State Budget Shortfalls — May 5, 2011
May 5, 2011
Updates this week: California; Hawaii; Maine; North Carolina; Texas
California has $2 billion in unexpected tax revenue. Tax income has been outpacing forecasts — good news as Sacramento struggles with a $15-billion budget deficit. LA Times. May 5, 2011.
Hawaii: -The Hawaii Legislature has passed a two-year state budget that aims to eliminate the state’s $1.3 billion projected state budget shortfall and pay for rising demand for government services. The budget approved May 3 totals $11 billion in the fiscal year that begins July 1 and $10.9 billion the following year. The general fund portion of the budget, over which lawmakers have the most control, amounts to $5.4 billion next fiscal year and $5.6 billion the following year. The budget relies on about $600 million in tax increases and another $600 million in cuts to Gov. Neil Abercrombie’s requests. Another $200 million comes from the state’s savings, most notably its hurricane relief fund. Businessweek.com. May 3, 2011.
Maine-Changes to assumptions related to the state retirement system have added another $94 million to the expected budget shortfall for the next two years. The retirement system board recently changed demographic and economic assumptions used to generate estimated costs, according to Capitol News Service. The board changed the assumed inflation rate from 4.75% to 3.5% and changed the projected earnings rate on investments from 7.75% to 7.25%. Finance Commissioner Sawin Millet said the changed assumptions impact state appropriations for the public retirement system and the savings estimated to result from Gov. Paul LePage’s changes to the system. As part of the next two-year budget beginning July 1, LePage proposed requiring teachers and state workers to increase their contributions by 2 percentage points, reducing the state contribution, freezing cost of living increases for retirees for three years and capping future increases to 2% instead of 4%. Millet said lawmakers will meet this week to address a change package for the budget in light of the shortfall related to the retirement system and the projected $47 million revenue shortfall announced last week. Mainebiz. May 3, 2011.
North Carolina-Gov. Bev Perdue vetoed a measure which would have filled a major budget shortfall by requiring teachers and state employees to pay a monthly premium for their health insurance plan for the first time. The State Health Plan for Teachers and State Employees faces a $515 million budget shortfall over the next two years and a $30 billion unfunded liability over the next 30 years. Lawmakers voted to balance the budget by making state employees pick up more of the tab and placing the plan under the supervision of the state treasurer, the goal of Senate Bill 265, which was passed by the Senate and House before being vetoed by Perdue. Under SB 265, for the first time ever, state employees would have been asked to pay a monthly premium for their health insurance—about $20 for the best plan and $10 for a basic plan, or about 5 percent of the total cost of coverage. They also would have had slightly higher deductibles and co-pays for office visits and prescription drugs. Heartland.org May 2, 2011.
Texas-The Senate passed a budget on May 4, that makes cuts to education and health care, but not as deep as the cuts in the budget that the House has already approved. The Republican dominated Senate voted 19-12 along party lines, which is rare for a budget vote, to approve the $176.5 billion budget for 2012-2013. Texas has a two-year budget cycle. The budget blueprint approved by the Senate spends $11 billion less than the current budget but $12 billion more than the House proposal. Neither version adds taxes. Reuters.com. May 4, 2011.
NCSL: A new state budget report from NCSL sheds some light on the shifting fiscal picture for states. NCSL’s State Budget Update: March 2011 shows that state revenues continue to stabilize or even grow, which is a welcome change after some of the most challenging budget years ever faced by states.
State Budget Reform Tool Kit: ALEC toolkit provides more than 20 recommendations to modernize state budgeting improve budget transparency, control costs and improve government efficiency. http://www.alec.org/AM/Template.cfm?Section=State_Budget_Reform_Toolkit&Template=/CM/HTMLDisplay.cfm&ContentID=15218
K -12 Education .The problem federal stimulus funds caused. http://blogs.edweek.org/edweek/campaign12/2011/01/race_to_the_funding_cliff.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CampaignK-12+%28Education+Week+Blog%3A+Politics+K-12%29&utm_content=Google+Feedfetcher
- Possible solutions. http://edreformer.com/2011/01/3-budget-strategies-for-broke-states/
Obama care accelerates a Medicaid meltdown.
