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Published on Friday, June 14, 2013

No budget yet, but maybe a glimmer of hope?

The 30-day special session clock ran out June 11 and legislators have begun their next special session during which they must adopt a state operating budget. They don’t have 30 more days to do this – it must be agreed to and signed by the Governor by sometime June 30 or technically, the state isn’t authorized to spend money not appropriated in an adopted budget (see more below).

Some glimmer of hope appeared late in the week as the House and Senate agreed to “fix” a court ruling that unraveled part of a citizen initiative that addresses the state’s Estate Tax. By finding agreement, they avoided creating a bigger budget hole and may have gained some positive momentum to reach agreement on the budget.

As the House and Senate prepare to find a compromise, it’s helpful to look at the different budget approaches each has taken as it relates directly to cities.

The House passed a new, somewhat slimmed down, version of their budget during the recent special session. For cities, it included the good news that there were not reductions in state-shared revenues and it reinstated $50 million in liquor excise taxes that were not fully funded last year. The disturbing news was the elimination of any funding during the next biennium for the Public Works Trust Fund. Approximately $400 million was diverted to the state’s general fund. $231 million of that was for loans to 66 cities. Ouch!

The Senate passed a budget at the end of the special session. Like the House budget, it didn’t further reduce state shared revenue to cities. Unlike the House, it only partially restored liquor excise taxes at $25 million. Also unlike the House, it kept a slimmed down Public Works Trust Fund, but permanently diverted several revenue streams supporting it. Ouch!

AWC has signed a letter from a coalition of public and private sector interests urging legislators to maintain funding for important Public Works Trust Fund projects.

Contingency planning underway in case there’s no state budget by July 1

As legislators and the Governor work to find agreement on an Operating Budget, the possibility looms that failure to do so could cause significant disruption in state services. To understand possible implications, AWC has been in consultation with the State Treasurer’s office and Office of Financial Management who are undertaking contingency planning.

Most services, and the employees providing them, occur based upon appropriations in a state budget adopted by the Legislature. Included among those services are distributions of shared and local revenues to cities and things such as processing various permits related to construction and licensing. If a budget isn’t adopted before the state’s new fiscal year begins on July 1, the impacts to cities would depend on how long the state government shutdown lasts and whether state workers are available to process payments and distribute revenues.

We remain hopeful that a budget agreement can be reached before July 1. Please consider connecting with your legislators while they’re home for the Father’s Day weekend and urge them to finish their work and do so by fully reinstating shared liquor excise taxes and without descimating the Public Works Trust Fund.