State budgets are in a strong position headed into 2019, with only six states projecting revenue shortfalls for the upcoming fiscal year. More than four times as many states faced budget deficits in 2018 and five times as many states did in 2017. A primary driver of this improved fiscal picture is the rise in income tax collections, which spiked as taxpayers pushed their liability to 2018 to take advantage of federal tax reform provisions.
Based on each state’s most recent publicly available revenue projections, Arkansas, Illinois, Nebraska, Pennsylvania, Rhode Island, and Wisconsin will have to address revenue deficits during their 2019 legislative sessions. However, as a recent National Association of State Budget Officers report noted, “Budget gap projections tend to be moving targets,” with new budget, revenue, and economic data frequently being released. This uncertainty means that this list could change over the course of the fiscal year.