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Continuing resolution is $600 million out of balance

State legislators have not reached agreement on a final budget for FY 2009-11. One the one had this is quite understandable given the deterioration in the revenue forecast following the April 15th revenue payments and the complications associated with the federal stimulus funds. On the other hand, the result is that the state will have to pass a continuing resolution (CR) that does not include any additional revenues, meaning that programs and services funded through the General Fund (GF) will be seriously impacted. The CR currently under consideration will authorize state agencies to maintain spending equal to 15% less than the authorized budget for 2008-09. Unfortunately “authorizing” them to spend this amount is not the same thing as having that much money to give them to spend! The fact of the matter is that the continuing resolution is $600 million out-of-balance – meaning that to achieve the allowable spending levels under the CR either additional spending cuts or tax increases are required. Allow me to explain.

$19.5 billion: 2008-09 estimated GF year-end spending (including stimulus funds). This is also the same level of spending that is “authorized” under the CR after the federal stimulus funds are included.

minus $18.9 billion: 2009-10 amount of GF tax revenues ($17.5 billion) plus federal stimulus dollars ($1.4 billion) available to support GF services.

equals: $600 million (the amount by which the CR is out-of-balance on an annualized basis).

Not surprisingly, some legislators who would prefer to shrink the size of state government are supporting the CR because it does not contain any tax increases. The problem is that they are claiming that the CR will maintain spending at current levels. WRONG! It will mean an additional cut of $600 million beyond the across-the-board 15% reduction specified in the resolution if it were to remain in place throughout the year. Agencies may be “authorized” to spend 85% of the original 2008-09 budget but that is not the same thing as saying that the state will have the funds necessary to support that spending level. Under the CR, it most certainly will not.

While it’s understandable that disagreements over the tax plans and some spending items have delayed passage of the final budget, it is imperative that the CR be in place for as short a span as possible. The CR enacts deeper reductions than it appears on the surface and it does not allow the state to make certain priorities a reality (closing inefficient prisons, maximizing federal matching funds, etc.).

3 Comments


  1. Chris

    June 29, 2009 at 2:17 pm

    Elaine,

    I have some differing math.

    According to the Governor’s office, actual expenditures for 2008-2009 are expected to be $20.3B.

    85% of that would be $17.25B, thus given projected revenues ($17.5B) would equal a surplus of roughly $250M.

  2. Elaine Mejia

    June 29, 2009 at 2:38 pm

    You have misunderstood my point. Moreover, if your numbers were accurate, which I do not believe they are, you would be making my point even stronger. In our discussions with administration officials two weeks ago they indicated that current year general fund spending (before stimulus) would be $18.4 billion, rising to $19.5 billion after stimulus funds are included. The CR “authorizes” spending equivalent to that amount (assuming stimulus funds can be used) but the baseline tax revenue forecast ($17.5 billion) plus stimulus funds ($1.4 billion) would only allow spending of $18.9 billion, or $600 million less than was spent this year. If your number ($20.3) were accurate that would mean that there would be an even greater gap between what the state will be able to spend under the CR (given baseline tax revenue constraints) and what was actually spent this year. Nice try.

  3. […] failed to recognize that the baseline revenue forecast even after adding in stimulus dollars still falls several hundred million dollars short of being able to support that spending level! Share and […]

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