State budget writers told economy is rebounding but another year until robust growth

Members of a joint legislative budget panel were told by fiscal researchers revenue collections are on target but still below what is estimated for a new budget. Here’s what the budget writers will have to consider for budget increases:

$300 million for retirement pensions

$150 million more for the State Health Plan

$110 million in enrollment growth for K-12 and colleges

$200 million growth in Medicaid expenses

It was estimated the revenue would be nearly $4 billion short without cuts or new revenue. The new Republican leadership is vowing to make deep cuts to avoid raising taxes. The fiscal staff gave the members what they called “opportunities for change.” They included increasing tuition at the colleges. In fact, the universities are likely to ask for a 6% increase. Budget writers could eliminate or reduce optional Medicaid services, such as prescription drugs or non-physician services. The members were told they could make changes in the Department of Correction as well. For example, they could reduce sentences for misdemeanants or habitual felons. They could also reform probation policies so there would be fewer revocations. There is also $1.5 billion in borrowing that although authorized has not been spent. What fiscal staff did not touch was the subject of layoffs, which the leadership and the Governor have said would be part of balancing act. The budget writers will also have to consider transportation needs and a rainy day fund. Then there is the $2.6 billion the state borrowed from the federal government for unemployment payments. A 4% interest payment on that will come due at the end of September.

Here is a link to the fiscal power point