Budget Blog

Overview Through February 25th, governors from 43 states and territories have delivered a State of the State address. In their speeches, governors described the state of their state as strong, resilient, and well positioned for the future. Many highlighted economic growth, job creation, fiscal discipline, record reserves, sustained investment in core priorities, and efforts to increase opportunities and build a brighter future. At the same time, challenges with affordability and the cost of living emerged as a central focus across many governors’ addresses. Governors repeatedly cited rising housing, childcare, ... More

What does it mean when a state has a budget gap? With state and territory fiscal conditions tightening, it is important to remember the various ways the term may be used and what it does and doesn’t mean. This explainer addresses several common questions including: What is the difference between a budget gap, a budget deficit, a revenue shortfall, and a structural deficit? When a state budget gap is identified, how can a state respond and how does this vary based on timing? Why is it so hard to find standardized data on state budget gaps? Defining Budget Gaps & Other Key Terms ... More

Disasters pose many challenges for states including the immediate response and long-term recovery. Disaster-related tax extensions provide relief for impacted taxpayers, but may present additional hurdles for revenue forecasters and cash-strapped states. To be resilient in the face of increasing disasters, policymakers need to be aware of, and prepared for, potential disruptions to revenue collections, including an expansion of disasters qualifying for extensions. When does the IRS issue disaster-related federal tax extensions? Following certain disasters, the Internal Revenue Service (IRS) will issue ... More

Newly released end-of-year revenue totals indicate states largely saw a third consecutive year of slow growth in tax collections in fiscal 2025. Despite modest gains in revenue collections, most states ended the year above both their original and revised revenue forecasts. Comparing actual collections to forecasts is a better indicator of state revenue performance than year-over-year growth figures which, in many states, have been considerably impacted by recently enacted tax cuts. While most states are reporting revenue surpluses, the surplus amounts are relatively small, especially when compared to the substantial ... More

Update: As of July 4, four states have yet to enact a full-year budget for fiscal 2026 (MI, NC, OR, and PA). As of July 1, 44 states have enacted a full-year budget for fiscal 2026, while in several states the governor is currently reviewing the budget bill(s). This is in line with last year when 46 states had enacted a full-year fiscal 2025 budget by July 1. Governors in 47 states (compared to 34 last year), the territories, and the District of Columbia are enacting a new budget for fiscal 2026. Thirty-one states are approving a one-year budget for fiscal 2026, while 16 states are enacting a two-year ... More

Early indications are most states and territories continued to see slow revenue growth through April, the tenth month of fiscal 2025 for most states (46 states will end their fiscal year on June 30th) and the largest month for tax collections for income tax states due to the tax filing deadline. In NASBO’s Fall 2024 Fiscal Survey of States , states projected fiscal 2025 revenues would be 1.9 percent higher than preliminary actual collections for fiscal 2024. Through April, most states appear to be meeting or exceeding these projections for another year of slow growth in tax collections but are not anticipating substantial ... More

As states work to finalize their budgets for fiscal 2026, many have published revised revenue forecasts, with most having revised estimates downward. A number of revenue forecasts discussed heightened economic uncertainty partly brought upon by changes at the federal level, while stating a cautious approach is warranted. Specifically, revenue forecasts noted the impact of potential changes in federal spending, federal tax provisions, trade policy including tariffs, federal workforce levels, immigration, geopolitical events, and consumer confidence in explaining the revisions. The lowered revenue forecasts come at ... More

In their State of the State addresses and budget proposals, governors have recommended a wide range of tax policy changes aimed both at providing tax relief and generating additional revenue through targeted increases. These revenue actions have included further reducing personal income taxes; lowering property tax burdens; ending the grocery tax; middle class tax relief including one-time refund checks; creating or expanding child tax credits; boosting earned income tax credits; targeted tax relief to retirees, farmers, and law enforcement officers; modifications to corporate taxes; expanding the sales tax base; ... More