-NY Times. January 28, 2011. http://www.nytimes.com/2011/01/29/us/politics/29medicaid.html
-Kaiser Health News. Jan. 30, 2011 http://www.kaiserhealthnews.org/Stories/2011/January/28/medicaid-maintenance-of-effort.aspx
-Governors’ Letter to Congress. January 24, 2011. http://www.nga.org/portal/site/nga/menuitem.cb6e7818b34088d18a278110501010a0/?vgnextoid=b990c07128cad210VgnVCM1000005e00100aRCRD
-Republican Governors ask Feds to ease healthcare mandates. January 2011. http://www.rga.org/homepage/gop-governors-ask-feds-to-ease-healthcare-mandates/
Latest budget projections
California. $14 billion through June 2012. Washington Post. March 17, 2011.
Connecticut. $3.67 billion. The CT Mirror. January 25, 2011
Delaware $216.4 million. Delawareonline.com January 28, 2011
Florida $4 billion. Gainesville Sun. April 26, 2011
Georgia $1.5 billion. Savannahnow.com. February 6, 2011.
Hawaii -$1.3 billion state budget shortfall over the next two years and an immediate shortfall of $232 million. Hawaii Reporter. April 28, 2011
Idaho-$92 million (FY 2011-12) Bloomberg.com. February 18, 2011
Illinois-$13 billion (FY 2010-11) WSJ. January 12, 2011
Iowa- $700 million (FY 2011-12). Bloomberg.com. December 22, 2010.
Kansas- $492 million (FY 2011-12). Nebraska.TV. March 4, 2011
Louisiana $1.6 billion FOX 8. December 30, 2010
Maine- $31.9 million. (FY 2010-11) The Republic. March 28, 2011.
Massachusetts up to $1.5 billion. Telegram.com. Masslive.com January 17, 2011
Michigan $1.4 billion (FY 2011-12) Shootonline.com. February 20, 2011
Minnesota $5.03 billion (FY 2012-13), Twin Cities Daily Planet. March 3, 2011.
Mississippi $634 million. Thegovmonitor.com. November 16, 2010.
Missouri - $1 billion. Kansas City Business Journal. August 5, 2010.
Montana-$388 million (FY 2011-12). Bloomberg Businessweek. October 8, 2010.
Nebraska -more than $1 billion (FY 2011-13) Action3news.com. January 6, 2011
Nevada - State budget shortfall of $2.2 billion. Examiner.com. February 7, 2011
New Hampshire $800 million. Sentinelsource.com. September 22, 2010.
New Jersey $10.5 billion (FY 2011-12). Blogs.APP.Com. July 22, 2010.
New Mexico $452 million). Bloomberg Busineeweek.com. November 11, 2010.
New York $2 billion (FY 2012-13)
North Carolina -$2.4 billion (FY 2011-12) and $2 billion (FY 2012-13) The TimesNews.com. February 20, 2011.
Ohio $8 billion (FY 2011-13) Foxnews.com. March 1, 2011. Oklahoma $600 million (FY 2011-12) kfor.com. February 7, 2011
Oregon $3.5 billion (FY 2011-13). NRToday. November 23, 2010.
Pennsylvania $4 - 5 billion (FY 2011-12). The Philadelphia Inquirer. December 17, 2010.
Rhode Island $290 million (FY 2011-12) Brown Daily Herald. March 3, 2011
South Carolina $829 million (FY 2011-12). GoUPstate.com. January 7, 2011
Tennessee - $1 billion. WSMV.com. January 31, 2011
Texas -$15 billion. Chron.com. Jan. 18, 2011.
Utah-$700 million. KCPW. December 11, 2010.
Vermont-$176 million (FY 2012-13). WCAX,com. April 21, 2011.
Virginia -$200 million (FY 2011-12). WashingtonExaminer.com. December 17, 2010.
Washington $5.3 billion for next 27 months. The Olympian. March 18, 2011.
West Virginia -$150 -$160 million (FY 2011-12). Charleston Gazette. June 7, 2010.
Wisconsin- 3.6 billion. (FY 2011-12). JSOnline.com. March 10, 2011 and WUWM.com. March 31, 2011.
