Budget Blog

December 13, 2019 - News Flash

By Brian Sigritz posted 12-13-2019 01:39 PM



Alabama distributed $272 million in tax collections that exceeded budgeted amounts to schools across the state, with $198 million allocated for K-12 schools and the remainder for higher education. State officials narrowed the list of potential bidders for a plan to construct three new men’s prisons at a projected cost of at least $900 million. A report from a counties’ association examines the pressure on county jails as a result of prison reforms passed in 2015.



Alaska’s governor released a proposed budget for fiscal 2021 that holds unrestricted general fund spending for operations flat at $4.5 billion, while also calling for a large supplemental appropriation for fiscal 2020 of $1 billion, including additional funds for Medicaid, wildfire response and dividend payments to state residents. Alaska officials expect the state to collect $187 million less in revenue than budgeted for fiscal 2020, due to oil revenues coming in below forecast.



Arizona’s budget director identified K-12 education and public safety as top gubernatorial priorities for the upcoming session, and also called out that general fund revenues have grown 8.6 percent year-to-date compared to fiscal 2019, considerably ahead of budget projections. A major rating agency upgraded the state’s credit rating based on its positive economic outlook, increase in reserves, and low debt burden.



Arkansas’ revenue collections through November are $87.5 million above forecast. The governor will ask legislators to increase funding for the University of Arkansas’ Division of Agriculture’s general revenue budget by $1.8 million in the next fiscal year to replace prior one-time funds.



California legislative staff expect the state to have a $7 billion surplus next year, which could help grow the state’s rainy day fund account to more than $18 billion by the end of fiscal 2021. An estimated $3 billion of the surplus would be available to spend on recurring programs, but that figure would drop to just $1 billion if the state does not receive federal approval to continue its managed care organization tax.



Colorado lawmakers are considering various budgetary options in response to voters’ decision to uphold the Taxpayer’s Bill of Rights state spending caps, such as raising new fees or exempting existing revenue from the cap. In his formal presentation of his budget to the legislature’s joint budget committee, the governor requested more money for transportation, a paid family leave program for state employees, and an increase in the state’s reserves.

Connecticut announced a settlement agreement with hospitals that would result in a withdrawal of all pending legal claims against the state for hospital user fees and Medicaid payments. The state is projecting an operating shortfall of $19.6 million, a $98.7 million reduction from last month’s forecast surplus. The governor and legislative leaders have agreed to vote on a transportation plan and a bonding bill in January.



Delaware’s Department of Education is seeking an additional $102 million in its next budget which would mark an increase of nearly 6.5 percent over the current year’s spending.  The state will continue for at least another year a program that provides rebates to individuals and businesses for electric and alternative fuel cars.



Florida’s governor unveiled a $91.4 billion budget for fiscal year 2021, an increase of approximately $400 million over the current budget. The budget includes $900 million in pay raises and bonuses for teachers and principals to increase minimum teacher salaries to $47,500 and $3.8 million to increase funding for high-performing hospitals. The state will receive $380.7 million in federal funds to help the timber industry recover from Hurricane Michael, which caused $1.3 billion in damage to the industry.


Georgia’s tax collections for November were down about 1.2 percent compared to the prior year and down 0.3 percent on a year to date basis; individual income tax collections were down 3.4 percent in November while gross sales tax collections were up 4.5 percent. A coalition of professional sports franchises is urging lawmakers to legalize online and mobile sports betting, estimating it could generate about $50 million in gross revenue for the state. The state revenue department ruled that a $35 million tax break on jet fuel included in last year’s budget is permanent instead of temporary as intended.



Hawaii experienced a decline in total visitor spending and the value of private building permits this year, signaling a softening in the state’s tourist and construction industries according to a state economist. The state board of education voted to give a pay raise to special education and language immersion teachers. Craig Hirai was appointed to lead the Department of Budget and Finance.



Idaho universities, hospitals, and other agencies are working out the details to cut their spending by 1 percent for the current budget year, while K-12 education was exempt from the mid-year cuts. The state’s popular Opportunity Scholarship program was also held harmless, with more than 6,000 college students getting money from the program this fall, up 50 percent from one year ago.



Illinois’ legislature gave approval to a bill to consolidate police and fire pensions; however they did not take action on a bill that would pave the way for the development of a Chicago casino. The state’s pension fund debt has increased to $137 billion; the governor earlier created a pension task force to explore various options including selling assets to boost pension funding. The governor said he wants to address pensions, early childhood education, criminal justice reform, healthcare, and a Chicago casino next year.



Indiana’s governor said that his plans for next year include further studying of teacher pay increases, continuing to build a skilled workforce, examining rising healthcare costs and the increase in youth vaping, and raising the smoking age to 21. Teachers across the state recently rallied for salary increases and other education related issues. The state is seeking a 10-year extension of its Healthy Indiana plan. Indiana saw $91.7 million in sports bets during its second month of legal wagering.



