NCSL: state general fund balances to decline in fiscal 2005.(News & Numbers)(National Conference of State Legislatures )

States may be on the home stretch of a marathon budget crisis, a recent survey by the National Conference of State Legislatures shows. "State Budget & Tax Actions 2004: Preliminary Report" indicates that states ended fiscal year 2004 with higher ending balances than last year. But those balances are expected to fall by the end of fiscal 2005.

"When budgets started their downturn in 2001, state legislators knew they were in for a difficult run, but they didn't expect a marathon," said NCSL President Marty Stephens, speaker of the Utah House. "Though we've seen some improvement in fiscal conditions, there's still a long way to go before we cross the finish line of this crisis."

Each July, NCSL surveys state legislative fiscal offices to summarize state budget and tax actions taken in the fiscal year ending June 30, and to project data for the next 12 months. NCSL received data from 44 states for this report. The data could significantly change, however, because the six states that had not yet passed fiscal 2005 budgets--California, Illinois, Kentucky, Michigan, New York, and North Carolina--account for about a third of the total national state budget picture.

The survey found that by the end of fiscal 2004 in the 44 reporting states, year-end balances increased 50 percent over last year--from $12.2 billion to $18.4 billion. Balances rose in 26 states, but declined in 18. Seven states' balances exceeded 10 percent of their budgets, and 11 states' balances exceeded 5 percent, the level Wall Street analysts recommend. Also, state rainy day fund balances rose slightly in 2004, from $7.9 billion to $9.5 billion.