Budget Blog

March 12, 2021 - News Flash

By Brian Sigritz posted 03-12-2021 02:52 PM

  

Alabama

Alabama’s House approved a $2.4 billion general fund budget that includes a 2 percent pay raise for state employees and increases funding for the Department of Mental Health and Alabama Law Enforcement Agency. Sales tax collections grew 7.13 percent in 2020 as shoppers spent 11.6 percent more during the last two months of the year compared to the prior year. The state Senate rejected a proposal to start a lottery and allow up to 10 casinos. The governor signed bills that exempt federal stimulus payments and other relief measures from state income taxes and provide COVID-19 liability protections to businesses, health care providers, schools, churches, and others.

 

Alaska
Alaska House lawmakers formed a new committee to consider possible revenue options, including an income tax, to help close an estimated $1.2 billion budget deficit in fiscal 2022. The governor said he will not approve new taxes without a statewide vote on his proposed constitutional amendment, which would require voters to approve any tax increases before they become law. Last month the governor issued a transition plan to take effect in place of the state’s recently expired COVID-19 disaster declaration. He also proposed a new database to increase transparency of health care provider and health insurance pricing. The Alaska Permanent Fund continues to grow rapidly and is now valued at an estimated $74.8 billion.

 

Arizona
Arizona lawmakers in the state Senate narrowly passed a major expansion of the state’s school voucher program; the bill would allow all children attending economically disadvantaged schools to be eligible for vouchers to pay for private school. District schools have seen a 6 percent enrollment decline statewide this academic year. State House lawmakers approved a bill to allow community colleges to offer four-year baccalaureate degrees to students. The governor and state transportation agency announced $230 million in new transportation infrastructure investments.

 

Arkansas

Arkansas’ state general revenue tax collections were down $7.9 million in February compared to the prior year but exceeded the state’s forecast by $31.7 million. Legislators approved a bill that exempts federal and state unemployment benefits from state income taxes in 2020 and 2021. The Senate approved a bill that revamps the state’s version of Medicaid expansion to add incentives for work, continuing education and other activities. Education officials outlined plans to spend almost $70 million in federal funding to offset pandemic impacts, including mental and behavioral health, learning gaps, and teacher academies.

 

California
California’s governor signed a $6.6 billion state-funded package to support schools reopening, including $2 billion for grants to support safety measures and $4.6 billion for voluntary learning expansions to address learning loss, such as extending the school year, tutoring, and mental health services; funding is tied to schools delivering in-person instruction. The governor also signed a $7.6 billion COVID-19 economic relief package that will distribute $600 state stimulus payments to low-income residents, provide grants and fee waivers to small businesses, and other measures. The governor highlighted both legislative packages in his State of the State address this week.

 

Colorado
Colorado lawmakers reconvened last month to consider proposals to restore last year’s severe education cuts, curb health care costs, invest in transportation infrastructure, and foster economic recovery. The governor highlighted these and other budget priorities like expanding broadband and targeted tax relief in his State of the State address. The governor and lawmakers announced plans to spend $700 million on one-time investments in transportation, agriculture, and small business aid. A House committee advanced a bill to preserve last year’s funding levels for schools that experienced enrollment declines due to COVID-19. Public higher education institutions facing revenue losses are pressing lawmakers to restore $493 million in budget cuts from last year.


Connecticut
Connecticut is projecting an operating surplus of $131.4 million for fiscal 2021, a change of $6.2 million from last month due to revised expenditure trends. The projected surplus represents 0.7 percent of the general fund. The governor unveiled a health care bill that would impose an assessment on insurance carriers, create more subsidies on the exchange, and would address the cost of prescription drugs by imposing an annual cap on price increases. The governor and the Mohegan tribal chair reached an agreement on a comprehensive gambling expansion plan that could eventually lead to legalized sports wagering and online gambling.

 

Delaware
Delaware’s governor announced an expansion of the state’s COVID-19 vaccination program for educators, school staff and childcare workers, in line with the President’s commitment to provide at least one dose of the COVID-19 vaccine to school personnel by the end of March. The Department of Health and Social Services proposed fiscal 2022 department’s budget includes a $12 million increase to the Medicaid budget, as the number of people eligible for the program has risen during the pandemic. The legislative session will remain online through March.

