After two years of low revenue growth, most state governments finished fiscal year 2018 with surpluses driven by unusually high individual income tax payments from non-withholding income sources. Many characterize much of this increase as one-time. Rainy day fund deposits will be the most common use; raising reserve levels above those prior to the recession.
Nearly 30 states recently passed tax actions; most to react to the new federal tax changes. At least nine states combined their reactions with broader state tax law changes, often reducing top marginal rates. Others passed adjustments to avoid inadvertent state tax increases.
– John Hicks, Executive Director, National Association of State Budget Officers