Last week the Rockefeller Institute issued its report on state finances [pdf] for the 4th quarter of 2009. Since it covers finances from 4 to 6 months ago, this is very lagging data. What is noteworthy is that the trend strongly suggests that on an annual basis state finances hit bottom at some point in the 1st quarter of this year, probably January or February, and are positive YoY now.
This is very significant given the draconian cuts that states and municipalities are making in their budgets, which the Institute estimates are constrained by an 18% fall-off in revenues since before the Recession. A diary on the Rec list several days ago argued that 100,000s of state and local employees could lose their jobs as the result of this crisis in budgets.
The latest report by no means indicates that the states are out of the woods, or that more painful cutbacks aren't in store this year. In fact, if anything it makes the case for another big round of federal loans to the states to bridge the gap in their finances until they recover further. Nevertheless, it appears the bottom has been reached.