 

Florida

Florida lawmakers expect the legislature to play a larger role in allocating the next round of federal fiscal relief, which could amount to $10.2 billion for the state. Lawmakers have suggested using federal funds to avoid tax increases on businesses by replenishing the unemployment insurance trust fund. The legislature is examining options to replace the state’s unemployment benefits system after challenges during the pandemic. The Senate Finance and Tax Committee advanced a bill to collect sales taxes on online purchases that could generate more than $1 billion a year as lawmakers also look at options to make it revenue neutral.


Georgia

Georgia’s governor signed a midyear budget for fiscal year 2021 that increases state spending by $654 million and includes $1,000 bonuses for most state employees and a 10 percent raise for correctional officers. State tax collections grew 43 percent in February compared to the prior year but officials credit this jump largely to a delay in income tax filings directed by the IRS. The House approved a $27.2 billion budget for fiscal year 2022 that backfills some previous spending cuts and borrows about $1 billion for construction projects. Legislators approved a state income tax cut that reduces what filers pay by raising the standard deduction.

 

Hawaii
Hawaii’s Senate approved a measure that would increase the income tax rate on individuals earning more than $200,000 per year, as well as increase the capital gains tax, corporate tax and high-end real estate sales taxes. The House Finance Committee wants to restore funding that the administration has targeted for cuts as well as pay back $700 million that was borrowed from the federal government for the state’s unemployment trust fund.  Another House committee advanced legislation that would require the state education agency to use $104 million in federal assistance to support public school teacher salaries.

 

Idaho
Idaho lawmakers in a House committee introduced legislation that would reduce income taxes and sales taxes, as well as eliminate a grocery tax credit. The Joint Finance Appropriations Committee approved budgets for seven state agencies, largely in line with the governor’s recommendation, and also advanced higher education budget bills that would increase overall funding for four-year higher education institutions by 2.6 percent. Lawmakers in the House passed a bill to limit the governor’s emergency powers, while a constitutional amendment being considered would allow lawmakers to call themselves back into special session. The legislature passed a bill authorizing the expenditure of $175 million in federal rental assistance funds.

 

Illinois
Illinois’ governor released a fiscal 2022 budget proposal that decreases spending 4.2 percent from the prior budget, uses federal COVID-19 relief dollars, includes fund transfers, funds core services, provides flat funding for education, includes no income tax increase, and closes corporate tax loopholes. The state Board of Education is advocating for a nearly $400 million increase in K-12 funding including early education. The governor signed a criminal justice overhaul bill that abolishes cash bail, among other provisions. A new report from Moody’s says the state’s net pension liability exceeds $300 billion.

Indiana
Indiana’s legislature is considering a bill to make sure schools get full funding even if they are providing instruction virtually due to COVID-19. The House passed a budget proposal that increases cigarettes taxes by 50 percent per pack, and imposes a new 10 percent sales tax surcharge on vaping products. A police reform bill has been approved by a Senate committee. The legislature is entering the second half of its session after earlier enacting a bill that provides civil legal immunity to businesses, schools, healthcare providers, and nursing homes impacted by COVID-19.

 

Iowa
Iowa’s governor signed an education measure that increases school funding by $36.5 million and boosts funding by $179 per pupil for fiscal 2022. Sports betting in the state set a daily record in February. The legislature continues to consider tax cuts and reform measures although it is awaiting the next forecast from the state’s Revenue Estimating Conference. Other measures being considered by the legislature include funding for rape kit processing, providing penalties for localities that defund the police, tort reform, schools choice bills, and tax credits and incentives for childcare facilities.

 

Kansas
Kansas’ legislature has been considering what to do with the newly approved federal COVID-19 relief funds, and has examined directing more towards education and the unemployment system. The legislature also held previous conversations about a state tax cut. Other items considered by the legislature include limiting online learning, a loan program to help localities with energy costs, and legalizing medical marijuana. Graduate students at the University of Kansas are concerned about the possible loss of teaching positions due to budget cuts.

Kentucky
Kentucky general fund receipts for January grew 6.6 percent over last year, an increase of $68.4 million; growth for the first seven months of fiscal 2021 is 5.7 percent. The state expects $2.4 billion in federal funds from the recently passed federal aid bill. Lawmakers passed a bill that would allow the state to forgive overpayments of unemployment insurance benefits. Legislation providing broad protections for businesses from coronavirus-related lawsuits passed the Senate. The governor signed an executive order calling for schools to offer or expand in-person instruction as school personnel are vaccinated. A state judge has granted a temporary injunction against three laws passed by the General Assembly to limit the authority of a governor during emergencies.

