As states prepare next year’s budgets, they are taking a second look at fiscal year 2013, which ends June 30 in most states. Initial reports suggest that a number of states will end the year in the black, mostly because revenues have performed better than projected. In addition, revenues have stopped declining and state and local employment, which has plummeted by more than half a million jobs from its pre-recession peak, is projected to grow in the near future.
All of this is good news, but there are four reasons why it doesn’t mean that state budgets are out of the woods.
Until the job market fully recovers from the recession, state revenues won’t be healthy enough to support tax cuts or to restore states’ deep cuts in services.