The state’s revenue forecast increased by $1.45 billion over the previous forecast, a positive surprise for the state budget writers as they complete their negotiations and prepare to finalize supplemental budget proposals. The February forecast means that the state has more than $5 billion for the 2021-23 biennium than anticipated during the budget process last year, in addition to remaining federal relief funds and new federal infrastructure funding.

The state has more than $5 billion for the 2021-23 biennium than anticipated.

The increased revenues are driven by:

• Continued economic recovery;
• A lower trend in virus rates;
• Impact of federal funding;
• Strong sales tax and real estate sales; and
• Higher-than-expected inflation.

Potential risks identified by the forecast include the rate of inflation, continued COVID-19 variant risks, and international uncertainty.

An action-filled week around budget proposals

The House and Senate supplemental operating budget proposals will be released Monday, February 21 and heard in the Senate Ways & Means Committee and House Appropriations Committee that afternoon.

The Senate-proposed supplemental capital budget was released on February 16 (see capital budget article) and the House version will be out this week.

The Senate-proposed transportation budget will also be introduced this week, following last week’s action on the transportation package (see transportation package article).

AWC will review the three proposed budgets after release and provide a summary of provisions impacting cities. Look for an article in our CityVoice newsletter on February 23 and more details in next week’s Bulletin.

Dates to remember

The respective Senate and House proposed supplemental operating budgets will be heard in the Senate Ways & Means Committee and the House Appropriations Committee on Monday, February 21 at 4 pm and 3:30 pm respectively.