Slides for "Challenges and Opportunities in State & Local Budgeting" webainar, presented December 9, 2014, by Association for Budgeting & Financial Management and American Society for Public Administration

1. Challenges & Opportunities in
State & Local Budgeting
Presented By
Kenneth Hunter, MPA, City of Rocky Mount, NC
Scott Pattison, Executive Director, NASBO
December 9, 2014

2. Overview
How We Budget
State Trends
Local Trends
Q&A

3. Different Governments,
Different Budgeting Processes

4. Structural Challenges
Where’s Washington?
Capacities/Expectations/Polarization
Entitlements
Obligations

5. When Budgeting Matters
Cover Obligations First
Prioritize Needs & Objectives
Realistic Projections
Assess Long‐Term Impact

6. Scott Pattison
Executive Director
National Association of State Budget Officers
444 North Capitol Street, NW, Suite 642 • Washington, DC 20001 • (202) 624-5382 • www.nasbo.org
ASPA
December 9, 2014

7. 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. -8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
(PercentageChange)
Annual Percentage Change in General Fund Expenditures
*Average
37-year historical average annual rate of growth is 5.5 percent.

9. Additional budget dollars target K-12 Education and Medicaid

10. 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

11. 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

12. States Enact $2.3B in Net Tax and Fee Cuts
for FY15
Fiscal Year
12/19/2014www.nasbo.org 7

14. 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

15. Spending by Funding Source
(Percentage)
Source: NASBO State Expenditure Report
12/19/2014www.nasbo.org 10

16. 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

17. Total State Expenditures by Function,
Estimated Fiscal 2014
Source: NASBO State Expenditure Report
12/19/2014www.nasbo.org 12

18. General Fund Expenditures by Function,
Estimated Fiscal 2014
Source: NASBO State Expenditure Report
12/19/2014www.nasbo.org 13

19. Revenue Sources in the General Fund
(Percentage)
Source: NASBO State Expenditure Report
14 12/19/2014www.nasbo.org

20. 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

21. www.nasbo.org
Thank You
Scott Pattison
(202) 624-8804
spattison@nasbo.org

22. Where Are Local Governments
Headed?
Overview of 2014 Fiscal Condition of Cities

23. Highlights
Improving (current resources &
reserves)
Revenues growing, not recovered
Emphasis on wages, public safety,
infrastructure

24. Highlights
Fee increases over tax increases
Challenged by benefits, infrastructure
needs
Revenues could stagnate,
expenditures continue growing

30. 2014 City Fiscal Condition Analysis
Available at
http://bit.ly/12mOQus

31. Business Trends
Housing volatility remains amongst
positive signs (prices, starts, SFH v.
MFH)
Manufacturing up 18 straight months
Services growing 58 straight months

32. 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?)

34. Thank You!
Kenneth Hunter
Kenneth.Hunter@nclgba.org
Scott Pattison
spattison@nasbo.org
www.ABFM.org