From a national perspective, balancing state budgets without having to worry about local budgets is a trivial problem. Roughly half of state spending is for aid to local governments. All but a few states could easily balance their state budgets simply by allowing no increases in local aid.

The difficult problem in dealing with structural deficits comes when likely spending and revenues are considered together, as they obviously must be to consider financing of education and other important functions. Consideration of state and local finances together implies that states have substantial control over local taxes. Please see the section titled “State-Local Fiscal Relations” for more information.

The revisions from the data presented in this report to the report to be published by the National Education Association will affect the exact size of structural deficits presented in certain tables and the rankings of certain states not including Tennessee or other states with large structural deficits. All revenue calculations reflect measures of economic growth trends. The period chosen for calculating trends happened to include an unusual federal crop support payment causing artificially high economic growth and revenue projections for states where grain and/or corn production is a significant factor in total personal income. Selecting a different period will move the affected states somewhat downward in the comparisons of structural deficits but nowhere near Tennessee.