ORLANDO, Fla. -- With no clear end in sight to the national recession, most states are likely to continue to face fiscal crisis in 1992, the president of the National Association of State Legislatures said yesterday.
"States as a whole are not coming out of the recession, just replacing their shortfalls in revenues," said Rep. John Martin, D-Eagle Lake, who is also speaker of Maine's House of Representatives. "If the trend continues, there will have to be a serious readjustment in programs provided."
Mr. Martin gave his assessement of the state of state finances at the start of the association's 17th annual session, which is being held this year in Orlando.
He predicted that legislators will find it difficult to continue to raise taxes, and will likely put more emphasis on spending cutbacks as a solution to fiscal strain. The state official said that education programs in particular are apt to have their funding slashed.
Mr. Martin blamed the states' precarious finances on a "tidal wave of unfunded mandates, restrictions on revenues and preemptions sent to us by the federal government."
"If there is a single thing to be angry about, if there is one thing that should galvanize us as state legislators and staff, it is the unfettered, unabashed cynicism with which the federal government deals with states," he said.
But even if there is an economic recovery, the Maine official said that very few states are likely to fund new programs. "New programs are not occurring and not likely to occur."
Other officials attending the fiveday conference also said yesterday that they see continued fiscal pressure on states.
"I agree that we are reaping the whirlwind of decreased aid from the federal government," said Daniel T. Blue Jr., D-Raleigh, North Carolina's house speaker. "All we can do is try to deal with the situation responsibly -- we cannot count on an economic recovery or a lot of help from the outside."
Said Rep. T.K. Wetherell, D-Daytona Beach, Florida's House speaker: "Today we are faced with how to implement the tough decisions -- there is no assurance things will improve."
The lawmakers' comments coincided with the release of the conference's 1991 annual fiscal survey, which paints a bleak portrait of state finances.
The survey says state tax increases for fiscal 1992 add up to 15.1 billion, the largest dollar increase ever and the largest as a percentage of previous year collections since 1971. It also says projected spending increases in 1992 would be at the lowest level in nearly a decade. After inflation, the report says, spending will rise only .02% in fiscal 1992.
Mr. Martin also pointed out that the survey revealed an overall deterioration in the state "rainy-day funds" traditionally used to cushion budgets in times of fiscal strain. According to the report, states now project a total of only $3.7 billion in such funds in fiscal 1992, about the same as 1990 levels. However, when California's $1.2 billion in rainy-day funds is subtracted, the total is $2.5 billion.
"The fact that states have little cushion to fall back on is very troubling," said Mr. Martin.
"The outlook for FYI 1992 is that revenue growth will exceed growth in expenditures," the report summarizes.
"State forecasters are not counting on national economic recovery to improve state fiscal conditions. Any unforeseen hardships could again threaten to tip states into imbalance. Although the national recession is reported to have ended, the depressed condition of state fiances is likely to continue."
The conference's report was based on information from 45 states and the District of Columbia that reported budgetary action for fiscal 1992. Of those states, 33 approved taxes increases.
Speaking of federal mandates, Mr. Martin said that the shifting of responsibility to the states has been most burdensome in the areas of Medicaid, prisons, and mental health.
The report says spending for corrections and Medicaid will likely rise by 5% to 6% more than appropriated levels. Spending for education, which is 9% above 1991 levels, should be closer to actual levels.
The council will release a detailed report on this drain on states on later this week, said Mr. Martin