ASPA Webinar: Challenges and Opportunities in State & Local Budgeting
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Challenges & Opportunities in State & Local Budgeting Presented By Kenneth Hunter, MPA, City of Rocky Mount, NC Scott Pattison, Executive Director, NASBO December 9, 2014
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Transcript of ASPA Webinar: Challenges and Opportunities in State & Local Budgeting
Challenges & Opportunities in State & Local Budgeting
Presented ByKenneth Hunter, MPA, City of Rocky Mount, NC
Scott Pattison, Executive Director, NASBODecember 9, 2014
Overview
How We Budget
State Trends
Local Trends
Q&A
Different Governments,Different Budgeting Processes
Structural Challenges
Where’s Washington?
Capacities/Expectations/Polarization
Entitlements
Obligations
When Budgeting Matters
Cover Obligations First
Prioritize Needs & Objectives
Realistic Projections
Assess Long‐Term Impact
Scott PattisonExecutive DirectorNational Association of State Budget Officers
444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org
ASPADecember 9, 2014
State Fiscal Overview
Budgets show continued slow improvement and stability
Fiscal 2015 marks the fifth consecutive year of revenue and spending increases
Positive signs: shrinking budget gaps, minimal mid-year budget cuts, net tax cuts and stable rainy day fund balances
Concerns: below average budget growth, limited projected revenue gains, cost increases, unmet demand in areas such as infrastructure
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
(Perc
entag
e Cha
nge)
Annual Percentage Change in General Fund Expenditures
*Average
37-year historical average annual rate of growth is 5.5 percent.
Additional budget dollars target K-12 Education and Medicaid
GF Spending Still Below Pre-Recession Peak Adjusted for Inflation
Source: NASBO Fall 2014 Fiscal Survey of States; Fiscal 2015 numbers are enacted*Aggregate spending levels would need to be at $771 billion to remain equivalent with real 2008 spending levels.
12/19/2014www.nasbo.org 5
GF Revenue Also Below Pre-Recession Peak Adjusted for Inflation
Source: NASBO Fall 2014 Fiscal Survey of States; Fiscal 2015 numbers are enacted*Aggregate revenue levels would need to be $763 billon to remain equivalent with real 2008 revenue levels.
12/19/2014www.nasbo.org 6
States Enact $2.3B in Net Tax and Fee Cuts for FY15
Fiscal Year
12/19/2014www.nasbo.org 7
Budget Cuts Made After the Budget Passed ($ millions)
Source: NASBO Fall 2014 Fiscal Survey *Fiscal 2015 midyear cuts are ongoing
Minimal Midyear Budget Cuts So Far in Fiscal 2015
12/19/2014www.nasbo.org 9
Spending by Funding Source(Percentage)
Source: NASBO State Expenditure Report
12/19/2014www.nasbo.org 10
Shifting of Funding Sources
Total State Expenditures by Funding Source (2008)
Total State Expenditures by Funding Source (2014)
Source: NASBO State Expenditure Report
12/19/2014www.nasbo.org 11
Total State Expenditures by Function, Estimated Fiscal 2014
Source: NASBO State Expenditure Report
12/19/2014www.nasbo.org 12
General Fund Expenditures by Function, Estimated Fiscal 2014
Source: NASBO State Expenditure Report
12/19/2014www.nasbo.org 13
Revenue Sources in the General Fund (Percentage)
Source: NASBO State Expenditure Report
14 12/19/2014www.nasbo.org
State Fiscal Outlook
15
Trends are positive with 43 states increasing general fund spending in fiscal 2015
Revenue collections are projected to grow at a faster rate compared to fiscal 2014.
However, additional revenue is limited and spending demands continue to rise, particularly in critical areas of the budget like health care and higher education
Fiscal stability likely to continue, but unmet spending needs may persist along with slow budget growth
Where Are Local Governments Headed?
Overview of 2014 Fiscal Condition of Cities
Highlights
Improving (current resources & reserves)
Revenues growing, not recovered
Emphasis on wages, public safety, infrastructure
Highlights
Fee increases over tax increases
Challenged by benefits, infrastructure needs
Revenues could stagnate, expenditures continue growing
2014 City Fiscal Condition AnalysisAvailable at
http://bit.ly/12mOQus
Business Trends
Housing volatility remains amongst positive signs (prices, starts, SFH v. MFH)
Manufacturing up 18 straight months
Services growing 58 straight months
Business Trends
Employment growth remains tied to skilled position, knowledge centers (progressive cities)
Small business sentiment improved significantly following negative trend all year (Hmmm…what changed?)
