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U.S. states end year with slim revenue growth, expect stronger 2018 -report

NEW YORK, Jan 5 (Reuters) - U.S. states saw tepid general fund revenue growth in fiscal 2017, with an average increase of 1.9 percent, while this year is expected to bring a stronger rise, according to a report released on Friday by the National Conference of State Legislatures (NCSL).

The slight rise in 2017 indicates a slow but steady financial rebound in many states, whose primary funds took a blow from the Great Recession and have struggled to recover in the decade since, NCSL said.

"Overall, states chart a course for modest growth, while increasing spending pressures and slow revenue growth cause some concern and keep state budgets tight," the report said.

Fiscal offices of 48 states, as well as the District of Columbia, responded to the survey. The report focused on estimated activity in general funds, which pay for most public programs including education, corrections and healthcare.

States reported a 3.9 percent expected general fund revenue increase in the 2018 fiscal year. Of the respondents, 43 states and D.C. said they anticipated some level of revenue growth. Illinois and Tennessee were the only states to project rise above 10 percent.

Revenues are predicted to decline in five states. At a drop of 3.3 percent, Oregon projects the biggest fall.

General fund spending is also expected to rise at 3.3 percent in the current fiscal year.

Thirty-two states anticipate an uptick in expenditures, while three states and the District of Columbia foresee flat spending and 12 respondents expect appropriations to decline.

North Dakota, representing the biggest expected drop in appropriations, said it would likely cut general fund outflow by a quarter.

Public schools and Medicaid made up about two-thirds of state general fund expenditures. Medicaid, a program that helps cover medical expenses for low-income residents, was the fastest-growing cost at an average expected rise of 5.4 percent.

Connecticut and Wisconsin, which had not adopted fiscal year 2018 budgets when the report was compiled, were not included in the survey. (Reporting by Laila Kearney; Editing by Daniel Bases and Cynthia Osterman)