Budget Blog

November 8, 2019 - News Flash

By Brian Sigritz posted 11-08-2019 12:12 PM



Alabama released a list of 28 city and county road projects that will receive $30.1 million from the increased state fuel tax, which increased by 6 cents a gallon on September 1. Lawmakers discussed options to address decreasing test scores in reading and math after national scores were released, noting recent passage of the Literacy Act which will require all third-graders to read on grade level before advancing.



Alaska is now projecting a state budget gap of $180 million to $200 million due to lower-than-anticipated oil production and lower oil prices. The governor vetoed a bill designed to restrict the governor’s ability to pay state employees more than allowed under the state salary scale and to hire workers for temporary assignments not designated by lawmakers.



Arizona has suspended plans to impose work requirements on Medicaid program recipients, due to pending court cases in other states challenging similar mandates. The governor allocated an additional $500,000 for adult education to reduce the waitlist for programs statewide. Economists expect the state to have $170 million in new ongoing revenues and $475 million in new one-time funds in fiscal 2021.



Arkansas scholarship lottery revenues in September increased from $35.1 million a year ago to $36.2 million this year, although net proceeds dropped in part due to lower jackpot levels. The U.S. Government Accountability Board found that implementing the state’s Medicaid work requirement cost the state and federal governments more than $26 million, with about $22.4 million paid by the federal government.



California’s governor vetoed numerous bills due to budgetary concerns, including measures for paid family leave for teachers and an expansion of full-day kindergarten programs. The governor issued a state of emergency proclamation for two counties amidst severe wildfires. Meanwhile, the state’s Public Utilities Commission approved a new surcharge for utility consumers that will help pay for a $21 billion wildfire fund.



Colorado’s governor proposed a $32.4 billion all-funds budget for fiscal 2021, which includes $28 million to expand public preschool, $10 million for paid family leave for state employees, and $31 million to increase the state’s reserve account. Voters rejected a ballot measure that would have let the state keep tax revenues above the state’s spending cap, which would have allowed the state to retain additional funds ranging from $550 million to $1.7 billion over the next three years.

Connecticut is projecting an operating balance of $79.1 million at year end with state reserves estimated at over $2.9 billion by the end of fiscal 2020. The governor met with legislators about the administration’s 10-year, $20-billion proposal to improve Connecticut’s roads, rail, and public transit. The finances of Connecticut’s hospitals remained mostly unchanged in 2018, with slightly more hospitals turning a profit but seeing a drop in the average margin. State officials said they found $500,000 in state funds to match another $500,000 in philanthropic funds to coordinate outreach for the 2020 Census.



Delaware’s health care premiums on the marketplace will be declining by 19 percent in the upcoming year, the first decline in seven years, and helped by the new reinsurance program in place to reduce premiums. County police announced the creation of a behavioral health unit to expand upon the agency's addiction response program and its mental health outreach team with the help of more than $2 million in government grants. 



Florida’s newest school voucher program, the Family Empowerment Scholarship, distributed all 18,000 scholarships that were available; the program allows children from low- and middle-income families to attend private schools. State senators passed a bill in committee requiring online sellers to automatically collect sales taxes and remit them to the state, potentially generating $700 million in revenue if enacted. Policymakers examined options to ensure full funding of the state’s affordable housing trust fund, including considering the fund separately from the state budget.


Georgia’s governor released a Medicaid expansion plan for uninsured adults who make no more than the federal poverty level that includes a work or community engagement requirement along with monthly premiums. In response to the governor’s request for plans on absorbing potential spending cuts over the next two years, some agencies submitted budget requests that include eliminating vacant positions and furloughing staff. The state lottery transferred nearly $292 million in profits to the state treasury from the first quarter of the fiscal year, an increase of $6.3 million over the prior year.



Hawaii officials are trying a new two-pronged approach to deal with homelessness by opening a temporary all-in-one hub for homeless services, while simultaneously imposing a crackdown on illegal homeless activity in the vicinity. A judge issued an injunction stopping the city and state from funding a controversial flood control project designed to protect Waikiki beach and surrounding areas from flooding.



Idaho’s K-12 education task force established by the governor voted to approve five recommendations related to topics including increasing teacher pay and full-day kindergarten. Roughly 35,000 residents have signed up for Medicaid in the first few days since the program began offering expanded coverage. Lawmakers are taking their first look at state agency budget requests while revenues are coming in below forecast. The governor recently asked agencies to trim their current budgets by 1 percent and prepare for additional cuts next year.



