Fiscal 50: State Trends and Analysis

Fiscal 50: State Trends and Analysis
Data Visualization

Fiscal 50: State Trends and Analysis

Explore fiscal and economic trends in the 50 states, then learn their significance with our expert analysis.

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Fiscal 50: State Trends and Analysis, an interactive resource from The Pew Charitable Trusts, allows you to sort and analyze data on key fiscal, economic, and demographic trends in the 50 states and understand their impact on states’ fiscal health.

Fiscal Balance
Fiscal Balance
Article

9 States Struggle With Long-Term Fiscal Imbalances

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Article

9 States Struggle With Long-Term Fiscal Imbalances

Even after two recessions, most states amassed sufficient revenue—predominantly from taxes and federal funds—to cover their expenses between fiscal years 2004 and 2018. But total revenue in nine states fell short.

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Vault
Article

States’ Financial Reserves Hit Record Highs

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Article

States’ Financial Reserves Hit Record Highs

A decade after the Great Recession, states collectively have amassed their largest fiscal cushion in at least two decades. As most states closed out their 2019 budget year, a surge in tax collections drove the total held in savings and leftover budget dollars to a record high.

Pew’s Fiscal 50: State Trends and Analysis presents 50-state data on key fiscal, economic, and demographic indicators and analyzes their impact on states’ long-term fiscal health.

Most states gained fiscal and economic strength in 2019

After years of slow progress, states benefited from a more promising economic and fiscal environment in 2019. Pressure on state finances eased as the U.S. economic recovery became the longest on record and revenue upswings led many states to post budget surpluses. Still, not all states had fully recovered from the shocks of the Great Recession more than a decade ago. Some were in a stronger position than others as the U.S. faced new economic uncertainties in 2020, particularly those stemming from the global effects of the coronavirus outbreak.

As most states closed out their 2019 budget year, growth in tax receipts provided widespread relief for the second year in a row, but the trend showed signs of moderating. After adjusting for inflation, tax collections in a record 45 states surpassed their recession-era peaks. The extra revenue led many states to add to their rainy day funds, which could cover a larger share of spending than before the recession in two-thirds of the states. 

The economy and employment rates were on the upswing through the close of 2019. Economic growth measured by state personal income rose in every state over the first three quarters of 2019.

Tax Revenue

Decade After Recession, Tax Revenue Higher in 45 States. A decade after the Great Recession ended, the number of states in which tax collections had fully recovered jumped to 45—the highest yet—as most states closed out their 2019 budget year, after accounting for inflation. The speed and size of each state’s recovery has been uneven because of differences in economic conditions, population changes, and tax policy choices. Even states that have surpassed their recession-era peak face the challenge of keeping up with increased demand for key services, such as Medicaid, and restoring spending cuts or catching up on investments delayed during the downturn. This challenge can be even greater for states with below-peak tax revenue. View the indicator or print the analysis.

Reserves and Balances 

States’ Financial Reserves Hit Record Highs. States collectively were more financially equipped by the end of fiscal 2019 to weather the next economic downturn than at any point in at least 20 years. Nationwide, states held record amounts in both rainy day funds and total balances, which include dedicated savings and money left over at the end of the fiscal year. These reserves also could cover a record share of state spending. State-by-state results varied, but rainy day funds in at least 34 states and total balances in at least 28 exceeded pre-recession levels when measured as a share of operating costs—the highest numbers yet. View the indicator or print the analysis.

Employment-to-Population Ratio 

Employment Rate Up Again, but Lags Pre-Recession High. The U.S. employment rate for adults of prime working age rose in 2017 for a seventh consecutive year, though no state could boast that its core labor pool had clearly surpassed its pre-recession employment rate. The share of prime-working-age adults (ages 25 to 54) with a job clearly remained below pre-recession levels nationally and in 10 states. Employment rates for this population were lower than in 2007 in another 30 states and higher in 10, but not by statistically significant amounts, so the results were inconclusive. View the indicator or print the analysis.

State Personal Income 

Federal Aid Boosts Personal Income in Farm States. Temporary federal subsidies for farmers amid ongoing trade disputes provided a boost to agricultural states in the third quarter of 2019. Farm Belt and Western states led the nation in growth of their residents’ combined personal income over the past year, but every state recorded an increase for the third consecutive quarter. Since the start of the Great Recession, however, growth has trailed its historical pace nationally and played out unevenly across states. Oil-rich North Dakota has led all states, with total personal income growing more than three times faster than last-place Mississippi since late 2007. View the indicator or print the analysis.

