While it’s not necessarily cause for alarm, the negative balances reported in the 2012 state budget update isn’t the happy news one hopes for in these things. As the National Conference of State Legislature’s notes:

In Washington, FY 2012 marks the midpoint of the biennium; the shortfall will be eliminated over the remainder of the biennium.

The picture nationally is surprisingly positive.

Overall, the economic outlook for the current fiscal year is stable for the vast majority of states.

The Rockefeller Institute of Government offers a similarly nearly-upbeat look at state revenue collections.

State tax revenues grew by 4.7 percent in the first quarter of  2012, according to Rockefeller Institute research and Census Bureau data. This is the ninth consecutive quarter that states reported growth in collections on a year-over-year basis.  Overall state tax revenues are now above prerecession as well as peak levels that came several months into the Great Recession.

In the first quarter of 2012, total state tax revenues were 4.8 percent higher than during the same quarter of 2008. However, after adjusting to inflation, state tax revenues were still 1.6 percent lower compared to the same quarter of four years ago, in 2008.

There will be some tough months ahead, but with good policy – and a little good luck – we may be heading toward better times.