Most State Budgets Still Have A Stable Short-Term Outlook (April Revenue Update)

Several times a year, our tax team does a survey of each state’s short-term fiscal outlook to determine if a state's revenues are relatively stable, or if it will likely face short-term fiscal challenges. A state’s fiscal picture is a major policy driver, so it’s important for state government affairs professionals to keep an eye on state fiscal health.

Though legislative sessions in several states have already ended or are winding down, for most states — especially most larger states — budget and associated tax discussions are just now heating up. Our April state fiscal report shows another month of incremental changes to projections, with most states releasing updated forecasts with no major changes over previous projections. The one exception (and outlook change since our last update) is Montana, where forecasters now predict a deficit beginning next year, increasing to $700 million by FY 2028. To reflect this, we've moved the state from a "positive" outlook to "conditional” (explained below).

The majority of states still have a generally positive short-term fiscal outlook (33 states in total as of this month). It is important to note that several states, such as California, have received high tax revenues due to the position of the equity markets in 2024. As this year has seen increased turbulence, those numbers may not carry over to 2025. Several states, however, are facing significant short-term challenges (Colorado, Illinois, Maryland, New Jersey, New York, Pennsylvania, and Washington). In Colorado, for example, revenue estimates have increased since the last revenue forecast, but fiscal conditions in Colorado continue to be poor. Joint Budget Committee chair Sen. Jeff Bridges has said, "We're still down about a billion dollars."  This figure includes spending from November's Proposition 130, which approved $350 million in law enforcement spending. Similarly, in Pennsylvania, the Independent Fiscal Office estimates that Pennsylvania will face an operating deficit of $3.4 billion in FY 2025, eventually growing to $6.7 billion by FY 2030.

We also have a category called “conditional” fiscal outlook, which means a state’s revenue health could go either way, depending on certain current extenuating circumstances. As of March, ten states fall into this category (Alaska, California, Iowa, Massachusetts, Minnesota, Montana, Nebraska, Rhode Island, Tennessee, and Utah). 

State Budget Tracker

Tax policy can be one of the most challenging areas for government affairs executives. MultiState’s team understands the issues, knows the key players, and helps you effectively navigate and engage. We offer a customized, strategic solution to help you develop and execute a proactive multistate tax legislative agenda. Learn more about our Tax Policy Practice.