Budget Blog

January 10, 2020 - News Flash

By Brian Sigritz posted 01-10-2020 11:18 AM



Alabama officials are developing requirements to implement the state’s literacy act, passed last spring, that requires students to read on grade level by the end of third grade or possibly be held back. The state is set to receive billions of dollars from the enactment of a federal fiscal year 2020 budget, with most funds earmarked for defense spending. New data highlights the areas of the state that may be hard to count during the 2020 Census due to factors such as internet access, poverty rates and home ownership rates.



Alaska restored a preventative dental care program for adult Medicaid beneficiaries that was ended three months ago due to budget concerns, with the program restarting January 1. The governor had proposed a flat budget last month, with priorities such as public safety receiving additional funds offset by reductions in other agencies. Facing a $1.5 billion budget deficit for fiscal 2021, the governor stated he would not propose new or higher taxes in the upcoming session.



Arizona legislative leaders expect to release budget proposals in the House and Senate during the third week of January and aim to complete their budgets by mid-February; the governor is expected to introduce his budget proposal on January 17. The state corrections department is reopening a prison unit to increase the number of beds for women; the prison system was short 60 beds for women in November.



Arkansas is eligible for about $5 million from the federal Help America Vote Act program, which received $425 million in new funding in the federal fiscal year 2020 budget bill signed into law in December, to help secure and improve election administration. Lawmakers approved a $136 million contract to house up to 500 prisoners at a privately run jail facility, marking the first time a private adult facility has been operated in the state since 2001.



California’s governor signed an executive order creating a $750 million fund to address the state’s homeless crisis and fund affordable housing. Legislators are expected to consider a $4.2 billion climate bond this session that would allow the state to borrow money to prepare for natural disasters. The state’s Cannabis Advisory Committee released an annual draft report identifying problems with the state’s cannabis industry as the Legislative Analyst’s Office recommended replacing current cannabis taxes with a single levy based on potency.



Colorado legislators are expected to consider a number of issues in the current legislative session including paid family leave, a public health insurance option, and repaying student loans. State and local officials have also met to discuss ways to increase investments in infrastructure. State income tax rates will temporarily drop to 4.5 percent from 4.63 percent due to the state exceeding revenue limits in fiscal 2019; the cut is mandated by the state’s TABOR law.

Connecticut is projecting an operating shortfall of $22.9 for the current fiscal year and the governor has directed each agency head to review their agency’s general fund spending in order to eliminate expenditures that are not absolutely critical. The Board of Regents for Higher Education approved a set of guidelines for the “last dollar” scholarship program, which will make community college free to eligible students regardless of income and regardless of when they graduated from high school. The legislature passed legislation to implement a recent hospital settlement.



Delaware’s Economic and Financial Advisory Council (DEFAC) increased its revenue estimates by $200 million for the current and upcoming fiscal years with projected increases in personal income, franchise, and corporate tax revenues. With the state’s new reinsurance program reducing monthly premiums, enrollment on the health insurance exchange increased more than 6 percent during the recent open enrollment period.



Florida lawmakers are exploring the legalization of sports betting, with one bill authorizing the state lottery to offer sports betting through self-service kiosks, although tribal opposition is expected. An independent audit found the state would save $40-46 million a year if it ended its private correctional healthcare contract. Legislators filed a bill that would eliminate the suspension of driver’s licenses for nonpayment of fines and fees for certain violation, which could affect two million people.  


Georgia’s governor submitted two plans to the federal government requesting changes to the state’s health insurance system - offering subsidized coverage to certain individuals earning up to 100 percent of the federal poverty level and making federal subsidies available to people who buy “skinny” health plans. Legislators proposed funding rural broadband expansion through low-interest state loans to local governments. Lawmakers may examine the state’s estimated $870 million in tax credits for the film and TV industry in the face of expected budget cuts in the fiscal year 2021 budget.



Hawaii’s governor released a supplemental budget proposal for the current biennium that includes additional funds for public education, affordable housing, and public safety; the governor also noted that now is the time to spend more on infrastructure with the current low interest rates and the state’s improved credit rating. On January 1, the state increased fees for electric vehicles. Legislators have questioned University of Hawaii officials over raises and spending. Medicaid signups have been lower than expected to date following voter approval of Medicaid expansion.



Idaho governor’s $4.1 billion budget proposal for fiscal 2021 calls for a 3.75 percent increase in spending, leaves a surplus, and increase’s the state’s rainy day fund. In his State of the State speech, the governor noted that the state must prepare for a future economic downturn, while making additional investments in areas such as education and public safety. Legislators are expected to consider giving localities the option to raise sales taxes in the current legislative session.



