Despite strong revenue, states still face fiscal challenges

Healthcare Financial Management, August, 2005

While the revenue shortfalls facing states in recent years have subsided and short-run forecasts are sunnier, most states still face budgetary challenges driven by a backlog of expenditure demands and Medicaid, according" to the National Governors Association and the National Association of" State Budget Officers.

In a report released July 7, The Fiscal Survey of States, NGA and NASBO found the revenue picture for most states improved dramatically in FY05, a situation both associations expect to continue in the current fiscal year. Nevertheless, expenditures for Medicaid, which is now a larger component of total state budgets than elementally and secondary education combined, continue to outpace revenue growth. According to the survey, 20 states reported Medicaid shortfalls in FY04, and 24 states experienced them in FY05.

To read The Fiscal Survey of States, go to www.nga.org/portal/site/nga and click on the report.