State Surpluses: Pleasant Surprises

Wells coming off the confidential list have been posted.

Don sent me this feel-good story early this a.m. The Daily Beast is reporting:

Surpluses are showing up in places you’d expect. North Dakota, currently enjoying an energy and agricultural boom, is projecting a $1.6 billion surplus over its two-year budgeting cycle. Texas, another resource-rich state, foresees an $8.8 billion surplus over its current two-year budget cycle.

But the Rust Belt is also regaining some of its fiscal shine. Ohio is expecting a $1 billion surplus for the current fiscal year. Wisconsin is looking at $484 million in black ink. Other states with surpluses include Iowa ($800 million) and Tennessee ($580 million). West Virginia completed its 2011–12 fiscal year with a surplus of about $88 million.

Some of the coastal states whose finances were hit hardest by collapsing housing markets and persistently high unemployment are also making a comeback.

For the past several years, California’s massive, recurring deficits have made life miserable for politicians and inspired comparisons to Greece. Thanks to tough spending cuts, higher taxes, and a generally recovery, California’s finances are on the mend.

“California expects to take in $2.4 billion more in revenue than it will spend this fiscal year, which ends June 30,” Tami Luhby of CNN Money reported. “After paying off a shortfall from last year and setting aside funds for upcoming obligations, it’s on track to end the year with a $36 million surplus.

Florida, another state that has had to deal with harsh cuts to rein in deficits, is also now in the black. The current projection is for a surplus of $437 million.

I saw the report earlier this week that Texas would be noting a $8.8 billion surplus over its two-year budget cycle. That was really surprising. I remember someone commenting elsewhere the oil boom would be short-lived in Texas and the state residents would soon see a state income tax. The oil boom has barely begun and already a nearly $10 billion budget surplus. My hunch is that the surplus has very little to do with the current Eagle Shale boom which has only just begun. And, of course, the other states mentioned (outside of North Dakota) are not oil states.

By the way, with their budget picture improving, it is unlikely that either Florida or California will see much pressure to open more off-shore oil exploration and production.