Fighting to attract business—and jobs—takes money. And this year, states finally have some more ammunition to bring into battle.
As recently as last year, states were still trying to shrug off the effects of the Great Recession, which is supposed to have ended in 2009.
"States' ability to fund services remains hobbled by slow economic growth," the nonpartisan Center on Budget and Policy Priorities reported last year. As the 2013 fiscal year was about to begin—three years after the start of the national economic expansion—31 states were still contending with budget shortfalls. And since nearly every state has a requirement to balance its budget, the gaps meant more budget cuts.
"The additional cuts mean that state budgets will continue to be a drag on the national economy, threatening hundreds of thousands of private and public sector jobs, reducing the job creation that otherwise would be expected to occur," wrote CBPP researchers Phil Oliff, Chris Mai and Vincent Palacios last June.
One year later, the organization has no plans to put out a new report listing state budget shortfalls, according to a representative of the center. That is how much state finances have improved. Instead, in a new report, the organization this year is urging states to be smart about how they spend a sudden windfall from tax revenues that are rising virtually across the board.
"In 32 states for which data are available, state tax collections in the first ten months of fiscal year 2013 were 5.7 percent higher than in the same period last year, on average," the report says. Most of the growth is in income tax receipts—up 8.9 percent on average—but sales tax receipts are up as well.
(Read More: States Bring Renewed Swagger to Top States 2013)
Figures from another organization, the National Association of State Budget Officers, suggest states are being prudent about the money—at least so far.
State budget stabilization or "rainy day" funds, which had fallen to a low of $32.5 billion or 5.2 percent of spending in fiscal 2010, swelled to $57.7 billion or 8.3 percent of revenue in fiscal 2013, the association reported in March. The report notes, however, that most of the increase was concentrated in two states: Alaska and Texas, whose fund balances account for more than 44 percent of the national total.