Illinois’ budget office, in a report, said that a graduated income tax is the best way to address the state’s structural deficit and without one cuts to essential services would be required. The state’s bill backlog is expected to reach $19 billion in five years if additional tax revenue isn’t found. The state also released details of its $23.5 billion road plan being funded partly by increased gas taxes and other new revenue. Illinois’ new marijuana law includes provisions aimed at helping communities hurt by the drug war.



Indiana lawmakers are considering possible changes to the school funding formula. A legislative committee found that targeted referendums can help increase teacher pay. The state is considering creating a hotline to report local government corruption. A panel is recommending increasing the age to buy cigarettes to 21. The state had decided to postpone Medicaid work requirements citing current federal lawsuits.



Iowa’s Revenue Estimating Conference is projecting 1.4 percent revenue growth in fiscal 2020 and 2.7 percent revenue growth in fiscal 2021, slower than fiscal 2019’s growth of 6.4 percent; the slowdown is partly due to federal trade and energy policies, as well as tax policy changes that strengthened fiscal 2019’s increases. Iowa casinos took in $40 million in wagers in their first month of legal sports gambling. The state has made tax credits available to help flooded communities. The governor is spotlighting apprenticeship opportunities in the state.



Kansas increased its revenue forecast for fiscal 2020 by $200.4 million and for fiscal 2021 by $305.1 million partly due to the strength of the economy. The legislature continues to consider possible ways to expand Medicaid. The legislature is also examining the awarding of a prison healthcare contract.



Kentucky’s preliminary general fund revenue estimates for the upcoming biennial budget process include growth rates of around two percent. General fund revenues have grown 1.1 percent through September, the lowest quarterly growth rate in three years. The Kentucky Supreme Court heard oral arguments on a suit against pension hedge fund managers. Andy Beshear, who currently leads the governor’s race by approximately 5,000 votes, said his January budget proposal will prioritize public education, healthcare, and rebuilding the state’s infrastructure.



Louisiana is drafting an action plan to spend $1.2 billion in federal flood mitigation funding. Advocates are seeking a higher state share of offshore energy revenues to match energy production sites on federal land. Regents are asking for a 14.5 percent increase in state aid for colleges and universities.



Maine’s governor signed an executive order to develop and support census counting efforts and to encourage full and accurate participation in the 2020 Census. Voters approved a ballot measure authorizing $105 million in bonds to build or improve roads, bridges, railroads, airports, transit and ports and make other transportation investments with state funds used to match an estimated $137 million in federal funds.


Maryland legislators proposed a $2.2 billion plan to replace, repair or expand the state’s school buildings, overseen by the Maryland Stadium Authority and funded by revenue bonds. A work group focused on education funding released a proposal that requires the state to spend $2.8 billion more on schools and mandates $1.2 billion from local governments, for a total increase of $4 billion annually.


Massachusetts’ governor introduced a comprehensive health care bill promoting access to behavioral health and primary care services, reining in physician and hospital billing practices, holding drug companies accountable, and supporting distressed community hospitals and community health centers. Preliminary revenue collections for October totaled $2.0 billion, which is $39 million or 2.0 percent more than benchmark. The House passed its own version of a $1.5 billion education funding bill. Lawmakers are examining possible ways to increase transportation funding.

Michigan’s governor and legislature continue to work on possibly restoring funds that were cut in the fiscal 2020 budget, which began on October 1; part of the debate centers on the governor’s ability to shift funds. The governor recently signed a bill classifying 17 year-olds as youth in the state’s criminal justice system. The House voted to legalize sports betting and internet gaming. The Department of Transportation director said that the Michigan may need a gas tax hike close to 80 cents a gallon.



Minnesota’s governor has said that the state needs to redo it school funding formula and reduce school districts reliance on referendums. The governor is launching a tour of potential public works projects. The University of Minnesota has seen an increase in revenue from nonresident students. The state prison system has seen an increase in overtime.



Mississippi transferred just over $205 million into the state rainy day fund from the unspent surplus of the prior fiscal year; as a result, the rainy day fund hit its statutory limit of $554.8 million. Scratch-off lottery tickets go on sale later this month and jackpot-style games begin in early 2020, with revenues dedicated to infrastructure and public education. A record $11.74 million, generated from leases of state-owned land and deposited into a trust fund, will be allocated for public access projects on the coast.



Missouri’s tax collections through October have grown 7.3 percent, well above fiscal 2020’s projected rate of growth of 2 percent. The state auditor said that Missouri needs to find a way to save more money to prepare for the next recession; the state constitution currently caps the amount allowed in the Budget Reserve Fund. The legislature is examining the possibility of permitting sports betting.



