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Published on Friday, February 19, 2016

What we know about the next state budget proposal and where to get updates

We are expecting the next supplemental operating budget proposal from the House shortly after noon on Monday, February 22. As soon as it is released, AWC legislative staff will scour the nearly 300 page budget for impacts - both positive and negative - on city finances, programs, and operations. As soon as we complete our analysis, we will post updates here.

As we await the proposal, here’s what we already know.

  • When the Governor released his proposed supplemental budget last December, the state budget was out of balance by about $455 million. This was primarily due to increased costs in Medicaid, healthcare, and corrections as well as paying for the state’s worst wildfire season in history. As a result, the Governor proposed additional fund transfers, including another $10 million from the Public Works Trust Fund, and using funds in the Budget Stabilization Account.
  • Last week the state’s Economic and Revenue Forecast Council (ERFC) released its quarterly revenue forecast. That forecast predicts that less revenue than previously expected will come into state coffers between now and the end of the fiscal year, June 30, 2017. However, much of this $78 million shortfall will be offset by caseload projections indicating fewer people on welfare and in nursing homes.
  • A huge decline in Model Toxics Control Account revenues means stormwater assistance and toxic cleanup projects are in danger. The shortfall is estimated at approximately $100 million, and many city projects could be on the chopping block.
  • Late last week, House Democrats announced five new bills designed to repeal, narrow, and attach stipulations to five corporate tax exemptions. Although the bills have not been formally introduced, the announcement summarized the bills which will deal with aerospace accountability, narrowing the extracted fuel use tax exemption and the real estate interest income B&O deduction, and repealing the international banking facilities B&O tax exemption and the sales tax exemption for purchases of large private corporate airplanes. The estimated $87 million in new revenue from these bills is likely to be included in the House’s supplemental budget proposal.

We’re also expecting to see a supplemental budget proposal from the Senate this week as well as supplemental capital and transportation budget proposals. Watch our website for updates on those as well.

Categories: Budget & finance