Analysis highlights key challenges to state finances and the nation's economy
The Pew Charitable Trusts' new online data resource, Fiscal 50: State Trends and Analysis, points to improving finances for most states more than four years after the Great Recession officially ended in June 2009, but reveals that many states have yet to return to prerecession levels on several key measures of fiscal health. Data showcased in the Fiscal 50 interactive confirms that the recovery has been fragile and varies widely from state to state.
“Among the top challenges ahead for state policymakers are a slowly recovering job market, shortfalls in funding for pension and retiree health care, and uncertainty over federal aid,” said Barbara Rosewicz, a research director at The Pew Charitable Trusts. “Pew's Fiscal 50 online tool reveals that states vary dramatically on key measures of fiscal health as they continue to recover from the worst economic downturn since World War II.”
Through a series of interactive graphics, Fiscal 50 illustrates trends across fiscal and economic indicators that serve as key measures of the long-term financial health of states. The tool is intended to simplify policymakers' access to vital pieces of data and enhance their understanding of long-term fiscal trends.
The interactive tool launched with six key indicators of state fiscal health:
- Tax revenue: As of the first quarter of 2013, only 14 states had seen their tax collections recover to peak levels experienced before their plunge in the recession, in inflation-adjusted dollars.
- Federal share of state revenue: More than $1 of every $3 of state revenue, a record high, came from the federal government in the wake of the recession, ranging from a high of nearly 49 percent of revenue in Mississippi to a low of 24 percent in Alaska in fiscal 2011.
- Change in state spending: After the Great Recession ended, total spending by state governments hit its highest level as a share of the economy in at least 20 years. Federal funds drove the growth, as spending from states' own dollars shrank as a share of personal income.
- Employment to population ratio: About 76 of every 100 Americans in their prime working years had a job in the 12 months ending in June 2013, compared with nearly 80 of every 100 in 2007, before the recession. The decline translates into lower tax revenue for states and increased expenses for assistance programs for the jobless.
- Debt and unfunded retirement costs: While states pass balanced budgets, some spending commitments that will not come due for years go unpaid. Among these are long-term obligations for public debt and unfunded pension and retiree health care benefits. As of fiscal 2010, unfunded pension costs in 31 states were a bigger liability than either debt or unfunded retiree health care promises.
- Reserves and balances: By the end of fiscal 2013, 13 states expected their financial cushions to be restored to prerecession levels. While states' rainy day reserves and general fund balances collectively are growing, four states expected to have just one day or less in operating costs set aside for unexpected expenses.
Fiscal 50 will be updated with new analysis, fresh data, and additional indicators. For more information, visit www.pewstates.org/fiscal50.
The Pew Charitable Trusts is driven by the power of knowledge to solve today's most challenging problems. Pew applies a rigorous, analytical approach to improve public policy, inform the public, and stimulate civic life. www.pewstates.org