NCPA - National Center for Policy Analysis

States Can't Spend Money Fast Enough

July 27, 1999

State are sitting on their largest budget surpluses in 20 years, according to a survey by the National Conference of State Legislatures. States which are unable to spend their surpluses risk generating a ground swell for tax cuts, observers predict.

  • States left more than $33.4 billion unspent in the 1998-99 fiscal year.
  • Seventeen states have surpluses exceeding 10 percent of their 1998-99 spending and 32 have balances of at least five percent -- the level recommended by Wall Street analysts.
  • Twenty states have cut taxes, 13 made major new commitments to programs, and 13 put surplus money into capital construction projects.
  • States cuts taxes by $5.5 billion -- including a reduction of $2.4 billion in personal income taxes and a reduction of $1.6 billion in sales taxes.

The only state failing to report a surplus this year was Wyoming, which has no income tax. But six states and the District of Columbia failed to respond to the survey.

Plummeting welfare caseloads will have left states with as much as $25 billion in unspent federal money by 2002. States have an incentive to spend federal money faster, since Congress is eyeing unspent surpluses with envy and could call back the funds at some point.

Source: Richard Wolf, "States Can't Spend Fast Enough, Rack Up $33 Billion in Surpluses," USA Today, July 27, 1999.


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