States’ Finances Strong Today, But Big Tests Loom

Policy Matters, v3n3

Over the past two years, the big headline in state capitals has been the return of strong revenues and expanding budgets. After a spate of mid-year spending cuts, layoffs, and tax/fee hikes, states are once again boosting spending and even putting tax cuts on the table, illustrating the boom/bust cycle of state fiscal conditions. Looking ahead, though, governors and legislators face a potent combination of internal and external forces that will test their ability to maintain and expand services such as higher education. Campus and system leaders and policymakers need to understand and carefully monitor these factors so that they can anticipate the potentially difficult choices ahead.