My colleagues at the Baker Institute and I have been closely monitoring the trends in the revenue sources that fund our state government. After decades of robust growth, we are now seeing clear signs that many of these revenue streams have leveled off—and in some cases, are beginning to decline.

According to the State Comptroller’s Monthly State Revenue Watch, state revenues fell by 4% in FY2024. This marked the first year-over-year decline since the Great Recession in 2009. Through the first nine months of the current fiscal year, revenues are up by just 0.17%. Moreover, the Comptroller, in his most recent revenue estimate to the Legislature, projected that revenues would remain essentially flat throughout this biennium.

You can find detailed trendlines for the various revenue sources in our report on the Baker Institute website. One aspect I suspect will surprise many of you is just how dependent the state has become on federal funds. These inflows spiked during the pandemic but are now receding.

I am afraid that the halcyon days of large State budget surpluses may be a thing of the past.