report on pension funds as of 2008. Official Unfunded Pension Liabilities based on assumptions of annual investment returns of 7 percent to 8.5 percent are from the CAFRs of each state’s major pension funds.

• Figures for unemployment Trust Fund Loans are from the National Council of State Legislatures, and budget shortfalls are from the Wall Street Journal and the Center on Budget and Policy Priorities. Total State debt is the sum of outstanding official debt, pension and OPEB liabilities, Unemployment loans, and budget gap. Figures for debt per private worker were computed using data from the Bureau of Labor Statistics.

State	Pension UAAL7	Pension UAAL Ranking	OPEB UAAL8	OPEB UAAL Ranking	Pension UAAL + OPEB UAAL	Pension UAAL + OPEB UAAL Ranking	Unemployment Trust Fund Loans as of 6/29/20109	Unemployment Trust Fund Loans Ranking
Alabama	$9,228,918,000	31	$15,549,411,000	39	$24,778,329,031	39	$283,001,164	9
Alaska	$3,522,661,000	19	$4,032,052,000	27	$7,554,713,019	19	$0	N/A
Arizona	$7,871,120,000	27	$808,818,000	14	$8,679,938,027	23	$7,016,253	1
Arkansas	$2,752,546,000	17	$1,822,241,000	20	$4,574,787,017	13	$330,853,383	10
California	$59,492,498,000	50	$62,463,000,000	48	$121,955,498,050	50	$7,207,436,466	31
Colorado	$16,813,048,000	45	$1,127,179,000	16	$17,940,227,045	33	$169,126,150	6
Connecticut	$15,858,500,000	44	$26,018,800,000	41	$41,877,300,044	43	$498,452,705	15
Delaware	$129,359,000	4	$5,409,600,000	29	$5,538,959,004	15	$12,901,505	2
Florida	-$1,798,789,000	2	$3,081,834,000	26	$1,283,045,002	5	$1,612,500,000	22
Georgia	$6,384,903,000	25	$18,322,123,000	40	$24,707,026,025	38	$416,000,000	13
Hawaii	$5,168,108,000	24	$10,791,300,000	34	$15,959,408,024	32	$0	N/A
Idaho	$772,200,000	11	$489,421,000	8	$1,261,621,011	4	$202,401,700	7
Illinois	$54,383,939,000	49	$39,946,678,000	46	$94,330,617,049	48	$2,239,582,343	25
Indiana	$9,825,830,000	32	$442,268,000	7	$10,268,098,032	25	$1,709,743,840	23
Iowa	$2,694,794,000	16	$404,300,000	6	$3,099,094,016	10	$0	N/A
Kansas	$8,279,168,000	29	$316,640,000	4	$8,595,808,029	22	$88,159,421	4
Kentucky	$12,328,429,000	40	$11,660,245,000	35	$23,988,674,040	36	$795,100,000	18
Louisiana	$11,658,734,000	38	$12,542,953,000	36	$24,201,687,038	37	$0	N/A
Maine	$2,782,173,000	18	$4,347,702,000	28	$7,129,875,018	17	$0	N/A
Maryland	$10,926,099,000	36	$14,723,420,000	37	$25,649,519,036	40	$133,840,765	5
Massachusetts	$21,759,452,000	47	$15,031,600,000	38	$36,791,052,047	42	$387,313,005	12
Michigan	$11,514,600,000	37	$39,878,500,000	45	$51,393,100,037	47	$3,876,782,333	30
Minnesota	$10,771,507,000	35	$1,011,400,000	15	$11,782,907,035	28	$580,825,783	16
Mississippi	$7,971,277,000	28	$570,248,000	9	$8,541,525,028	21	$0	N/A
Missouri	$9,025,293,000	30	$2,851,826,000	23	$11,877,119,030	29	$722,116,933	17
Montana	$1,549,503,000	13	$631,918,000	11	$2,181,421,013	9	$0	N/A
Nebraska	$754,748,000	10	N/A	50	$754,748,010	3	$0	N/A
Nevada	$7,281,752,000	26	$2,211,439,000	21	$9,493,191,026	24	$438,155,817	14
New Hampshire	$2,522,175,000	15	$3,054,188,000	25	$5,576,363,015	16	$0	N/A
New Jersey	$34,434,055,000	48	$68,900,000,000	49	$103,334,055,048	49	$1,749,563,533	24
New Mexico	$4,519,887,000	22	$2,946,290,000	24	$7,466,177,022	18	$0	N/A
New York	-$10,428,000,000	1	$56,286,000,000	47	$45,858,000,001	45	$3,176,873,428	29
North Carolina	$504,760,000	8	$28,741,560,000	44	$29,246,320,008	41	$2,288,985,365	26
North Dakota	$546,500,000	9	$81,276,000	2	$627,776,009	2	$0	N/A
Ohio	$19,502,065,000	46	$27,025,738,000	42	$46,527,803,046	46	$2,314,186,799	27
Oklahoma	$13,172,407,000	41	$359,800,000	5	$13,532,207,041	31	$0	N/A
Oregon	$10,739,000,000	34	$609,793,000	10	$11,348,793,034	27	$0	N/A
Pennsylvania	$13,724,480,000	42	$9,956,800,000	33	$23,681,280,042	35	$3,008,614,961	28
Rhode Island	$4,353,892,000	21	$788,189,000	13	$5,142,081,021	14	$225,472,937	8
South Carolina	$12,052,684,000	39	$8,638,076,000	32	$20,690,760,039	34	$886,662,352	19
South Dakota	$182,870,000	5	$76,406,000	1	$259,276,005	1	$0	N/A
Tennessee	$1,602,802,000	14	$1,746,879,000	19	$3,349,681,014	11	$0	N/A
Texas	$13,781,228,000	43	$28,611,584,000	43	$42,392,812,043	44	$1,290,700,472	20
Utah	$3,611,399,000	20	$672,843,000	12	$4,284,242,020	12	$0	N/A
Vermont	$461,551,000	7	$1,614,581,000	17	$2,076,132,007	8	$32,657,065	3
Virginia	$10,723,000,000	33	$2,621,000,000	22	$13,344,000,033	30	$346,876,000	11
Washington	-$179,100,000	3	$7,901,610,000	31	$7,722,510,003	20	$0	N/A
West Virginia	$4,968,709,000	23	$6,108,398,000	30	$11,077,107,023	26	$0	N/A
Wisconsin	$252,600,000	6	$1,700,396,000	18	$1,952,996,006	7	$1,424,768,541	21
Wyoming	$1,444,353,000	12	$174,161,000	3	$1,618,514,012	6	$0	N/A
Total	$452,195,687,000	N/A	$555,102,484,000	N/A	$1,007,298,172,275	N/A	$38,456,671,022	N/A