Iowa’s auditor said the budget is currently in good shape but that the state should start preparing for the possible expiration of federal tax breaks in the 2025-2026 budget year. Iowa gamblers placed $46.5 million in bets in October; sports betting became legal in the state in August. $30 million in new transportation funding has helped rural school districts. The state Senate leader said he supports raising the smoking age to 21 but not legalizing marijuana.



Kansas increased its revenue forecast for fiscal 2020 by $207 million, or 2.8 percent, and by $303 million for fiscal 2021, or 4.1 percent. A tax reform council appointed by the governor recommended changes to taxing out-of-state retailers and taxing certain digital products, while also recommending tax relief for low-income residents on grocery purchases. The legislature continues to examine the possibility of expanding Medicaid. The governor is planning on holding a series of budget listening sessions.



Kentucky’s newly sworn-in governor is expected to rescind work requirements for able-bodied Medicaid recipients and restore voting rights to some nonviolent offenders; the governor has already taken actions to dissolve the Kentucky Board of Education. John Hicks, NASBO’s former executive director, was named as the state budget director. The previous administration said the new administration could face a $1.1 billion budget shortfall over the next two years.



Louisiana’s governor told the University of Louisiana System Board of Supervisors that his budget proposal for fiscal 2021 will include more money for higher education. The state transportation chief said that any future effort to increase the gas tax will depend on the willingness of the House and Senate to support the effort. The governor is expected to push for more funding for early education and raising the minimum wage in the upcoming session, while the legislature has indicated that they will push for tort reform and rolling back taxes.



Maine’s Revenue Forecasting Committee estimates that the state will have $75 million more than anticipated through fiscal 2021 with sales and use taxes likely to exceed budgeted amounts by $40 million, and individual income taxes exceeding estimates by $27 million. The state is looking to reform and possibly streamline transportation services including non-emergency medical transportation. The governor is expected to release the state’s first 10-year economic development plan.


Maryland’s governor unveiled proposals to turn around low-performing schools and generate $3.8 billion for school construction over five years, using $125 million annually from casino revenues to borrow and pay off the bonds. Separately, a commission on education approved a plan to update the state’s school funding formula in which schools would receive about $4 billion annually in additional money, contributed by the state and local governments. The governors of Maryland and Virginia announced a plan to renovate and expand a shared bridge, including room for toll lanes.


Massachusetts’ preliminary revenue collections for November totaled $2.093 billion, which is $237 million or 12.7 percent more than the prior year and $148 million or 7.6 percent more than benchmark with year-to-date figures showing a moderate gain over benchmark. Experts at the annual consensus revenue hearing are projecting fiscal 2021 revenue growth from a low of 0.8 percent to a high of 3.5 percent. The comptroller said the legislature needs to appropriate $316 million in order to close the books on fiscal 2019, or the funds will be transferred to the rainy day fund.

Michigan’s legislature reached an agreement with the governor and voted to restore more than half of the state funding that had previously been vetoed by the governor in a policy dispute. A Senate panel also voted to approves sports betting and online gaming. The governor said that addressing roads funding and expanding economic opportunities will be two of her priorities next year. Legislative leaders have rejected a call by the governor to suspend Medicaid work requirements. The state has begun issuing medical marijuana business licenses.



Minnesota is projecting a $1.3 billion budget surplus during the current biennium budget, after automatically transferring $284 million to the state’s rainy day fund; the rainy day fund now stands at $2.359 billion, the recommended level. The surplus is expected to be a factor in debates during the upcoming legislative session over spending priorities including increases in transportation funding, and possible tax cuts. The legislature also continues to examine a public works bill. The state has pledged $15 million to electric vehicles from the Volkswagen settlement.



Mississippi’s governor-elect reiterated his stance against raising the gas tax or expanding Medicaid. Ticket sales for the new state lottery exceeded $8.9 million in the first six days, netting the state $1.9 million for roads and bridges. A report found that the state’s habitual offender laws are resulting in extreme prison sentences and costing the state millions of dollars for incarceration.



Missouri House Special Interim Committee on Gaming released a report supporting the legalization of sports betting and continuing to support the lottery and gaming as a way to increase education funding. A group continues to push for placing Medicaid expansion on the 2020 ballot. A ballot initiative to increase the gas tax is unlikely in 2020 according to a legislator. The state Supreme Court is weighing whether Planned Parenthood can receive Medicaid funds.  



