Slump Saps Federal, State Revenue
Scott Pendleton, writer of the Christian Science Monitor, The Christian Science Monitor
STATE and federal revenue expectations have been shortchanged - again - by the economy's continuing sluggishness.
"We are weakening our forecast" for federal revenue, says Mark Desautels, an assistant in the office of intergovernmental affairs at the Congressional Budget Office (CBO).
In August, the CBO added $16 billion to its deficit forecast for fiscal year 1992, which began on Oct. 1. The increase took into account anticipated lower tax collections caused by the recession.
This addition, along with an upward revision last January that added $46 billion to the deficit, brings the total estimated federal shortfall to $362 billion on the $1.5 trillion 1992 budget. The latest adjustment still doesn't capture the impact of the recession because the recovery has proceeded so much slower than expected, Mr. Desautels says.
The CBO is now at work on the budget projections it must give Congress on Jan. 23. The deficit will rise by at least $10 billion, he says. Other analysts expect the deficit, already at a historic high, to careen beyond $400 billion. That will be added to the existing $2.7 trillion national debt.
Meanwhile, budgets in 25 states are running in the red, a survey of legislative fiscal officers found last month. And that number will increase when the National Conference of State Legislatures repeats the survey this week, predicts Arturo Perez, a research analyst with the NCSL.
"No one wants to own up to it until they have to," adds Brian Roherty, director of the National Association of State Budget Officers. Governors prefer not to discuss deficits until they draft corrective measures, he says, but NASBO has unofficial word that deficits are again widespread. Budgets due in January
Just how serious the shortfalls are and how the affected states propose to deal with them will be seen in January. That's when governors of the 46 states present FY 1993 budgets to their legislatures. (Alabama, Michigan, New York, and Texas are the four states that do not operate on a July 1-June 30 fiscal year.) In general, states must balance their budgets and make up for any unexpected deficits this year.
The proposed state budgets will incorporate revenue forecasts that are derived in part from economic projections by independent sources like DRI/McGraw-Hill of Lexington, Mass. Unfortunately, the company's econometric model is spitting out "pretty rotten" numbers, says David Wyss, research director at DRI. …