Total debt

State	FY2010 Total Budget Gap (In Millions)10	FY 2010 Total Budget Gap Ranking	Total Debt11	Total Debt Ranking
Alabama	$1,600	26	$28,324,562,195	32
Alaska	$1,300	22	$10,850,062,019	16
Arizona	$5,100	42	$21,902,499,280	26
Arkansas	$395	8	$7,899,579,400	11
California	$54,600	50	$290,855,041,516	50
Colorado	$1,600	27	$25,681,980,195	28
Connecticut	$4,700	40	$65,213,378,749	43
Delaware	$557	10	$8,723,729,509	12
Florida	$817	12	$31,840,545,002	35
Georgia	$6,000	45	$44,233,458,025	41
Hawaii	$4,500	39	$26,111,383,024	29
Idaho	$1,200	19	$3,679,867,711	7
Illinois	$562	11	$120,743,173,392	47
Indiana	$14,300	48	$27,563,948,872	31
Iowa	$1,400	24	$6,841,508,016	9
Kansas	$1,300	23	$15,434,845,450	21
Kentucky	$1,800	30	$32,099,663,040	36
Louisiana	$1,200	20	$36,512,950,038	37
Maine	$1,900	31	$9,972,282,018	15
Maryland	$849	13	$40,615,471,801	38
Massachusetts	$2,800	32	$61,515,259,052	42
Michigan	$5,600	43	$69,418,882,370	45
Minnesota	$3,400	34	$21,206,734,818	25
Mississippi	$917	14	$13,817,286,028	18
Missouri	$1,700	29	$18,249,257,963	24
Montana	$0	1	$2,568,901,013	5
Nebraska	$305	6	$1,102,440,010	2
Nevada	$1,500	25	$15,334,815,843	20
New Hampshire	$430	9	$7,066,331,015	10
New Jersey	$11,000	47	$167,300,145,581	49
New Mexico	$995	16	$14,511,860,022	19
New York	$21,000	49	$122,527,873,429	48
North Carolina	$5,000	41	$43,742,516,373	40
North Dakota	$0	2	$2,348,367,009	4
Ohio	$3,600	36	$68,961,315,845	44
Oklahoma	$1,600	28	$17,254,404,041	22
Oregon	$4,200	38	$26,365,021,034	30
Pennsylvania	$5,900	44	$41,844,487,003	39
Rhode Island	$990	15	$9,087,812,958	13
South Carolina	$1,200	21	$31,097,531,391	34
South Dakota	$48	4	$803,305,005	1
Tennessee	$1,100	18	$5,879,108,014	8
Texas	$3,500	35	$81,128,512,515	46
Utah	$1,000	17	$9,254,242,020	14
Vermont	$306	7	$2,872,679,072	6
Virginia	$3,600	37	$22,294,831,033	27
Washington	$6,200	46	$30,455,510,003	33
West Virginia	$304	5	$13,774,822,023	17
Wisconsin	$3,200	33	$17,971,519,547	23
Wyoming	$34	3	$1,699,484,012	3
Total	$197,109	N/A	$1,796,555,185,297	N/A