CATO released its “Fiscal Policy Report Card on America’s Governors: 2010” http://www.cato.org/pub_display.php?pub_id=12173. September 30, 2010NY Post analysis finds that “major city infrastructure projects undertaken as past of the federal stimulus package have yet to generate even a fraction of the thousands of promised jobs. NY Post. September 6, 2010. PublicSectorInc.org Experts Rate the Governors. PublicSectorInc.com January 25, 2011. http://www.publicsectorinc.com/psi_articles/2011/01/publicsectorinccom-experts-rate-the-governors.html
Center on Budget and Policy Priorities believe 2012 is “shaping up at states’ most difficult budget year on record. Thus far some 44 states and the District of Columbia are projecting budget shortfalls totaling $125 billion for fiscal year 2012. January 21, 2011. http://www.cbpp.org/cms/index.cfm?fa=view&id=711
Legislators of both parties allow bureaucrats to report a budget shortfall as the difference between what the governor wants to spend (not the current budget) vs the revenue forecast. We have not found any state that reports a shortfall as the difference between the current level of spending and the revenue forecast. Thus, most shortfalls are highly inflated.
Unemployment Insurance: Unemployment insurance and the amounts that states are borrowing from the federal government will be a big issue for many states over the next few years. The U. S. Department of Labor in their July 2010 Unemployment Insurance Outlook stated:
1. “Outlays from state trust funds accounts are projected to exceed revenues and interest income by $27.48 billion in FY 2010 and $18.09 billion in FY 2011.”
2. “State trust fund account balances, net of loans, are projected to continue to fall, from $3.2 billion at the end of FY 2009 to -$60.9 billion at the end of FY 2013, before starting to grown again. Net balances are not projected to become positive again until well beyond 2015.”
3. “Very large amounts of borrowing from the Federal Unemployment Account (FUA) are projected over the next few years. The balance of outstanding loans is projected to increase from $17.4 billion at the end of FY 2009 to a peak end-of-the-year balance of $65.2 billion in FY 2013.This peak balance is almost $30 billion less than projected for the Presidents budget. A total of 35-40 states are expected to borrow.”
Alabama-A $1.8 billon General Fund budget approved by the Alabama Senate on April 7 will require most agencies, except prisons and Medicaid, to get by on less money and will wipe out funding for many museums and tourist attractions. The budget provides no raises for state workers and is based on them paying more for retirement and health insurance. But it will allow them to keep their yearly longevity bonuses and not have furloughs, although layoffs remain likely. Forbes.com. April 8, 2011.
-$100 million state budget shortfall eliminated by Governor declaring a 15% across-the-board cut for the current fiscal year which ends on September 30, 2011. myfoxal.com. March 31, 2011
Alaska- Legislature went into special session on April 17 because House and Senate was deadlocked on the budget. JuneauEmpire.com. April 18, 2011.
Arizona-Governor signed budget that eliminates state budget shortfall. Spending in the next fiscal would total $8.3 billion. That’s below the current year’s $8.5 billion and Brewer’s proposed $8.9 billion. The budget restored transplant coverage — eliminated amid much controversy last fall — as part of a major revamp of the state’s Medicaid program that also include enrollment freezes that would reduce the number of people in the program by about 138,000 over the next year. Other elements of the plan include proposed new fees for smokers and obese people who don’t work with their physicians and meet goals. The changes would save the state a projected $500 million to help close a $1.1 billion budget shortfall. Arizona Republic. April 8, 2011.
California – California legislature to decide this week on possible tax extensions, the elimination of redevelopment agencies and other tax hikes to solve state budget shortfall. MercuryNews.com. March 20, 2011
- Governor Brown signed legislation on March 24 to close $11.2 billion of a $26 billion state budget shortfall. LATimes.com. March 25, 2011.
Colorado- Governor Hickenlooper helped lawmakers mold a budget compromise to balance the state budget to help cover a $1 billion state budget shortfall. Canadianbusiness.com. April 21, 2011.
