The good news that state revenues have climbed above prerecession levels has to be tempered by less favorable fiscal realities facing the states.
The National Governors Association said that the states will collect $690.3 billion in the 2013 budget year, an increase of $10 billion more than the year ending in June 2008. The recession began in December 2007.
The revenue growth, though, is uneven. Twenty-three states are expected to have tax revenue below five years ago. Tax hikes in 10 states account for about a quarter of the expected increase in revenue.
The higher revenue means less pressure on states to cut budgets and lay off workers. In Michigan, plans to have 37,000 state workers take four days of unpaid leave have been put on hold. After slashing jobs during the recession, state governments have started to add jobs at an average of 3,000 a month in the past six months.
States, though, are facing greater demands for services. According to the Center for Budget and Policy Priorities, they have to educate 350,000 more elementary and secondary students and an additional 1.7 million college students. Education, the largest category of spending, is followed by Medicaid expenditures.
Job losses and reductions in pay or hours have forced many to rely on the federal-state health care program. After a 23 percent jump in the 2011 fiscal year, state spending is expected to shoot up another 20 percent this year.