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Governors paint picture of recovery

January 26, 2014 - 11:15pm

As the economic recovery begins to provide state budget writers with new and unexpected revenue streams, California is making a comeback. So is Arizona. And Michigan. And Missouri. And Ohio.

Governors across the country are using annual addresses to proclaim a comeback, recovery or rebound. The revitalized tax revenue flowing into state coffers, bolstered by income and sales tax revenue bouncing back to pre-recession levels and a strong stock market contributing millions — in some cases billions — of dollars in capital gains taxes means almost every governor has good news to share.

“Michigan is the comeback state. We’ve come farther and faster than most any other state in the economic recovery since the beginning of the Great Recession, and we should be proud of that,” Republican Gov. Rick Snyder said this month in his State of the State address.

“Critics, who have long recited our state’s decline, perhaps have nothing to say in the face of California’s comeback except, ‘Please don’t report it,’ ” Democratic Gov. Jerry Brown told lawmakers Wednesday. “Well, I’m going to report it, and what a comeback it is.”

Gov. Jan Brewer, a Republican, spotlighted the Arizona Comeback — capital letters included — in her State of the State address. Republican Gov. John Kasich has highlighted the Ohio Comeback in campaign stops around his state. And the Republican Governors Association last month debuted a series of videos featuring Kasich and governors of Louisiana, New Mexico and South Carolina touting their states’ path back from the brink.

In Hawaii, Gov. Neil Abercrombie, a Democrat, used his State of the State address to tout an $844 million surplus in this fiscal year’s budget, a $1 billion turnaround since 2010. “I am able to report to you, our state government’s financial house now stands on solid ground,” he said.

And states’ financial health is improving. Almost every state will end this fiscal year with budget surpluses, ranging from a few tens of millions of dollars to several billion dollars. Forty-three states are anticipating increases in revenue and spending in the coming year, according to the National Association of State Budget Officers (NASBO). And most states are socking away hundreds of millions more in reserve funds to prepare for the next rainy day.

But in many cases, the “comebacks” will manifest as an absence of further cuts, rather than a return to pre-recession spending levels. Thirty states are collecting less revenue than they did before the recession hit.

“It’s been enough years since the end of the recession that you are seeing an improvement in the revenue. States, particularly income-tax states, are going to benefit from the stock market,” said Scott Pattison, NASBO’s executive director. “They’re not going to have to go back and cut.”