Posted by JR Olson | Posted in Business, Current Events | Posted on 21-09-2014
The Great Recession of 2009 not only impacted the economic well-being of the country, but also took its toll on the budgets of various states. States hardest hit by the recession include California, Illinois, New Jersey, New York, Texas, and Virginia. The problems shared by these states include rising Medicaid spending, underfunded state pension accounts, and the rising federal deficit.
The states that have the healthiest budgets and fiscal outlooks include South Dakota, Iowa, Tennessee, Nebraska and North Carolina, based on combined level of debt and the amount of unfunded pension liabilities. Here’s a more in-depth look at what makes these states fiscally sound relative to the other states.
South Dakota closed its most recent fiscal year with a budget surplus for the second consecutive year. The state exceeded projected revenues by nearly $14 million in 2013 and limited it’s spending to $10 million less than what was appropriated. Maintaining a balanced and disciplined budget is one of the priorities of the state’s current administration and that has manifested itself in lower spending and increased revenues, not only from tax receipts but also revenues from property taxes and those derived from insurance companies operating in South Dakota.
Iowa is another state that has maintained budget surpluses in this troubling economic climate. The state is sitting on a surplus of $600-$700 million and has an additional $1 billion held in reserve accounts. The state’s philosophy of hold-the-line spending for its programs and departments allows the state to maintain basic service levels for its residents and also allows for flexibility in expanding other programs, such as a homeowner buying program for returning veterans.
The budget for the State of Tennessee has grown from $1.2 billion in 1970-71 to an estimated $31.1 billion for 2012-13, a growth of nearly 2,500 percent. The state budgets of the last two years have been going down, from a high of $31.73 billion in 2010-11 to $31.68 billion (a decrease of 0.15 percent) for 2011-12 and $31.1 billion estimated for 2012-13 (a decrease of 1.83 percent). Across the board budgetary reductions over the past five years (2008-2013) have resulted in savings in spending of nearly $1.5 million.
Nebraska has a total state budget of $7 billion and has an anticipated surplus of $81 billion planned for its upcoming budget. This turnaround for the state and its 1.8 million residents is due in part to the government reversing crippling deficits from years past and maintaining discipline in its spending priorities, as evidenced by Governor Dave Heineman’s recent line-item veto of $44.6 million from the proposed biennial budget.
The Great Recession caused many in North Carolina to fear drastic cuts in spending in many programs that provide support for North Carolinians. A projected surplus of $103 million over budgeted revenue forecasts by the end of June 2013 means the state faces the prospect of having more money heading into its next budget period, not less. The state is looking at revenue increases of 3.6 and 4.1 percent in 2013-14 and 2014-15 respectively.
Chance Sheridan writes on Banking, Economics, Financial Regulation, Securities Litigation and other kindred topics.