Fiscal conditions in the states began to decline in fiscal 2008. State spending and revenues grew at a lower rate than the prior year and balances were well-below their near record levels of fiscal 2007. While fiscal 2008 saw somewhat moderate declines, the fiscal situation in the states has deteriorated much more sharply in fiscal 2009. State spending is projected to be negative for the first time since 1983, balance levels are being reduced as states use reserves to address shortfalls, and recent data shows state revenues declining by 4 percent. As a result, states are likely to face a difficult budgetary environment in fiscal 2010 and beyond.