In its latest State Budget Update, the National Conference of State Legislatures says 43 states are on track to meet or exceed their revenue for the current fiscal year, which ends June 30 in most states. (Only Delaware, Oklahoma, Tennessee, Kentucky, West Virginia, North Carolina and Indiana are expected to miss their targets, the organization says.)
Compare this year's mostly rosy forecast to 2009, when NCSL reported all but four states faced budget shortfalls.
The turnaround is far from complete, however.
"Officials are concerned about sluggish revenue growth, rebuilding reserves and long-term spending trends—especially for K–12 education and health care," NCSL said.
Also an issue: growing pains in some parts of the country, where a domestic energy boom in recent years altered the competitive landscape—and our rankings.
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North Dakota, at the epicenter of the boom, burst into our Top Five in 2012, then rose to third place last year. Since then, unemployment in the Peace Garden State has continued to plummet, hitting a record low 2.6 percent in May. That means intense upward pressure on wages and other expenses, potentially hurting the state in our all-important Cost of Doing Business category.
The situation is similar in South Dakota. The Mount Rushmore State—No. 1 in 2013—is seeking this year to become the first state ever to repeat as America's Top State for Business. But the worker shortage there is so severe that some employers are running help wanted ads on prime time television.
"Our low unemployment rate is a sign of our economic strength, but it also means it's difficult for employers to add more jobs even if they have the business to justify it," said Gov. Dennis Daugaard in his 2014 State of the State address January 14.
The shortage also hurts South Dakota in our Workforce category.