Softening revenue conditions following extraordinary revenue growth is challenging many U.S. states' budget adoption efforts for fiscal 2024.

While S&P Global Ratings believes some states can adapt their budget more readily to a slower revenue growth environment than others heading into the new fiscal year, we see states as being well-positioned financially to navigate the uncertainties moving forward, S&P Global Ratings said today in a report titled "In The Race To A Fiscal 2024 Budget, U.S. States Face Off Against Stubborn Inflation And Slowing Revenue Growth."

"States' strong reserve levels provide cushion to address shallow economic growth projected in fiscal 2024," said S&P Global Ratings credit analyst Tom Zemetis.

In our view, most U.S. states' fiscal 2024 budgets are structurally balanced, though some budget negotiations could extend past the fiscal 2023 year-end as legislators work to balance inflation-driven spending demands and provide tax relief amid a weakening revenue climate.

Fifteen states have yet to enact their fiscal 2024 budgets. Two of those states without a fiscal 2024 budget have deadlines that are later this year.