Connecticut— Governor, lawmakers reach agreement on package of$1.5 billion in tax hikes to close $3.3 billion state budget shortfall. Under the agreement, the General Assembly would raise taxes on income, corporations, inheritance, alcohol, cigarettes and gasoline. The sales tax on retail items also would increase from 6 to 6.35 percent. The remaining shortfall by reducing spending and negotiating concessions from state workers, though it is still unclear whether public employees will go along with cuts of the magnitude being sought. Stateline.org. April 21, 2011.
Delaware-$216.4 state budget shortfall for FY 2011-12. Delawareonline.com. January 28, 2011.
Florida- Florida: Legislators settle on budget deal that covers $4 billion state budget shortfall. The agreement will require public employees across the state — including teachers, firefighters and sheriff’s deputies — to start paying 3 percent a year toward their pension costs. Gainesville.com. April 26, 2011.
Georgia- The General Assembly approved an $18.3 billion budget for the upcoming fiscal year and sent it to the Governor. The budget cuts college funding and borrows from Medicaid to prop up the teacher, employee and retiree health care system. The measure also borrows $675 million for construction of schools, college buildings and other facilities. Atlanta Journal-Constitution. April 13, 2011.
-Prison system reform will focus on sentencing alternatives. Watchdog.org. February 17, 2011.
-State budget shortfall of $1.5 billion for FY 2012. Savannahnow.com. February 6, 2011.
Hawaii- House and Senate budget committees on April 28 passed a budget that grows the size of government, restores many cuts lawmakers made earlier this session to Gov. Neil Abercrombie’s budget proposal and includes funding for new state positions. How the state will pay for the almost $22 billion biennium budget – through a new pension tax, alcohol tax hike, removal of business tax exemptions, and special fund raids on the city’s rail surcharge, hotel room tax and other special funds – won’t be decided until later. The state is facing a $1.3 billion state budget shortfall over the next two years and an immediate shortfall of $232 million. Hawaii Reporter. April 28, 2011
Idaho-State budget shortfall of $92 million for FY 2011-12. Bloomberg.com. February 18, 2011.
Indiana - Senate Appropriations Committee voted 8-3 along party lines this morning for a revamped, $28 billion two-year state budget that leaves more than $1 billion in reserves at the end of fiscal year 2013. Indystar.com. April 18, 2011.
–Indiana ended fiscal year 2009-10 on June 30, with a balance budget but reserves have dropped to $830 million as of June 30. State Auditor is forecasting reserves will drop to $188 million by June 30, 2011. NWI.com. July 19, 2010
-Indiana saving funds by implementing corrections reform. NY Times. January 17, 2010.
Illinois –Governor proposes nearly $1 billion in agency cuts but wants to increase state spending by $1.7 billion. Proposal includes borrowing $8.7 billion to pay outstanding state bills to solve $13 billion state budget shortfall. Wthitv.com. February 15, 2011.
-State and local unfunded pension liability is more than $200 billion. Chicagotribune.com. August 13, 2010.
-NCSL reports Illinois has worse financial situation of all the states; however, total state spending is up 15.1 percent!!! WBEZ91..5 July 27, 2010
Iowa- Governor Branstad vetoed one-year state budget. In his veto message, Branstad said he has proposed to the Iowa Legislature a budget that includes funding for fiscal years 2012 and 2013. He also has submitted legislation to require lawmakers and the governor to adopt a biennial budget. “Iowans have every right to demand the governor and General Assembly restore the sound budgeting practices and long-range planning tools that are necessary to ensure predictability and stability in state budgeting,” Branstad said in his veto message. Desmoinesregister.com. April 13, 2011
-State faces state budget shortfall of $700 million for FY 2011-12. Bloomberg.com. December 22, 2010.
Kansas- http://bobscorner.tumblr.com/post/3925198235/state-budget-shortfalls-march-17-2011State budget shortfall of $492 million for FY 2011-12. Nebraska. TV. March 4, 2011.
Kentucky –House adjourns expecting veto from Governor. MurrayLedger.com. March 28, 2011.
Louisiana-State budget shortfall of $1.6 billion for FY 2011-12. KPLCTV.com. December 12, 2010.
Maine-State budget shortfall of $31.9 million for current budget for fiscal year ending June 30, 2011. Governor proposes another supplemental budget to solve deficit. The Republic.com. March 28, 2011.