Illinois’ general fund revenue through the first six months of the fiscal year are approximately $1.37 billion ahead of fiscal 2019. Issues that are expected to receive attention in the state this year include increasing early childhood education funding, property tax relief, pension reform, the tax structure for a Chicago casino, and a November ballot measure on creating a graduated income tax. The state legalized recreational marijuana on January 1, with first day sales reaching $3.2 million.



Indiana is expecting to collect $260 million more in revenue through June 2021 than originally anticipated in April, partly due to the collection of sales taxes on online purchases. The governor and legislative leaders are expected to agree on many priorities this year, including spending $300 million in surplus funds on one-time higher education construction projects. The governor is expected to discuss possible changes to school funding and teacher pay in his upcoming State of the State speech. The governor also recently approved pay for performance raises for state employees.



Iowa’s legislature is once again expected to examine tax reform and tax relief during the legislative session. The state is withholding $44 million in Medicaid payments to an insurance provider regarding issues with payments and claims. Legalized sports betting appears to be increasing the state’s overall gambling revenue. The governor has said her focus will be on maintaining a competitive business climate while also focusing on workforce issues.



Kansas’ governor is recommending that the state pay off nearly $500 million in debt owed the Kansas’ Public Employee Retirement System and refinance the system’s long-term liability to free up funding for other purposes. The state is expected to examine various tax reform proposals during the upcoming legislative session. Six judges have filed a lawsuit against the state hoping to force the legislature to increase court funding.



Kentucky’s Consensus Forecasting Group predicted that state tax revenue will increase 1.3 percent in fiscal year 2021 and 1.8 percent the following year, for new revenues of $146 million and $207 million respectively. The newly-elected governor revoked the previous governor’s plan for work requirements for able-bodied adults receiving Medicaid while also preserving the state’s Medicaid expansion. Legislation was introduced to legalize sports betting, with most new revenues directed to public pension system payments.



Louisiana will receive $33 million in competitive federal grant funds to expand access to early childhood education, with $11 million allocated per year over three years. Failing to garner unanimous approval, the state’s revenue estimating conference did not adopt higher revenue estimates for the next two years. The governor has indicated he will release a proposed budget for fiscal year 2021 that includes higher revenue numbers to fund priorities including K-12 teacher pay raises, higher education and early childhood education.



Maine’s commission met to study and recommend solutions to the state’s transportation system with the state’s $675 million annual highway budget roughly $232 million lower than it should be to meet the backlog of maintenance, repair and replacement projects. The state received a federal grant to create a statewide system to treat women with substance use disorders during their pregnancies and postpartum.


Maryland’s new legislative leaders highlighted their priorities for the upcoming session, focusing on education reforms contained in the Kirwan Commission report while ruling out across-the-board tax increases. A new state law requires the publication of annual state reports detailing wages paid to inmates both in institution jobs and corrections industries. The governor requested lawsuits against the U.S. Environmental Protection Agency and Pennsylvania over pollution enforcement efforts affecting the Chesapeake Bay.

Massachusetts’ individual income tax rate will be reduced from 5.05 percent to 5 percent effective January 1 as a result of voter approval of a rate reduction from 5.9 percent to 5 percent in 2000, with the legislature implementing the rate reduction gradually based on certain economic triggers. The minimum wage will soon be increased to $12.75, up $0.75 from 2019 with a long-term target of $15 per hour by 2023. The governor signed a supplemental budget bill that spends $542 million with the majority of spending in health care.

Michigan’s governor is expected to detail a new road funding proposal in her State of the State speech later this month. Marijuana retailers in the state had sales approximately $1.8 million in the fifth week since legalization, the highest total yet. The state is also expected to have sports betting and internet gaming in place by March. In December, the governor signed legislation ensuring the collection of sales taxes on more online purchases.



Minnesota implemented several new laws on January 1 including an increase in the minimum wage, measures increasing education and treatment for opioid addiction, and changes to prescription drug licensing. The governor recently announced the launch of a new homeless fund to raise money for homeless shelters; the fund is a partnership between public, private, and philanthropic entities. The governor is examining possible changes to the Department of Human Services.



Mississippi’s retirement system board finalized a rule allowing retired state employees to continue collecting pension benefits while also serving in the legislature. The newly-elected lieutenant governor outlined his priorities for the upcoming session, including pay raises for teachers and state employees, addressing the health care gap and the potential for local gas tax increases. Lawmakers are examining options to address the state’s prison system, including increasing officer pay and enacting sentencing reforms, following a prison uprising that left five inmates dead.



