The Senate Ways & Means Committee released its proposed supplemental budget to the adopted FY 2017-2019 budget on Monday, February 19. The next day, the House Appropriations Committee released its proposed supplemental budget. Both budgets reflect use of the unanticipated increased revenue forecast for some additional investments in education funding and to implement a state property tax reduction using funds from the “rainy day” fund.
The Senate Ways & Means Committee held hearings on Monday, February 19, on the supplemental capital budget, which makes minor changes to the capital budget for FY 2017-19 that was adopted just a few weeks ago in January. The Senate Ways & Means Committee and House Appropriations Committee held simultaneous hearings on Tuesday, February 20. All of the proposed bills are expected to pass out of committee by the end of the week.
The Senate supplemental budget proposal adds $900 million in increased spending for a total budget of $44.6 billion, with an additional $972 million allocated to fully implement the Supreme Court’s view on the timing of implementation of teacher salary increases by September 2018 to fully implement their McCleary decision. The proposal also uses revenue from the “rainy day” fund, expected from the February revenue forecast to implement a state property tax reduction of $0.31 per thousand in 2019.
The House proposal adds $377 million in new spending for a total budget of $44.1 billion. The House transfers $1.1 billion from the general fund to the Education Legacy Trust Account to fully allocate the resources necessary to fully implement teacher salary increases approved last year, but, unlike the Senate, does not change the timeline for phase-in of those increased salaries. The House also implements a property tax reduction of $0.34 in 2019 and $0.40 in 2020. Additional property tax reductions would be funded permanently, beginning in 2021 with the previous year’s collections from implementation of a capital gains tax.
AWC testified before the committees and focused on several of the following impacts to cities in the supplemental budget.
State-shared revenues
We appreciate that both proposals leave intact the adopted funding levels for revenues shared with cities, including liquor profits and taxes. Additional marijuana revenues of $18 million for disbursement to certain cities and counties tied to the February 2018 revenue forecast are included in both the Senate and House proposals. Streamlined Sales Tax mitigation is fully funded for the biennium at $20.6 million.
Mental health
Senate: Provides $38 million for community behavioral health enhancements, provides $1 million to fund a mental health field response team grant program, and funds a diversion center pilot program at $800,000.
House: Provides $70 million for a defined community behavioral health enhancement – including rates, provided $1 million to fund a mental health response team grant program, and funds the diversion pilot program at $500,000.
Housing and homelessness
Senate: Funds a landlord mitigation account to assist in implementation of restrictions on income discrimination in rental housing.
House: Funds AWC priority bill HB 2437 providing counties and cities with a local sales tax option credited against the state sales tax for affordable housing and supportive housing options. Provides funding for implementation of expanded eligibility for the Housing and Essential Needs (HEN) program.
Opioid treatment and prevention
Senate: The proposal includes increasing the Medicaid rate for Medication Assisted Treatment and $14.4 million additional funding for evidence-based treatment services, including expansion of hub and spoke networks to provide capacity.
House: The proposal includes increasing the Medicaid rate for Medication Assisted Treatment. It also adds $562,000 to develop the prescription monitoring program for implementation of HB 1427, and $14.4 million to implement strategies to prevention and treatment of opioid use disorders including four new hub and spoke networks to provide capacity.
Pensions
Senate: PERS 1/TRS 1 cost of living adjustment (COLA) includes a one-time, 2 percent COLA with a maximum annual benefit increase of $750 for retired PERS 1/TRS 1 members. This would increase the PERS 1 supplemental contribution rate for PERS and PSERS employers.
House: Funds a 3 percent increase to the minimum benefit and the alternative minimum benefit for PERS 1/TRS 1 retirees who qualify. This would increase the PERS 1 supplemental contribution rate for PERS and PSERS employers.
Basic Law Enforcement Academy
Senate: Funds one additional class in 2019 and allows local spending authority for a locally funded class for which local employers would pay 100 percent of the costs in 2018.
House: Funds two additional classes in 2019 and allows local spending authority for a locally funded class for which local employers would pay 100 percent of the costs in 2018.
More details about the Senate and House’s budget proposals are available on AWC’s budget summary chart and through the state’s budget page.