Maryland –House passed $14.6 billion budget which eliminates state budget shortfall of $1.6 billion for FY 2011-12. The budget is a $1.4 billion increase over the current budget. The Legislature raised a number of fees - as well as its alcohol tax - in tackling a $1.6 billion shortfall during the state’s recently completed legislative session. State employees will also now have to pay more into Maryland’s depleted pension system while taking cuts to their health benefits. Baltimore citybizlist.com. March 24, 2011.
Massachusetts-State budget shortfall of up to $1.5 billion. Masslivecom. January 17, 2011.http://www.forbes.com/feeds/ap/2011/04/06/general-mn-xgr-minnesota-budget_8395197.html
Michigan-State faces a $1.4 billion state budget shortfall for FY 2011-12. Shootonline.com February 20, 2011
Minnesota-Republicans who control the Minnesota Legislature were putting the finishing touches Wednesday on their opening offer to solve the state’s $5 billion state budget shortfall, with the state House passing a bill to cut funding to state agencies by 34 percent before taking up spending reductions on social welfare programs. Forbes.com. April 6, 2011.
-State is considering “pay for performance” bonds that would pay investors a 4 percent return on investment. The state would use the money to pay nonprofit providers that provide job training, help addicts kick their habits, or other such services—but only if they produced specific results that would save the state money. Under the Minnesota plan, nonprofits carry the risk. The investors get their return on investment no matter what, but nonprofits get paid only if they succeed. Philanthropy.com. March 24, 2011.
-Governor vetoes $901 million in proposed budget cuts. StarTribune.com. February 11, 2011.
Mississippi- State faces $634 million state budget shortfall for FY 2012. thegovmonitor.com. November 16, 2010.
Missouri-Missouri’s state budget breezed past another milestone Wednesday, passing through the Senate with wide support. The $23.2 billion spending plan, which already had passed the House, keeps basic school aid the same as last year’s budget. Lawmakers from both chambers now will come together to work out minor differences before holding final votes to send the budget to Gov. Jay Nixon by the May 6 deadline.Kansascity.com. April 20, 2011.
-faces $1 billion state budget shortfall for FY 2012. Kansas City Business Journal. August 5, 2010.
Montana-House passes budget deal between Governor and Republican legislative leaders. The agreement cuts spending of that “general fund” money by more than 6 percent, compared to the current two-year budget period that ends in June. But the budget deal fully restores about $100 million in federal money for programs largely aimed at the needy that Republicans tried to cut - prompting some in the GOP to oppose the compromise. Forbes.com. April 27, 2011.
-State faces $388 million state budget shortfall in FY 2011-12 budget. Projected surplus this year of $236 million will help offset this shortfall. Bloomberg Businessweek. October 8, 2010
Nebraska –State budget shortfall of more than $1 billion for FY 11-13 budget. Action3news.com. January 6, 2011
Nevada-State budget shortfall of $2.2 billion. Examiner.com. February 7, 2011
New Hampshire –State faces $800 million state budget shortfall. Sentinelsource.com. Sept. 22, 2010.
–A new way on retiree health care costs. Stateline.org. May 12, 2010
New Jersey-State faces $10.5 billion state budget shortfall for FY 2011. APP.Com. July 22, 2010.
-Governor signs budget that will reduce state spending for the third year in a row. The total state budget is now at roughly the same level it was in 2005. Pensions were underfunded by $3 billion. NJ.com. June 30, 2010. Governor vetoes three bills. Result will save taxpayers $132 million. Government monitor. July 24, 2010.
New Mexico-State budget shortfall grows to $452 million. Bloomberg Businessweek.com. November 11, 2010.
New York –Legislature passes first on-time budget in five years. Stateline.org. March 31, 2011.
North Carolina – Legislative leaders outlined how they would close a $2 billion plus state budget shortfall with cuts in education while largely sparing classroom teachers. AP. April 13, 2010.
