State Reserves and Revenue Growth Drop.

• Position: Statestats

States are facing the tightest fiscal conditions they have seen in a decade, and evidence of growing distress continues to accumulate. States have lowered their revenue estimates, reduced their budgets and confronted significant expenditure pressures in recent months. Most economic indicators show slower growth, but none are timely enough to reflect changes that have occurred since Sept. 11.

A recent NCSL survey found that state reserves have declined for the first time since 1992. States saw their reserves fall from 11.5 percent of general fund expenditures in FY 2000 to 8.2 percent in FY 2001, the biggest percentage drop since FY 1980. These figures are likely to decline even further in the coming months as states tap these funds to deal with budgetary pressures.

On top of shrinking reserves, revenue growth is diminishing. Twelve states even saw declines in tax collections. Overall, revenue growth was only 2.6 percent for the second quarter of 2001, the slowest in 10 years. And that small increase is due almost exclusively to the personal income tax. Sales tax growth has fallen to its lowest rate in more than 10 years and corporate income tax collections have declined dramatically.

STATE RESERVES AS A PERCENTAGE OF GENERAL FUND SPENDING FY 2000 FY 2001 FY 2002 Estimated Projected New England 7.1 5.8 4.9 Connecticut 4.9 4.9 5.0 Maine 19.2 7.1 5.7 Massachusetts -did not report- New Hampshire 2.2 3.7 5.3 Rhode Island 7.3 8.5 3.1 Vermont 7.3 7.6 6.9 Middle Atlantic 9.2 7.4 5.4 Delaware 10.8 6.9 8.2 Maryland 16.8 12.4 5.5 New Jersey 6.4 5.0 4.4 New York -did not report- Pennsylvania 8.3 7.5 6.0 Great Lakes 10.4 6.4 5.9 Illinois 7.2 6.1 5.4 Indiana 14.3 5.4 5.4 Michigan 15.4 12.3 11.0 Ohio 11.6 7.2 6.4 Wisconsin 7.4 1.8 2.2 Plains 12.2 7.3 8.6 Iowa 13.3 9.9 11.3 Kansas 8.7 7.9 6.4 Minnesota 17.3 7.4 11.4 Missouri 4.5 3.3 3.7 Nebraska 19.5 13.6 11.8 North Dakota 7.7 6.0 2.2 South...