Woah! State revenue shortfall balloons to $3.3 billion

This morning Governor Perdue announced at a press conference that the revenue shortfall for the current fiscal year has grown to $3.3 billion. The most recent estimate had put the year-end revenue shortfall at $2.2 billion. In response, the governor is taking steps to make sure the state’s checkbook balances on June 30th. In a turn of course she is implementing a state furlough that will reduce state employees’ salaries (include teachers and council of state agencies) for the next two months by .5% and in turn will allow state employees to take additional time off. The governor is also planning to use $400 million of federal assistance that she had planned to use to balance the 2009-11 budget. Finally the governor will dip further into other funds, including the rainy day fund. All eyes will now turn to the House and Senate who now have to cope with a budget shortfall for next year that just grew by at least $1 billion (the $1 billion drop in revenues plus less federal funds available). To put that into perspective the Senate’s budget, which was widely criticized for its deep spending cuts including a proposed increase in k-12 class size, included $1.3 billion in spending reductions. So the House is now looking at roughly double the spending reductions proposed by the senate and/ or raising substantially more revenues.

If this announcement doesn’t stop the business-as-usual approach on Jones Street nothing will. State leaders need to follow the Senate Finance Committee’s lead and build a revenue system that creates a stable revenue stream that raises adequate funds to pay for necessary state services. This should also push state lawmakers to have more reform-minded discussions about the spending side of the equation as well including sentencing reforms that could save on prison costs and implementing best-practices in government-funded health care programs. To that end, the governor did say today that her BRAC-style budget commission is hard at work generating new recommendations.

When it comes to fixing the future, there is no time like the present.

One Comment

  1. Louie

    April 28, 2009 at 3:16 pm

    havent 14 states already raised revenues?

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