Louisiana
Louisiana’s governor said he will propose a state budget avoiding cuts, giving modest pay raises to public school teachers and support staff, and adding funding to higher education. A state panel voted to double the public school spending proposal from the governor’s request; the $80 million recommendation was sent to the state Board of Elementary and Secondary Education. The state’s $24 million rental assistance program was shut down after four days due to the number of applications. Louisiana’s governor is asking lawmakers to borrow more than $1 billion over several years to more quickly repay federal loans for rebuilding the flood-control system; the move would lessen the interest that would otherwise be owed.


Maine
Maine’s governor presented her state of the budget address that included key priorities focusing on healthcare, education, and the economy. The governor proposed borrowing at least $111 million to aid the state’s pandemic recovery including $50 million to help heritage industries increase production, $30 million for broadband expansion, $25 million for career training programs, and $6 million to help childcare facilities build, renovate or expand. State budget revenues were up 6 percent over the first seven months of the fiscal year though the state still projects a $650 million shortfall over the next three budget years. The state faces a debate about how to use $1.6 billion in state and local funds from the latest COVID-19 relief package.


Maryland
Maryland’s Board of Revenue Estimates projects a 1.5 percent increase in fiscal year 2022 revenues, an increase of nearly $300 million from previous estimates. The state comptroller announced an extension of the state’s income tax filing deadline until July 15, applying to individual, pass-through, fiduciary and corporate income tax returns. The governor submitted a $1.59 billion education supplemental budget for fiscal year 2022 that includes funding for reopening schools, nutrition programs, and higher education. The General Assembly approved a $1 billion pandemic relief bill that includes tax relief and economic stimulus for low-income families and small businesses. After a veto override, the state approved the nation’s first tax on revenue from digital advertisements, which is now subject to a lawsuit.


Massachusetts
Massachusetts’ year-to-date collections through February totaled approximately $19.5 billion, which is $1.1 billion or 6.1 percent more than collections in the prior year. Legislative leaders have reached a deal on a bill that will freeze the unemployment insurance tax rate for 2021 and 2022 and extend tax relief on Paycheck Protection Program forgiven loans in an effort to help businesses and their employees work through the COVID-19 pandemic. The state Senate President said she has no plans to raise taxes this year; the governor’s budget proposal did not include a tax increase on individuals either.


Michigan
Michigan’s governor signed a $2.5 billion supplemental funding law that allocated COVID-19 aid to rental assistance, a wage increase for direct care workers, testing and contact tracing, vaccine administration, and education. The governor vetoed some spending items and limitations on her authority to issue pandemic-related orders. A legislator said he will not consider allocating additional federal funds until the governor negotiates with lawmakers on pandemic orders. The governor said the latest COVID-19 relief package will provide much needed support. Earlier, the governor said an in-person K-12 learning option is crucial.

Minnesota
Minnesota increased its revenue forecast due to an improved economic outlook bolstered by federal actions, and is now anticipating a $1.6 billion surplus for the next two-year budget. The revised outlook will be taken into consideration as the legislature considers the upcoming biennium budget. Earlier, the governor proposed a $518 million infrastructure package that includes repairs and improvements to higher education institutions and state agencies. The state is beginning to consider how it will allocate funding from the latest federal COVID-19 relief plan. The legislature has reached its midway point and is considering issues concerning public safety and tax reform.

Mississippi
Mississippi’s House approved legislation that eliminates the state’s income tax over time, cuts the grocery sales tax in half and increases other sales taxes. The Senate is examining the bill, gathering feedback from potentially impacted groups, including retirees and farm groups. A bill proposing a statewide election on increasing gas and diesel fuel taxes to pay for improvements to state highways and local roads did not receive a vote before the deadline.


Missouri
Missouri’s legislature has been considering a series of measures concerning tax changes including reducing income tax rates, collecting online sales taxes, and raising the gas tax for transportation needs. The House recently passed a bill concerning private school tax credits and is considering legislation allowing students to choose which public school district they want to attend. The House also passed legislation to forgive federal, but not state, unemployment overpayments. Earlier, the governor signed a $324 million package for rent and utility needs.


