Good News on the State Budget Front? One Can Only Hope

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October 27, 2011; Source: Stateline | The press is trumpeting the reported increase in state revenues in the second quarter of 2011, up 10.9 percent over the same quarter in 2010. That’s the “strongest year-over-year increase since 2005,” according to a report from the Nelson A. Rockefeller Institute of Government.

  1.  Does this news sufficiently offset the 1 percent decline in local governments’ property tax revenues (which have declined for three successive quarters)?
  2. The bulk of the upswing was due to increased personal income tax revenues. With the economy still sputtering, can we count on that to continue?
  3. Preliminary figures for July and August 2011 show increases of only 6.8 percent compared to a year ago, not the 10.9 percent of the second quarter. Does that suggest that the robust revenues of the second quarter are unlikely to continue?
  4. State revenues are still lower than they were four years ago (meaning that the big increase is an increase against a very low base). Does the rate of increase matter, or does the fact that the states still haven’t come back to where they were four years ago mean that the state budget crisis continues?
  5. With the federal government facing a supercommittee deficit reduction of $1.2 trillion (or an equal amount of spending cuts if the committee is unable to come up with a plan, do these purported increases in state revenues offset the all-but-guaranteed retrenchment in federal discretionary spending?
  6. Are nonprofits seeing any upswing in their fundraising comparable to the 10.9 percent reported by the states?

State budget recoveries are welcome. So are recoveries in nonprofit budgets. Hopefully, if there is really new state largesse available, nonprofits will be getting their share.—Rick Cohen