Current as of June 12, 2009
Late yesterday afternoon, the State Board of Economic Advisers again lowered tax revenue estimates for both the remainder of the current fiscal year and for the new fiscal year that begins on July 1.
Given that only a couple of weeks remain in this fiscal year, and we have yet to enter the first quarter of the new fiscal year, these actions are not expected to trigger an outright reduction to our appropriations immediately, but they do signal that the state economy remains troubled and all state agencies will continue to operate with appropriations uncertainty for the foreseeable future. Both the waning fiscal year revenue reduction of $92 million and the 2 percent ($120 million) reduction in revenue estimated for the next fiscal year are expected to be met by the state drawing on its remaining reserves for the time being. Two additional events in the near term will provide further information in regard to longer-term impacts:
- The General Assembly will meet for three days next week, when leaders could signal their intentions regarding the estimate reductions. The terms of their adjournment already allow them to come back into session in the Fall to deal with budget issues in certain circumstances, such as a 4 percent or more reduction in revenue estimates at the end of the first quarter of the new fiscal year.
- The State Budget and Control Board will meet June 29 on a variety of issues. While by law the board cannot adopt across-the-board appropriation reductions until the end of the first quarter of the new fiscal year at the earliest, its members also may signal overall intentions at the June meeting.
Meanwhile, we are continuing to factor all emerging new information into the budget/tuition recommendations that will be put forth for action later in the month, and we will keep you updated as further developments warrant.