Today the House released its budget proposals – there are three budgets: operating, capital, and transportation. The operating and transportation budget proposals will be heard in the House Appropriations and Transportation Committees Monday at 3:30 pm. The capital budget will be heard in the House Capital Budget Committee on Tuesday at 8 am. The House anticipates moving the budget proposals this week including taking a floor vote on the operating and transportation budgets by the end of the week, sending them over to the Senate for consideration. The capital budget is reported to be on a slightly different schedule and may not be voted on by the full House this week.
Additionally, the Senate is expected to release its version of the transportation budget on Wednesday this week.
Revenue forecast released: Positive findings
A positive revenue forecast released on March 20 set the final stage for the budget proposals. The Economic and Revenue Forecast Council (ERFC) adopted a March forecast that assumes additional $307 million in revenue for the current biennium (2017-19) and $554 million more for the coming 2019-21 biennium. Initial reports suggested that this forecast may hint at a slowing economy and there remains concerns about a recession developing in the next year or two. According to ERFC’s summary, a Wall Street Journal survey of economists shows the probability of a recession rising, but is still below 25 percent for the next 12 months.
The forecast of increased revenue puts the state at record levels for new revenue to work within developing the 2019-21 budget. However, legislators from the majority party warn that the state’s maintenance level expenditures continue to outpace revenue growth. New costs associated with lawsuits like Trueblood and the need to spend more on the behavioral health system leave the state budget with a significant deficit that must be filled with new tax revenue.
The state’s budget problem
This graphic from the Office of Financial Management (OFM) from January shows the scale of the state’s budget problem.
![1921OFMBudgetOverview 1921OFMBudgetOverview](/sf_images/default-source/imglegislative/1921ofmbudgetoverview.jpg?sfvrsn=ed6b5e4f_2)
We expect that the House budget will include new tax revenue in addition to the spending proposals. As soon as the budget is officially released, AWC will review it and update our budget matrix. We will send out the matrix along with an overview of the budget proposals’ impacts on cities with an AWC Budget Alert on Tuesday, March 26.
AWC budget priorities
In last week’s View from the Hill we highlighted AWC’s budget priorities including preserving state shared revenues. AWC’s Board has adopted budget principles that also guide our approach to the budget proposals. AWC’s budget principles include:
- Support city revenue flexibility.
- Revenues distributed to cities and towns must be maintained and where possible restored.
- Unfunded and underfunded mandates weaken our cities’ fiscal health.
- Infrastructure investment is crucial to both cities and the state.
Watch for our Budget Alert tomorrow afternoon and more information in Wednesday’s CityVoice. We will also do a deeper dive in next week’s Legislative Bulletin.
Finally, there are still a number of bills we remain focused on and have included in this week’s bill tracking Hot Sheet. The next major cutoff for policy bills is April 3.