Montana
Montana’s governor signed a bill that sets aside $2.5 million in annual general fund dollars to give to school districts that increase starting pay for teachers above a certain threshold. The governor’s tax package was advanced in the Senate; the bills would reduce the state’s top marginal income tax rate and trigger additional reductions if certain financial benchmarks are achieved, as well as exempt some entrepreneurs from capital gains taxes. Lawmakers on a joint subcommittee proposed a $570.2 million infrastructure spending package for the next biennium, including $102.2 million in bonding. The full House Appropriations Committee this week held hearings on the state’s main budget bill, which provides $4.5 billion in general fund spending over the next biennium.


Nebraska
Nebraska’s legislature is examining tax reform that could expand the sales tax base while lowering personal income tax rates. The legislature also continues to move forward on exempting 100 percent of military retirement income from the state income tax. The state continues to pursue a new $230 million prison to help address overcrowding. The Nebraska Economic Forecasting Advisory Board recently raised revenue forecasts for the remainder of fiscal 2021, and the next two fiscal years. The governor recently discussed encouraging trends in the fight against the coronavirus and keeping the economy moving forward, and continued to call for controlling property tax growth.

Nevada
Nevada’s governor signed a bill providing additional federal pandemic relief funds to small businesses. The state, heavily reliant on tourism and with one of the highest unemployment rates in the country, is expected to receive $4.5 billion in funding from the latest federal aid package for the state government, counties, cities, schools and transportation. Lawmakers are proposing to use funds from this next round of federal stimulus to bolster summer school programs by as much as $1 billion to address learning loss during the pandemic. The governor outlined a proposal to allow technology companies to form “Innovation Zones” that would have the same authority as a county.


New Hampshire
New Hampshire’s governor’s fiscal 2022-2023 proposed budget totals $6.83 billion in fiscal 2022 and $6.96 billion in fiscal 2023 in state funds from all sources, compared to $6.85 billion in fiscal 2021. The budget proposal is focused on core services and includes new funding in several areas such as education and mental health, and includes a series of tax cut measures. The governor is proposing the state merge its two- and four-year college systems as a part of his budget plan, for a more collaborative approach to public higher education. The state’s tax receipts for February totaled $120.3 million, which is about $18.8 million above the projections for the state's two-year budget, and $24.8 million more than a year ago; the governor wants to add back $70 million in spending to his budget plan with the improved revenue performance.


New Jersey
New Jersey’s governor’s proposed $44.8 billion budget for fiscal 2022 would increase spending on education, economic-development programs, and pension payments. The proposal calls for about $200 million to help jump-start the economy with grants and loans for small businesses and other initiatives. The governor signed a bill making a program permanent that offers tuition free education at the state’s community colleges for low- and moderate-income students. Fiscal year-to-date, total collections through January of $18.75 billion are up $793.3 million, or 4.4 percent above the same seven months last year.

 

New Mexico
New Mexico’s governor signed legislation to make $200 million available as grants to businesses to cover rent and mortgage obligations in exchange for rehiring workers or making new hires. House lawmakers approved a bipartisan $7.39 billion general fund budget for fiscal 2022, representing a 4.6 percent spending increase over fiscal 2021. The state’s revenue outlook has improved compared to a year ago, but longer-term uncertainty remains. House lawmakers passed a broad package to expand tax credits for low-income workers while raising new revenue through establishing higher tax brackets for high-income earners and limiting a capital gains tax deduction, and also approved a bill to impose a tax on health insurance premiums to help fund health care coverage for low-income residents.

 

New York
New York is expected to receive approximately $12 billion from the latest federal COVID-19 relief package, while the governor said tax increases are still a possibility as the state is facing a $15 billion gap. The state’s comptroller released an analysis of the governor’s proposed fiscal 2022 budget, including a review of the governor’s 30-day amendments and the amended financial plan. The state extended its open enrollment period on the health care marketplace with 5.8 million residents enrolled in coverage. The legislature has moved to restrict some of the governor’s COVID-19 emergency powers.


North Carolina
North Carolina is projected to receive $4.1 billion more in revenue this fiscal year than expected, a nearly 18 percent increase from the May 2020 forecast. The General Assembly approved a $1.7 billion spending package that distributes federal coronavirus relief money though concerns have been raised over changes it makes to the administration of emergency rental assistance funds. The governor and legislative leaders announced compromise legislation to return more students to daily in-person instruction.


