State Budget Heyday Getting Closer

The New York Times reported today that an unexpectedly steep rise in federal tax revenues is driving down projected future budget deficits. If this trend continues, it will have real implications for education funding, because the same economic phenonmena will drive up state tax revenues, particularly in states with federal-style progressive income taxes. States don't update their revenue forecasts as often as the federal government, so you won't be reading about this in the newspaper for a while. But as federal revenues go, state revenues will follow.

Some foresightful commentators predicted many months ago that this would happen, and urged education advocates to re-orient their thinking away from the scarcity mentality that has dominated state budgets for the last five years and prepare for the coming abundance of new money. It's not too late to take that advice--2007 will be the year when states are suddenly flush with unanticipated cash and politicians will be looking to use that money to buy voter approval. By 2008 and 2009, most of that money will be spent, and if history is any guide the end of the decade will put us closer to the end of the business cycle and revenues will drop once again. So make your plans and get ready; opportunities to to spearhead new, expensive education programs don't come along that often.