Additional challenges await states

Even states that have overcome the effects of the recession may face financial and demographic pressures that could shape their budgets now and for years to come. A number of state governments face fiscal constraints today because of inherited shortfalls in funding for public employees’ pension and retiree health care benefits; recurring deficits between annual state revenue and expenses; and weak population growth, which can affect economic prospects and revenue collections. Among other challenges facing states are rising costs for Medicaid, a health care program that accounts for the largest share of total federal aid to states, and tax revenue volatility, which can confound policymakers’ efforts to balance budgets.

Debt and Unfunded Retirement Costs  

Long-Term Obligations Vary as a Share of State Resources. Unfunded pension benefits were the largest, most prominent, and fastest-growing of a selection of future costs facing states as of 2013. States reported $968 billion in unfunded pension costs—the equivalent of 6.9 percent of 50-state personal income, as well as $587 billion in unfunded retiree health care liabilities (4.2 percent of personal income) and $518 billion in outstanding debt (3.7 percent). If not properly managed, these costs can limit future budget flexibility and raise borrowing costs. View the indicator or print the analysis.

Fiscal Balance

9 States Struggle With Long-Term Fiscal Imbalances. Even in the aftermath of two recessions, most states amassed sufficient revenue between fiscal years 2004 and 2018 to cover all their expenses. But total revenue in nine states fell short, jeopardizing those states’ long-term fiscal flexibility and pushing off to future taxpayers some past costs for operating government and providing services. States can withstand periodic deficits without endangering their fiscal health over the long run. But chronic shortfalls are one indication of a more serious, unsustainable structural deficit in which revenue will continue to fall short of spending absent policy changes. View the indicator or print the analysis.

State Medicaid Spending

States Collectively Spend 17 Percent of Their Revenue on Medicaid. Medicaid consumed a greater portion of states’ own money in nearly every state between fiscal 2000 and 2017. States’ increases varied widely, however, from less than 1 cent to nearly 12 cents more per dollar of state-generated revenue, exerting different degrees of budget pressure. Medicaid’s claim on state revenue surged in the wake of the Great Recession, after temporary federal economic stimulus dollars expired but before the federally funded expansion of Medicaid eligibility began, and has remained stable since. Medicaid is most state governments’ second-biggest expense, after K-12 education. View the indicator or print the analysis.

Population Change

Western, Southern States Gain Residents the Fastest. All but two states—Illinois and West Virginia—added residents over the past decade, with those in the West and South growing fastest. Still, population growth is estimated to have slowed nationally and in most states over the past 10 years, continuing a long-term trend. In 2018 alone, nine states had fewer residents than a year earlier. Population changes are tied to states’ economic fortunes and government finances, and are therefore useful for understanding both. View the indicator or print the analysis.

Federal Share of State Revenue

Federal Funds Hover at a Third of State Revenue. The federal government is the second-largest source of state revenue—accounting for 32.4 percent of the total in fiscal 2017—meaning that federal budget decisions also play a key role in state budgets. But states’ reliance on federal funds varies widely, ranging from about 21 percent of revenue in Hawaii to more than 46 percent in Montana. The share of states’ revenue made up by federal dollars in fiscal 2017 was the fourth-largest on record. View the indicator or print the analysis.

Tax Revenue Volatility

Tax Revenue Volatility Varies Across States, Revenue Streams. Some states experience greater swings in tax revenue from year to year than others do, leading to surprise shortfalls or windfalls that can make it hard to manage budgets. Alaska experienced the greatest volatility over the past two decades and South Dakota the least, after removing the effects of tax policy changes. Taxes on oil and mineral extraction and corporate income were consistently more volatile than other major tax streams. View the indicator or print the analysis.

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Issue Brief

‘Lost Decade’ Casts a Post-Recession Shadow on State Finances

Despite almost 10 years of national economic recovery, strains from the 2007-09 downturn still linger in many states

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Issue Brief

‘Lost Decade’ Casts a Post-Recession Shadow on State Finances

Nearly 10 years after the end of the Great Recession, state governments have put the worst behind them. But the deepest downturn since World War II also has lived up to early predictions that states would face a “Lost Decade” because of missed economic and revenue growth.

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Where States Get Their Money, FY 2018

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Taxes and federal funds together account for 80.3 percent of revenue for the 50 states. Taxes are the largest revenue source in 43 states, while federal funds are greatest in seven: Alaska, Arizona, Louisiana, Mississippi, Montana, New Mexico, and Wyoming.

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How States Raise Their Tax Dollars, FY 2018

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Taxes make up about half of state government revenue, with the bulk coming from levies on personal income and general sales of goods and services.