Montana’s state trust lands produced revenue totaling nearly $100 million, a $12 million increase over last year, which will support public schools, universities, the state’s veterans home and other specific purposes. An interim legislative committee is being asked to examine statewide and local option sales taxes ahead of the 2021 session. The legislature will conduct a mini-test of an annual legislative session next month.



Nebraska’s legislature is expected to focus on issues such as property tax reform, prison overcrowding, and challenges associated with youth rehabilitation centers and rural nursing homes in its upcoming legislative session. The Senate has also held hearings on its plan to create a two-tier Medicaid system. Tax collections through October are 6.7 percent above forecast. More colleges are joining an effort to help students graduate in four years.



Nevada state officials are working to implement a new school funding plan according to legislation passed earlier this year to overhaul the funding formula for the first time since 1967. The state’s higher education board of regents approved dozens of fee increases. The state’s Supreme Court and Court of Appeals still have a large backlog of unresolved cases.


New Hampshire

New Hampshire’s governor signed an executive order that will speed up the licensing of officials who process Medicaid funds for schools brining the program into compliance with federal guidance while maximizing how much schools can be reimbursed for health care services. State health officials are planning to apply for a waiver from the federal government that would loosen restrictions on how Medicaid dollars could be spent on mental health treatment. The legislature is expected to examine changes to highway funding including a possible road usage fee.


New Jersey

New Jersey’s total collections through October are up $784.4 million, or 9.8 percent above the same period last year. The governor is looking at a public bank which would invest millions of dollars in state deposits usually kept in commercial banks back into communities. The governor said that he will once again include a millionaires tax in his budget proposal.

New Mexico

New Mexico’s governor endorsed a plan to overhaul the state’s public pension system, which would reduce its unfunded pension liability by an estimated $700 million. The state’s revenue forecasting group reported that revenues are on track to exceed current annual general fund spending by 11 percent, a $797 million surplus, while the forecast slightly lowered projections for next year’s revenue as oil production growth begins to slow.


New York
New York is facing a projected $6.1 billion shortfall for the upcoming fiscal year with $4 billion linked to Medicaid costs. The governor is considering measures that may include reductions in rates paid to providers and health plans and reductions in discretionary payments. Increased utilization, medical inflation, and higher minimum wages for health care workers are some of the factors leading to the increased Medicaid spending. The state Board of Regents is asking the governor and legislature to increase education spending by $2 billion for the 2020-21 school year.

North Carolina

North Carolina’s health department confirmed the roll out of a Medicaid managed-care initiative would not occur on February 1 and instead the current fee-for-service model would remain, due to a lack of start-up funds that have yet to be approved. The governor vetoed three minibudget bills, citing the inadequacy of the teacher pay raises and inclusion of a corporate franchise tax rate cut. A state appeals court ruled that the legislature can decide how federal block grant money is spent, after the governor sued over line-items in the 2017 state budget.


North Dakota

North Dakota’s new internet sales tax has brought in $27 million in revenue since its creation last year. The state’s $6.36 billion Legacy Fund balance has led people to call for different uses for some of the funds including school buildings, universal school lunch, healthcare, and promoting tourism; higher education leaders are also asking to use some of the Legacy Fund earnings. The governor is hopeful that the Office of Recovery Reinvented will remain when his tenure ends.



Ohio’s governor recently announced a plan to improve water quality and curb algal blooms.  The governor also said that he plans on continuing wraparound funding for school services in his next budget proposal. The attorney general has promoted a plan to place a constitutional amendment on the ballot which would prevent opioid settlement funds from being used for different purposes by lawmakers. The Speaker of the House said that the state should be given the ability to redistribute school funding and lessen the reliance on local property taxes.



Oklahoma’s general revenue for November was $467.1 million, or 3.9 percent above forecast but was 7 percent below the prior year; year to date general revenue is 1.5 percent above forecast and 2.2 above the prior year. The state hired a consultant to assist in the development of a state Medicaid program as an alternative to expansion. Several state agencies presented their fiscal 2021 budget requests: the Department of Public Safety requested an increase of about $7 million; the state regents are requesting a $125 million increase for higher education; and the health department aims to reduce its budget by 1.5 percent, or $4.5 million.



Oregon plans to appeal a recent ruling that decided the state owes 13 rural counties more than $1 billion for its failure to maximize logging revenues on state lands in those jurisdictions. State lawmakers are introducing legislation in preparation for a short session in 2020, including a bill to stop the suspension of driver licenses for those with unpaid traffic fines and a proposal to altogether eliminate the short session in even-numbered years.



Pennsylvania’s November fiscal year-to-date general fund collections total $12.7 billion, which is $166.1 million, or 1.3 percent, above estimate. The structural deficit from projected spending exceeding projected revenue will surpass $1 billion in a few years, but still be much smaller than previously anticipated, according to the Independent Fiscal Office. A task force released a list of recommendations to make changes to transportation funding. The legislature is expected to examine options to cut or get rid of school property taxes.


