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Report: State budgets recovering modestly

NEW YORK (Reuters) — U.S. state budgets appear to be stabilizing, budget gaps are rare and policymakers have more flexibility to deal with over-spending and unexpected one-off costs, the National Conference of State Legislatures said in a report distributed on Tuesday. South Dakota was one of eight states expected to exceed revenue targets, the report said.

State budgets have been recovering modestly in the 4-1/2 years since the financial crisis but slow economic growth means there is little room for major new policy initiatives, according to the bipartisan group that serves state governments nationwide.

“More than two-thirds of legislative fiscal directors described their state fiscal situation as stable,” said the report, which was dated Monday. “Common terms were ‘stable with slow growth’ and ‘moderately positive.’ ”

The report, based on state budget data collected during the fall of 2013, found that revenue collections have “met or exceeded expectations in most states” and that “nearly all states are optimistic that they will meet their revenue targets for the rest of the fiscal year.”

The four states where revenues are unlikely to meet targets were Alaska, Indiana, Tennessee and West Virginia. Eight states said they would likely exceed revenue targets. Those were Arkansas, Georgia, Maine, Mississippi, North Dakota, South Dakota, Texas and Wisconsin.