Montana lawmakers and other key stakeholders are debating how much funding to provide to the Land and Water Conservation Fund, which was permanently reauthorized earlier this year. Health insurance plans available to state residents purchasing coverage on the federal exchange are offering lower premiums compared to last year. One-hundred percent of public school students in the state now have access to high-speed broadband.



Nebraska’s economic forecasters increased their revenue projections for the current two-year budget; the governor has said that the additional revenue should be used for property tax relief. The legislature is expected to release a tax reform proposal sometime this month and debate it next year. The state is in the process of enacting Medicaid expansion that was approved by voters last year. The University of Nebraska is offering buyouts to senior faculty.



Nevada’s general obligation bond rating was upgraded by a major credit rating agency due to the state’s strong economy, employment, population growth and growing reserves. The state’s health insurance exchange will focus on enrollee retention this year, the exchange’s first year since leaving the federal health care site.


New Hampshire

New Hampshire’s tuition for in-state students at state colleges and universities will be frozen in place for the 2020-2021 school year due to additional funding in the budget with the first such freeze since 2013. The state released a report on the priorities for implementing the state’s 10-year mental health plan. Residents in nine cities voted on whether to permit in-person sports betting.


New Jersey

New Jersey’s Department of the Treasury released $114 million of the $235 million in spending that had been placed into reserve in July to help maintain a balanced budget and a responsible surplus. The state has received federal approval to set up a hybrid federal-state health insurance exchange, the initial step in the state’s eventual transition to a state-based exchange in 2021. Year-to-date, total collections through September of $6.1 billion are up $422.5 million, or 7.4 percent above the same three months last year with September collections substantially enhanced by a large one-time payment. Legislators may consider issues such as marijuana legalization, vaping, tax incentives, and water infrastructure in the coming months.


New Mexico

New Mexico’s governor announced the creation of two committees to study the state’s tax code and recommend changes to promote “fairness, efficiency and equity.” The state’s new early childhood education department is seeking a 50 percent or $84.2 million spending increase compared to current levels. The state’s executive branch vacancy rate has held at 22 percent due to tough competition with the private sector for workers.


New York
New York’s Medicaid spending is on track to exceed statutory limits by more than $3 billion for fiscal 2020 with potential actions to address the shortfall including rate reductions and delayed payments. The State Thruway will need to raise tolls by 2022 to pay off escalating debt payments on the new Tappan Zee Bridge and other road projects, according to an independent analyst. State legislators heard from public officials and local leaders on how the state should prepare in the event of another federal government shutdown.


North Carolina

North Carolina legislators adjourned until January without passing a full budget, although a series of mini budgets were approved covering issues such as disaster relief, raises for state employees, funding for a juvenile justice reform bill and funds to reduce a backlog in testing evidence in sexual assault cases. Lawmakers approved a mini-budget that would raise public school employees’ pay by an average 3.9 percent, retroactive to July 1.


North Dakota

North Dakota was able to meet the federal deadline for child welfare funding. North Dakota State University is seeking proposals for 10 percent spending cuts due to an anticipated decline in enrollment. The state is planning to provide funding to healthcare facilities to help attract new nurses.



Ohio’s governor signed an executive order creating an advisory council to review the foster care system and offer recommendations for improvements. Some in the legislature have examined the possibility of reopening state mental hospitals. The attorney general said the state’s bitcoin tax payment program was set up improperly, leading to its suspension. The director of the Department of Transportation said that the recent gas tax increase has allowed the department to return to solid financial ground. A planned Medicaid work requirement would require caseworkers to talk to recipients before they are removed from Medicaid.



Oklahoma implemented the largest mass commutation in U.S. history, with a total of 527 inmates having their sentences commuted and at least 462 inmates released, as part of a prison reform effort. The state’s education superintendent proposed a fiscal 2021 budget that increases funding by $220 million and requests additional counselor positions. The state’s economic outlook was upgraded from stable to positive by a ratings agency, due in part to the 2018 tax increases that resulted in budget surpluses and increased reserves.



Oregon’s governor announced the creation of a new committee tasked with setting an annual target for health care cost growth and making recommendations to lawmakers on ways to manage and contain costs; insurance companies, hospitals and health providers will be required to stay within that growth target. A state audit found a new system designed to streamline enrollment in state safety net programs may encounter data issues and lead to long wait times when it launches next year. 