Rhode Island
Rhode Island is projecting revenue for the current fiscal year to track with budget estimates with stronger than projected tax revenues offsetting lower collections from gaming and is projecting revenues to rise 1.5 percent to $4.24 billion for fiscal 2021. The Department of Children, Youth and Families is on track to overspend its legislature-approved $165.1-million budget by nearly $22 million. A tuition increase has been approved at Rhode Island colleges. The state released rules for medical marijuana dispensaries.


South Carolina

South Carolina economists are estimating a $1.8 billion increase in the general fund for fiscal year 2021, with about $800 million in recurring funding and the remainder one-time funding. The governor intends to propose a $3,000 pay raise for all teachers in the next budget at a cost of $211 million and will also push for an income tax cut. A commission created by the governor to study flooding released a final report that recommends 227 projects costing more than $300 million, in addition to creation of a coordinated multi-agency plan.


South Dakota

South Dakota’s governor released a $4.94 billion state budget proposal for fiscal 2021 that calls for additional funding for school enrollment increases, special education, an anti-meth initiative, public safety radio infrastructure, and some higher education programs; the proposal does not include discretionary inflation increases for education, Medicaid providers, and state employees. The budget proposal also does not provide additional funding for teacher raises. In her budget address the governor said the state needs to prepare for slower economic growth.



Tennessee’s State Funding Board announced the state budget is projected to grow between 2.7 percent and 3.1 percent for fiscal year 2021, generating between $345 million and $408 million in new general fund revenue. The state’s proposal for a modified block grant funding model for Medicaid was submitted to the federal government and is open to public comment through December 27. Lawmakers are working through a plan to spend down a $732 million reserve in the state’s Temporary Assistance for Needy Families program.



Texas sales tax revenue totaled $3.18 billion in November, an increase of 6.2 percent compared to the prior year; sales tax revenue for the quarter was up 4.8 percent over the prior year. The state spent over $750 million on prison health care during fiscal year 2019, an increase of 53 percent from seven years earlier, driven by an older and sicker prison population. The University of Texas System will increase tuition 2.6 percent at its eight campuses each of the next two years.



Utah’s governor called a special session to consider a substantial and controversial tax reform plan recommended by a legislative task force that would cut state taxes by $160 million overall, reducing state income taxes while increasing revenues from state sales taxes and other sources. The state education board is calling for a 6 percent increase to per pupil spending, in addition to funding for projected enrollment growth and other items.


Vermont officials are moving forward with a prescription drug importation programs although the federal government has not yet approved the program. The state has reached a $1.8 million settlement with a company that sold unapproved and inadequate student health insurance policies at 10 of the state’s colleges and universities. Revenue collections through October represent an increase of of 3.14 percent, a decline of 1.36 percent, and an increase of 8.03 percent for the general fund, the transportation fund, and the education fund, respectively, from the prior year. School property taxes are expected to rise on average 6 percent next year.



Virginia’s governor will propose a $94.8 million increase in early childhood education as part of his next two-year budget as well as a $22 million investment in maternal health care and $145 million to offer free community college for certain students. The governor directed the state’s Medicaid program to “pause” negotiations with the federal government on approval of work requirements, part of the state’s Medicaid expansion. A report found that prison medical care accounts for one-fifth of all operating expenses for state prisons, driven in part by an aging inmate population.



Washington state lawmakers will look to reduce the transportation budget by $478 million in the next session to respond to the revenue loss effects of a ballot initiative that passed last month capping vehicle registration fees, though a state judge temporarily halted implementation of the initiative. The state is projected to see revenue increase $299 million in the fiscal 2020-2021 general operating budget.


West Virginia

West Virginia is currently facing a budget shortfall of approximately $29 million for fiscal 2020; however, the governor is holding off on budget cuts as early December tax collections have been strong and the state is hoping for continued improvement in the upcoming months. The state Racing Commission is expected to go broke without additional funding from the state, according to the agency’s executive director. The head of the Division of Highways said that a recent $300 million increase is helping but that additional funding is needed for road maintenance.



Wisconsin’s governor has called for more funding for mental health and officers in schools following a series of violent incidents at schools. The governor has also called for the release of homelessness funding. The state moved to delay implementation of its Medicaid work requirement until early next year. Several legislators are pushing a bill that would make pension changes to make it easier for retired teachers to return to the classroom.



Wyoming’s governor released his $3.2 billion budget proposal for fiscal 2021-2022 that would provide mostly flat funding to programs, using reserves to help balance the budget over the next biennium. The governor did call for the state education system to receive an increase in $38 million over the next two years to comply with past court decisions and keep pace with inflation.