North Dakota
North Dakota’s legislature has entered the second half of the legislative session and is considering a series of issues including using earnings from the state’s Legacy Fund to issue bonds for infrastructure projects, legalizing marijuana, limiting the governor’s emergency powers, boosting the coal industry, and several social issues. The House passed a bill increasing the state’s gas tax by 3 cents to help support infrastructure improvements. The legislature is also considering legalizing sports betting this year. Higher education leaders have asked legislators to support the North Dakota University System’s funding bill.

Ohio
Ohio’s House of Representatives passed an $8 billion transportation budget that adds money for public transit and eliminates penalties on distracted driving. The Senate voted to remove subsidies in a previously passed nuclear plant bailout bill. The legislature is once again considering K-12 funding reform as part of the two-year budget process. The state may lift the cap on the number of medical marijuana dispensaries. Casinos and racinos in the state recovered some in February, but are still below levels from a year ago.

 

Oklahoma
Oklahoma’s expenditure authority for fiscal year 2022 increased nearly $1.2 billion, or 13.9 percent, from the December estimate, totaling more than $9.6 billion; this includes $6.7 billion available for appropriation. A bill with bipartisan support in the legislature would give parents of school-aged children a $1,000 tax credit for tax year 2021 at an expected cost of $411 million. A bill ending most sentencing enhancements, which would reduce the state’s prison population, failed to advance in the legislature.

 

Oregon

Oregon’s governor and legislative leaders said they will spend $250 million in state funds and $75 million in federal funds on summer school programs to address learning loss. Taxpayers are expected to receive $571 million in personal income tax rebates, due to the state’s “kicker” law that sends revenues above the state’s initial budget projections back to taxpayers. State officials welcomed the improved projections in the latest quarterly revenue forecast, but also noted ongoing uncertainty and the fact that many residents, especially low-income workers, remain unemployed. The state higher education coordinating agency announced a new funding model designed to improve equity and affordability.

 

Pennsylvania
Pennsylvania collected $2.7 billion in general fund revenue in February, which was $593.9 million, or 28.4 percent, more than anticipated. Fiscal year-to-date general fund collections through February totaled $23.9 billion, which is $901.3 million, or 3.9 percent, above estimate. Casinos in January statewide generated $311 million in gambling revenues, nearly 3 percent more than the $302.8 million in revenues generated the prior year, which was bolstered by the opening of two casinos and the growing popularity for sports wagering, online gambling, and video gaming terminals. The governor’s office is awaiting additional guidance on how funds from the newly approved COVID-19 aid package can be used, while some are advising only using one-time funds for one-time costs.


Rhode Island
Rhode Island is on track to finish fiscal 2021 with a surplus of $44 million based on a projection of actual spending from July through December and incorporating updated forecasts for revenue and social services. Voters approved $400 million in seven bond measures to fund projects ranging from affordable housing, to facilities upgrades for higher education, to transportation infrastructure. Rhode Island’s new governor is expected to focus on a series of issues concerning the budget, reopening the economy, economic development, hospitals, schools, and vaccinations.


South Carolina
South Carolina’s House budget committee approved a nearly $10 billion spending plan that includes small annual pay raises for teachers, $16 million for raises and other bonuses to retain police officers and prison workers, and $30 million for rural broadband expansion. State economists did not change the revenue estimates in February due to ongoing economic uncertainty from the pandemic; revenues have grown nearly 5 percent this fiscal year. The Senate approved a proposal to borrow up to $550 million to expand the port in Charleston.


South Dakota
South Dakota’s legislature approved the state’s fiscal 2022 budget proposal which includes a 2.4 percent pay increases for teachers, Medicaid services providers and state government employees and moves institutions that deliver Medicaid to 100 percent reimbursement, among other items. The budget also includes additional investments in broadband and needs-based scholarships. The legislature was unable to agree on changes to legalizing medical marijuana meaning a previous voter-passed measure to legalize it would go into effect on July 1, 2021. The governor signed a measure allowing people under 18 to hunt, fish, and trap without a license or paying a fee.

Tennessee
Tennessee’s governor highlighted provisions in his budget proposal that focus on infrastructure, workforce development and education to keep the economy growing. The governor’s budget included $200 million for broadband expansion and groups are pushing for an improved broadband map to target coverage. A bill to legalize and regulate medical cannabis began advancing through the legislature.