Pennsylvania’s general fund revenue collections through October total $10.4 billion, which is $164.2 million, or 1.6 percent, above estimate. Leaders of  the university system will ask the state for up to $100 million more over the next five years to consolidate services and achieve savings and new revenue. The state is devoting $4 million to get residents to participate in the 2020 Census The Turnpike will move ahead with a $129 million project to become a completely cashless toll system by the fall of 2021.


Rhode Island
Rhode Island’s economic outlook has improved over the last six months with average hourly wages growing by 3 percent through the end of September. The state will take over Providence schools beginning November 1 for 5 years. The Peterson Center on Healthcare announced an expansion of its partnership with the state and Brown University to study healthcare cost trends. The governor has unveiled a website to provide parents with resources on early childhood education and development.

South Carolina

South Carolina is implementing a system that rewards inmates for good behavior through reclassification and could result in 4,000 fewer inmates in maximum-security prisons. Legislators studying the state’s school funding system plan to continue their work through this legislative session before recommending any changes. Amazon is challenging a court ruling that it owes the state as much as $12.5 million in sales taxes on goods sold in early 2016 through its website.


South Dakota

South Dakota is expected to see $20-$25 million less in revenue next year due to a federal law requiring the state to stop collecting sales taxes on internet services; sales taxes are up 3.6 percent through the first three months of the fiscal year but would need to increase 4.9 percent to make up for the different. The governor requested a disaster declaration for tornado damage from September storms. Legislators are examining a parks fee increase as well as game, fish, and parks habitat funding.



Tennessee’s governor indicated the state is working on a plan to use some of its $732 million in reserves from the federal Temporary Assistance for Needy Families (TANF) program, including $68-70 million in grants to nonprofit organizations. Following public hearings on the state’s proposed plan to change its Medicaid funding into a modified block grant, state officials will make some revisions before submitting the proposal to the federal government. Tennessee colleges are requesting $87 million in spending increases for the next fiscal year, with $38 million tied to better outcomes. 



Texas voters approved 9 out of 10 constitutional amendments in Tuesday’s election, including measures that increase the requirements to adopt a state income tax, provide temporary property tax exemptions for property damaged in a disaster, and require money raised from the sales tax on sporting goods to be spent on state parks and historic sites. The state comptroller estimated the government should end its current two-year budget period with a $2.89 billion cash surplus but expressed caution due to national and global economic risks.



Utah lawmakers on a task force have recommended a tax plan that would reduce revenues by $75 million by increasing the sales tax on groceries and lowering the state income tax rate; the governor has said he will call a special session before the end of the year to consider tax reform if the House and Senate agree on a proposal.  A legislator unveiled a draft bill that would provide $35 million in funding for affordable housing.


Vermont’s governor projects that the state will face a $70 million to $80 million budget gap next year and plans to propose a spending package in January that will close it without raising new taxes or fees. General fund revenues through September are above target. A nonprofit group providing health insurance to school employees filed proposed premium rate increases ranging from 12.9 percent to 14.7 percent with rates needing to be reviewed by the Department of Financial Regulation before they are finalized.


Virginia will need to spend an additional $596 million on technical changes to education funding over the next two years, separate from the $950 million increase in funding the Board of Education is recommending for the next budget. State costs for the Medicaid program decreased by $212 million this fiscal year, with savings generated by lower enrollment in long-term care and reduced payments for uncompensated care due to Medicaid expansion.



Washington’s governor directed the state transportation agency to postpone projects not already underway after voters approved a ballot initiative strictly limiting motor vehicle registration fees, as well as eliminating certain vehicle fees. Voters also passed a proposed constitutional amendment designed to help keep the government running during a large-scale disaster.


West Virginia

West Virginia state agencies are preparing for $100 million in budget cuts due to lagging revenues. Through October, state revenue collections have fallen $33 million short, led by severance tax receipts. A federal lawsuit filed alleges neglect of more than 6,000 children in the state’s foster care system. Mobile sports betting affiliated with casinos is rising.



Wisconsin’s general fund balance surpassed $1 billion for the first time, although future drawdowns are possible. The state received approval from the federal government to conduct drug testing for unemployment benefits. The cost of voucher programs in the state is approximately $350 million. The state Supreme Court took a case challenging some of the governor’s budget vetoes. The state Senate recently voted to limit some of the governor’s veto authority.



Wyoming is expected to generate $185 million less in revenue over the next three years and face a budget shortfall of $400 million for the next biennium due to a slowing investment market and continued declines in the coal industry. Lawmakers are considering a small tax increase on alcohol sales to raise additional revenue for substance abuse treatment programs statewide.