Missouri’s governor and legislature continue to work on reaching agreement on a consensus revenue forecast for fiscal 2021 as the governor prepares to lay out his priorities in his State of the State speech. The legislature is once again looking at ways to increase transportation funding, including raising motor fuel taxes. Tax collections through December are up 5.2 percent compared to last year.



Montana general fund revenue collections are up through November and the state has a general fund ending balance of $294 million. The governor released a new plan to preserve and develop outdoor recreation in the state. An infrastructure package is facing delays due to an audit of the health department, according to state officials.



Nebraska’s governor is expected to push property tax relief and limited state spending growth in the legislative session, while also calling for targeted spending increases in areas such as prison staff salaries and repairs from flood damage. The legislature is expected to consider tax reform early in its legislative session. The state has proposed a two-tier system for Medicaid expansion designed to save costs, while critics argue it will cut coverage and benefits.



Nevada is launching a program to test all inmates for hepatitis C, after the cost to treat the disease has declined. Several new laws for enacted on January 1 including ones dealing with paid sick leave and the testing of job applicants for marijuana. The governor recently named members of a new patient protection panel.


New Hampshire

New Hampshire became the second New England state to offer sports betting with  wagering expected to produce an estimated $7.5 million for education in fiscal year 2021 and $13.5 million two years later. State officials plan to spend $1.56 billion in general  funds in fiscal 2020, up slightly from $1.5 billion in 2019 and have $1.6 billion in general fund revenues in fiscal 2020.


New Jersey

New Jersey’s commissioner of education recently upheld a decision by an administrative law judge dismissing a lawsuit from eight New Jersey school boards challenging the equity of school funding changes implemented in 2018. Year-to-date, collections through November totaled $10.918 billion, up $990.8 million, or 10 percent, above the same five-month period last year, however, there remains ongoing uncertainty surrounding the continuation of these trends for the remaining seven months of fiscal 2020.


New Mexico

New Mexico governor’s budget proposal for fiscal 2021 calls for an 8 percent increase in state spending; the recommendation includes additional funds for education, teacher and state employee raises, and increases the size of the rainy day fund. The state has seen an increase in revenue partly due to oil production. The governor said an executive order allowing state employees to take up to 12 weeks of paid paternity leave. Legislators have begun examining grants and tax incentives for businesses.


New York
New York’s governor recently gave his State of the State speech and called for legalizing recreational marijuana, increased borrowing for environmental projects, a small business tax cut, and working to close the spending gap between poor and wealthy school districts. The state health department is reducing Medicaid payments by 1 percent as part of a plan approved by the legislature to reduce Medicaid spending. The governor proposed three initiatives to lower prescription drug costs including drug importation from Canada.


North Carolina

North Carolina’s state schools superintendent raised concerns over third-grade students being improperly promoted without proficient reading skills and called for changes to the state’s Read to Achieve program. The state reduced spending on tobacco-prevention programs from $2.8 million in fiscal 2018 to $2.2 million in fiscal 2019. A legislator’s resignation may allow a vote on overriding the governor’s veto of the budget bill.  


North Dakota

North Dakota’s taxable sales in the third quarter of the calendar year were up 4 percent compared to last year. Tribes in the state are hoping to receive a portion of revenue from online sales. The interim president of Dickinson State University is planning layoffs to deal with budget challenges.



Ohio’s governor said his priorities for 2020 include addressing drug addiction and mental health issues, expanding wrap-around services, and passing gun violence bills. The legislature is looking at possible changes to the state’s school funding formula and the school voucher program. The state’s minimum wage slightly increased on January 1.



Oklahoma’s Board of Equalization certified an estimated $8.3 billion in state funds available for fiscal year 2021, an increase of 0.1 percent or $9.4 million over the current year budget. The state’s attorney general is appealing a $465 million judgement against Johnson & Johnson over its role in the opioid crisis, arguing the amount is not sufficient to fund the state’s abatement plan. Three tribes sued the governor over renewal of gaming compacts, which generated nearly $139 million for the state in fiscal 2018.



Oregon voters may vote on a number of initiatives in 2020 including ones dealing with decriminalizing the possession of most drugs and expanding treatment options; and requiring that certain new transportation fees or tolls have voter approval. On January 1, the state increased car registration fees and fees for some outdoor activities. Oregon is creating a new office within the transportation department to focus on large projects and issues.



Pennsylvania’s year-to-date general fund collections through December total $15.6 billion, which is $75 million, or 0.5 percent, above estimate. The state implemented a preferred drug list estimated to save $85 million a year. The governor recently announced a new mental health campaign. The state enacted a number of new laws on January 1 including ones reforming career and technical education, making changes to the justice system, and allowing spouses and children of military members to attend college for free or at a reduced cost.