Taxes

In 2010, taxpayers paid $25 billion more in taxes to state and municipal governments then they did in 2007. The total tax increase was 2 percent, while the average household income dropped 3 percent.

Declines in Spending

The Fiscal Survey of States issued in June 2010 by the National Governors Association and National Association of State Budget Officers noted a decline in state general fund spending, with declines in state spending anticipated in FY2011 after declines in spending in both FY2009 and FY2010. FY2010 general fund expenditures were estimated to be $612.9 billion compared to $657.9 billion in FY2009, a 6.8 percent decline. In FY2008, spending was $687.3 billion.

Budget Cuts Made After FY2010 Budget Passed

State	FY 2010 Size of Cuts ($ in millions)	Programs Exempted from Cuts
Alabama	426.7	Debt service and federal court decrees
Arkansas	205.9
Arizona	120.0
California	1,000.0
Colorado	500.1
Connecticut	158.5	Program funding which is compulsory for ARRA funding
Delaware
Florida	3,000.0
Georgia	1,253.4
Hawaii	342.6	Employees health insurance
Idaho	87.8
Illinois	382.9	Debt service, statutory exemptions, and federal mandates
Iowa	564.4
Indiana	726.5	Student financial aid, transportation, and public assistance
Kansas	262.0	Debt Service
Kentucky	1,110.5	Corrections, Prosecutors, Debt service, Retirement contributions, Parks, Revenue/tax collection efforts, Mental Health/mental retardation programs, Corrections, Student financial aid
Louisiana	247.9	Programs which are Constitutionally required were not cut
Maryland	565.0	Mandated K-12 expenditures and debt service
Massachusetts	2,394.0	Debt Service
Minnesota	89.0	Military and veterans affairs, core public safety
Mississippi	499.1	Debt service and statutory exemptions
Missouri	380.4	K-12 foundation formula and higher education Institutions
Nebraska	55.0
Nevada	107.5
New Hampshire	25.0	Appropriation reductions to the University System of NH, the NH Community College System and the Department of Education – Adequacy Funding
New Jersey	2,028.0	Debt Service
New Mexico	368.9
New York	1,083.0
North Carolina	500	Debt Service, Medicaid, CHIPS
Oklahoma	709.1
Pennsylvania	135.0	After budget enactment, the Governor does not have the authority to reduce appropriations to the Attorney General, Auditor General and Treasurer (which are independently elected); the legislature and judiciary
Rhode Island	155.4
South Carolina	566.5	Higher Education Scholarships and Tuition Grants; Southern Regional Education Board Professional Scholarship Programs and Fees; Debt Service; Aid to Fire Districts; First Responder Interoperability; National Guard Pension Fund; Compensation of County Registration Board Members & County Election Commissioners; Commission on Indigent Defense Legal Services Corporation; Clemson University Public Service Authorities; Boll Weevil Eradication Program; Department of Revenue; Homestead Exemption Fund
South Dakota	5.5
Texas	527.4
Utah	39.0	Public education
Vermont	21.0
Virginia	1,044.0
Washington	130.0	K-12 basic education, debt service, retirement contributions
West Virginia	120.0	Debt service & retirement
Total	$ 21,973.0	----

Rainy Day Funds

Because prior economic downturns resulted in lower than anticipated revenue collections, states established “rainy day” accounts during times of economic expansion. These accounts were intended to help stabilize budgets from future declines in tax collections and mitigate the disruption to state services during an economic downturn.

Total Year-End Balances as a Percentage of Expenditures, Fiscal 2009 to Fiscal 2011 (number of states)

Percentage	Fiscal 2009 (Actual)	Fiscal 2010 (Estimated)	Fiscal 2011(Recommended)
Less than 1.0%	11	14	15
1.0% to 4.9%	16	16	17
5.0% to 9.9%	14	12	10
10% or more	9	8	8

See also

• Government budgets
• Tax Foundation