 

Texas

Texas’ chief justice estimated it will take three years to get through the backlog of criminal cases built up during the COVID-19 pandemic, in addition to civil and child protection cases. The state extended a provision that maintains public funds to schools through the current school year regardless of enrollment losses of approximately 3 percent. The governor said spikes in energy bills during the recent winter storm were unacceptable and called on lawmakers to mandate weatherization of power plants.

 

Utah
Utah lawmakers passed a nearly $22 billion budget for fiscal 2022 that restores many funding cuts imposed last year, especially for education, as well as makes a number of largely one-time investments in economic development, an “infrastructure bank”, building construction, and affordable housing and homelessness initiatives. Updated revenue projections last month showed the state had more than $1.3 billion in one-time money and $205 million in ongoing revenue to spend in fiscal 2022, though spending requests from agencies still exceeded available funding. Lawmakers also backed a $1.23 billion transportation package and a series of bills providing $100 million in targeted tax relief. Before adjourning, the legislature passed a bill to limit the governor’s emergency powers.

 

Vermont
Vermont’s trustees of the State Colleges plan to have all three of the system’s four-year schools eventually merge into one Vermont State University. Compared to the revised estimate, January estimates for the general fund, the transportation fund, and the education fund were a combined $12.1 million, or 4.8 percent above the consensus expectations, although revenue collections were still below pre-pandemic expectations. State officials said the state would be able to respond to pressing economic recovery and public health needs and would also have time to strategize about longer-term investments with the federal funding from the latest COVID-19 relief bill.  


Virginia

Virginia has $730 million in unexpected tax revenue over two fiscal years due to new figures for sales tax revenue from the holiday season, estimated payments, corporate income taxes and recordation taxes. Budget negotiators reached a compromise on a two-year state budget that includes a 5 percent pay raise for teachers and state employees, $443 million to protect K-12 schools from pandemic losses, and $900 million for reserve funds. Legislators voted to allow businesses who received forgiven Paycheck Protection Program loans or a state grant to deduct up to $100,000 on their 2020 tax returns for eligible expenses.


Washington
Washington’s governor signed a COVID-19 relief bill providing $2.2 billion in federal funds for vaccine administration, rental assistance, and public schools. Lawmakers in the Senate narrowly passed a bill to create a capital gains tax, marking the first time that either chamber of the state legislature backed this proposed new tax, which has been considered by the state for a number of years. The House approved a bill backed by the governor to set low-carbon fuel standards. A Senate proposal calls for modest increases to the gas tax, bicycle sales taxes, transit fees, and ride-sharing fees to help fund road improvements and cover pandemic-related revenue losses; two other transportation plans have been introduced this session so far.

 

West Virginia
West Virginia’s governor has unveiled a proposal to cut the state’s personal income tax which would use $900 million in annual tax hikes to partially offset the $1.07 billion reduction; the offsets include an increase in state sales, beer, wine, liquor, cigarette, tobacco products, e-cigarette, and soft drink taxes; the elimination of sales tax exemptions for a variety of services; and a tiered severance tax plan. The House of Delegates received a presentation on the governor’s budget proposal; the plan calls for a flat budget to match the state’s mostly unchanged revenue collections. The House of Delegates also passed a bill to increase the number of public charter schools allowed every three years from three to ten and allow for online-only charter schools.


Wisconsin
Wisconsin’s governor released a two-year budget proposal that increases spending by approximately $10 billion over the last two-year budget, adds K-12 funding, boosts higher education funding, prioritizes mental health, focuses on justice reform, reinstates collective bargaining for some public employees, targets climate change, and borrows for road projects. The legislature is not expected to pursue marijuana legalization or raise the minimum wage this year. The legislature is also expected to oppose the governor’s plan to allow localities to raise the sales tax. The governor recently signed a bill to begin to overhaul the state’s unemployment system. The legislature is pushing for greater control on newly approved federal COVID-19 relief funds.

Wyoming

Wyoming lawmakers have begun debating the governor’s supplemental budget proposal, which includes roughly $445 million in general fund reductions (some already in effect). In his State of the State address, the governor highlighted economic development and recovery efforts, as well as the need to consider broad changes to the state’s unsustainable K-12 funding model. The state faces a $300 million budget shortfall for K-12 education. Senate leaders say K-12 spending reductions will need to be considered first before discussing possible revenue increases; House lawmakers, meanwhile have introduced a bill that would cut school spending by $100 million as well as create a framework for raising new revenues.