NCSL: states balancing budgets without broad tax hikes.(News & Numbers)(National Conference of State Legislatures report)

The states that have balanced their budgets amid the worst fiscal crisis in decades have done so largely without broad tax hikes, according to the latest fiscal report from the National Conference of State Legislatures. Forty-three of the 49 states required to balance their budgets had completed the process as of the end of July, mostly by tapping reserves, increasing fees, and cutting spending.

With 42 states reporting, the 2003 net increase in taxes stood at 1.3 percent of 2002 tax collections. This is only the second time in nine years that states have had to increase taxes. From 1995 to 2001, states collectively lowered taxes every year--by as much as 2 percent.

"After three daunting years of financial crisis, state legislators should be lauded for resolving some of the most formidable budget problems seen in decades," said NCSL President Angela Monson, an Oklahoma state senator. "State lawmakers have done what they had to do. They made the wrenching decisions and they balanced their budgets."

As states tapped reserves to help balance budgets, aggregate budget reserves have fallen. They dropped 48 percent over the past fiscal year, from $22.4 billion at the end of fiscal 2002 to $11.6 billion at the end of fiscal 2003. The aggregate balance combines states' general fund ending balances with their rainy day funds.

The states may finally be turning the corner, though, after quarter upon quarter of impending gloom. State fiscal officers are predicting that revenues will rebound in fiscal 2004. In 2004, general fund ending balances are expected to rise slightly from fiscal 2003 levels.

State Budget and Tax Actions 2003 is available online in its entirety from the National Conference of State Legislatures (www.ncsl.org).

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