1. NABE September 16, 2009 Scott Pattison Executive Director National Association of State Budget Officers 444 North Capitol Street, NW, Suite 642 Washington, DC 20001 (202) 624-5382 www.nasbo.org

2. NASBO 2 Recent State Fiscal Situation Extremely difficult fiscal period for states States experiencing significant shortfalls $230B+ for fiscal years 2009-2011 Large revenue declines Widespread budget cuts, layoffs/furloughs ARRA helping, but does not solve all fiscal problems

3. NASBO 3 Regions Nearly every state seeing decreasing revenue Large states (New York, California) in bad shape Housing bust states (Arizona, Florida, Nevada) in very bad shape Auto sector, manufacturing states hurting Small mountain and middle west states in relatively better shape but still seeing difficult fiscal situation and declining revenue

4. NASBO 4 This downturn vs. Post 01 Last Time: Housing sector strong in 01 Primarily income tax decline This Time: Broad economic decline; Longer recession Localities will be hit this downturn

5. NASBO 5 Negative Spending in Both FY 2009 and FY 2010 *32-year historical average rate of growth is 5.9 percent **Fiscal 09 numbers are estimated ***Fiscal 10 numbers are recommended Source: NASBO June 2009Fiscal Survey of States *

6. NASBO State Revenue Down 12% in 1 st Quarter: Largest Decline on Record Source: Fiscal Studies Program, Rockefeller Institute of Government; U.S. Census Bureau

7. NASBO Revenue Forecasts 7 * Fiscal 2008 numbers are actual Sources: Hawaii Council on Revenues; VT JFO & Administration Forecast

8. NASBO 8 Balances Declining *32-year historical average is 5.8% Source: NASBO June 2009 Fiscal Survey of States

9. NASBO Budget Cuts at Record Levels 9 Source: June 2009 Fiscal Survey of States

10. NASBO Combined Budget Gaps of $230B 10 * Only 24 states have forecasted FY 2011 budget gaps to date 37 states 24 states

11. NASBO 11 The Cliff: Year-by-Year State Stimulus Spending Source: Statelin e.org

12. NASBO 12 Long Term Spending Pressures Medicaid and Health Care K-12 and Higher Education Demographic Changes Corrections Infrastructure Pensions

13. NASBO 13 State Fiscal Outlook Much will depend on the length and severity of the recession Recovery for states at best in FY 2011; Revenues may not recover until FY 2012 States will look for creative financing and revenue opportunities to meet these spending demands Opportunities for reform, restructuring, examining priorities

14. NASBO 14 www.nasbo.org Scott Pattison (202) 624-8804 spattison@nasbo.org