Rhode Island
Rhode Island’s governor will continue to focus on economic development, job training and education and would like to continue offering more public pre-kindergarten slots and explore ways to create a permanent funding stream for affordable housing. The governor plans to seek approval to launch a $73.7 million, multiyear replacement of the decades-old computer technology for state government functions including payroll and  accounting.


South Carolina

South Carolina’s governor will include $53 million in his fiscal 2021 budget proposal to expand full-day prekindergarten statewide; the program is currently available in 40 school districts. A legislator is planning a bill to tie state employee salary increases to inflation and overhaul the salary structure to address the 10,000 vacancies across agencies. The federal government approved the state’s application for community engagement requirements for certain Medicaid beneficiaries, with required reporting either annually or quarterly.  


South Dakota

South Dakota’s governor said that she plans on growing the economy and improving her working relationship with lawmakers in 2020; she also noted that responding to damage from tornadoes, storms, and flooding were some of the state’s biggest challenges last year. Voters will vote on a constitutional amendment to legalize recreational marijuana in November. Faculty at the University of South Dakota have expressed concerns about the proposed tight budget.



Tennessee’s governor issued an executive order offering executive branch employees three months of paid leave for new parents and caregivers of sick relatives starting on March 1; the legislature will file legislation extending the policy to an additional 3,100 state workers. Education officials will release a plan to return 30 state-run schools to local districts no later than the fall of 2022, while also retaining the school-run district for possible future takeovers of low-performing schools. The public comment period on the state’s proposal for a modified block grant to fund its Medicaid program closed last month after nearly 4,000 comments were received.



Texas’ sales tax revenue for December totaled $3.01 billion, an increase of 4.8 percent over the prior year; sales tax is the largest source of revenue for the state budget, accounting for 57 percent of all tax collections. A new report on the state’s pension fund for state employees found the financial outlook for the pension system is “very poor” and warned of the strong possibility of becoming insolvent by 2075.



Utah lawmakers approved an overhaul of the state’s tax system, reducing income taxes and increasing taxes on food and gas for a net reduction of about $154.5 million. The state will expand the Medicaid program, covering residents earning up to 138 percent of the poverty level. The state will begin a program in which volunteers will pay a fee for every mile they drive. Revenue to the general and education funds totaled $2.9 billion through the first five months of fiscal 2020, representing a year-over-year growth rate of 5.5 percent, above the November consensus revenue target of 4.3 percent.


Vermont has projected a 4.3 percent growth rate in total health care costs next year above the 3.5 percent growth rate target. Year to date general fund revenues through November exceeded their target by $10.29 million, or 1.73 percent with the transportation fund essentially on target, and the education fund 0.59 percent above the consensus forecast. The state’s tax structure commission released a report on the impact of population changes on state finances.



Virginia’s governor released a $47.5 billion general fund biennium budget for fiscal years 2021-2022, $135 billion in all funds, that projects an increase of $239.5 million in state tax revenues plus a $212 million Medicaid surplus. The proposed budget includes an additional $1.2 billion over the biennium for K-12 education, $92 million to curb evictions and expand affordable housing, $145 million to offer free community college to low-and middle-income students in high-demand majors, and $733 million for environmental projects. The governor also proposed a series of criminal justice reforms including decriminalizing marijuana and reducing the number of people whose driver’s licenses are suspended.



Washington’s governor supplemental spending plan includes a proposal to spend $146 million during the 2019-2021 biennium and $300 million over three years from the state’s emergency budget reserve to add 2,100 shelter beds and provide other help to combat homelessness.  Major general fund-state revenue collections for the November 11 to December 10, 2019 collection period came in $83.7 million, or 2.9 percent above the November forecast.


West Virginia

West Virginia will no longer need to make mid-year budget cuts for fiscal year 2020, after the governor had previously directed agencies to identify $100 million in spending cuts. December state tax collections surpassed estimates by $6.9 million, driven by taxes carried over from November; the state’s year-to-date budget deficit declined to $33.4 million. The legislature is expected to consider measures to alter the state’s parole system during the upcoming session.



Wisconsin’s governor said the scheduled close of a troubled youth prison is unlikely to happen unless a significant increase in funding for a juvenile justice overhaul is approved. The governor said that he was partially successful on his campaign promises in his first year and hopes for more bipartisanship in 2020. The Senate majority leader said he does not support current medical marijuana proposals and hopes for property tax relief in 2020.



Wyoming’s governor announced the launch of a budget transparency website that offers the public an easy way to access information about the recommended state budget. A quarterly economic report shows the state saw an increase in overall sales this year. Additional funding will be used to build out broadband infrastructure across the state.