-State faces a $2.4 billion state budget shortfall FY 2011-12 and $2 billion for FY 2012-13. TheTimesNews.com February 20, 2011
North Dakota- State is forecasting a $696 million surplus for the fiscal year ending June 30, 2011. Inforum.com. September 22, 2010
Ohio- Ohio Governor Kasich’s budget is full of accounting gimmicks. $8 billion state budget shortfall disappears and state budget is increased $7 billion. Columbus Dispatch.com March 16, 2011
-Buckeye Institute analysis of Governor Kasich budget. Buckeye Institute. March 17, 2011
-State budget shortfall $8 billion. Foxnews.com. March 1, 2011
-Oklahoma--State faces $600 million state budget shortfall for FY 2011-12. Kfor.com. February 7, 2011.
Oregon-Governor cuts health care for state employees effective April 1, 2011. Suite101.com. February 26, 2011
-State budget shortfall for FY11-13 is now $3.5 billion. NRToday. November 23, 2010.
Pennsylvania –State budget shortfall of $4 - 5 billion for FY 2011-12. The Philadelphia Inquirer. December 17, 2010.
Rhode Island –Governor Chafee’s sales tax package would create a two-tiered sales tax that would lower the current 7-percent rate to 6 percent, but expand it to include more items and services, including nonprescription drugs, haircuts, landscaping services, automotive repair and more. The governor also wants to institute a 1-percent sales tax on other exempt goods, including home heating oil, clothes, and water for residential use. The plan would create $165 million in new revenue for fiscal year 2012 to close a state budget shortfall of more than $295 million. Projo.com. April 22, 2011
South Carolina –State budget shortfall of $829 million. GoUpstate.com. January 7, 2011
South Dakota-Legislature passes balance budget to eliminate state budget shortfall for FY 2012 on March 11, 2011. capjournal.com. March 14, 2011.
Tennessee–$1 billion state budget shortfall for FY 2011-12. WSMV.com January 31, 2010.
Texas – State budget negotiations gain speed with House vote, Senate deliberations. Community Impact. April 15, 2011.
The House approved a budget for the next two years that totals $164.5 billion in state and federal funds, or nearly $23 billion less than current spending. The House Budget Chair expects “at least” 8000 state government employee layoffs. Mysanantonio.com. April 4, 2011. 2010.
-– Texas Public Policy Foundation publishes policy paper on Lessons from the 2003 budget crises. This is a template to solve the current Texas budget shortfall. TPPF. March 2011.
Utah- $700 million state budget shortfall. KCPW December 11, 2009.
Vermont— Vermont lawmakers are looking for ways to shore up a $176 million state budget shortfall. They wanted to go with a cigarette tax hike to raise $9 million. The governor doesn’t like that plan and today stopped it dead in its tracks. WCAX.com. April 21, 2011.
Virginia-State budget shortfall of less than $200 million for FY 2011-12. Washington Examiner.com. December 17, 2010.
Washington - Special legislative session to close state budget shortfall will start on April 26. Seattle Times. April 22, 2011.
-–Senate passed two-year budget on April 18, that contains the deepest cuts yet to education, including a 3 percent reduction in teacher pay and a plan to take money from schools when students play hooky. The bipartisan budget cuts $4.8 billion overall and transfers a few hundred million dollars from other funds to bridge a shortfall exceeding $5 billion. The proposal includes double-digit college-tuition increases, cuts to health-care and social-service programs and salary reductions for state employees. What it wouldn’t do is privatize the state liquor wholesale-distribution system. The House budget tentatively booked $300 million in new revenue, assuming details could be worked out to lease the wholesale operation to a private company. Seattle Times. April 18, 2011.
-House passes budget to solve $5.1 billion state budget shortfall. Tacoma News Tribune. April 10, 2011.
-Gov. Gregoire gets a “F” on state’s budget. Freedom Foundation. March 1, 2011.
-State budget shortfall of $5.3 billion for next 27 months. The Olympian. March 18, 2011.
West Virginia –Legislators want stimulus answers. Charleston Gazette. August 10, 2010
-$150 -160 million state budget shortfall in FY 2011-12 budget. Charleston Gazette. June 7, 2010.http://sundaygazettemail.com/News/201006070756
Wisconsin- Gov. Walker signed bill to eliminate $137 million state budget shortfall for current year. WKOW.Com. April 6, 2011.
