NCPA - National Center for Policy Analysis

States Hike Spending, Shrinking Their Surpluses

January 4, 2000

State spending is rising faster than revenue, according to a new survey from the National Governors' Association. As a result, states are draining their reserves and budget surpluses.

  • Spending is going up by 5.5 percent, while revenue is rising by 4.3 percent.
  • Projected budget surpluses are forecast at 5.6 percent this year, down from 9.2 percent two years ago.
  • States have used their surpluses to cut taxes by $5.2 billion this year, and $27.3 billion over the past six years.
  • They boosted spending on education by an average of 7.1 percent over the past five years, and increased spending on Medicaid, the federal-state health care program for the poor, by 5 percent in 19999 and a projected 7.5 percent in 2000.

At least 12 states and the District of Columbia will consider cutting taxes this year, according to a different survey, conducted by the National Conference of State Legislatures. The NCSL found that 49 states expect to collect as much or more revenue than forecast for the 2000 fiscal year, with only Louisiana anticipating less revenue.

Source: Richard Wolf, "States Are In the Money, but Reserves Are Smaller," USA Today, January 4, 2000.


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