Balancing the Budget 2008-09

This year our revenue is coming in about $600 million less than we forecasted. That's throwing our budget out of balance. We can't have that, so we're making adjustments to bring it back into balance. Here's a summary of what we're doing.

The Problem
Last year we passed a budget (known as the Long Bill) that aligned the amount we were spending with the amount of revenue we expected to get from taxes. That's in the chart below as "2008-09 Long Bill."

In December, a new revenue forecast showed actual revenue coming in below what we forecast. With no change in spending, that put us out of balance -- by $587.5 million, to be exact. You can see that in the column labeled "With Dec. 2008 Revenue Forecast."

General Fund	2008-09 Long Bill	With Dec 2008 Revenue Forecast	With Dec 2008 Revenue Forecast & Balancing Package
GF Revenue
LCS Forecast	$8,114.30	$7,526.80	$7,526.80
Revenue Increases			$243.77
Total GF Revenue:	$8,114.30	$7,526.80	$7,770.57
GF Obligations
GF Appropriation (original)	$7,813.50	$7,813.50	$7,813.20
GF Changes			-$90.04
Increased Medicaid Match			-$107.70
GF Reserve	$300.80	$300.80	$155.11
GF Appropriation (new)	$8,114.30	$8,114.30	$7,770.57
Budget Balance (Revenue - Spending)	$0.00	-$587.50	$0.00

To bring the budget back into balance, we're doing two things:

• Adding to our General Fund revenue
• Cutting from our General Fund spending

You can see that in the column labeled "With Dec 2008 Revenue Forecast & Balancing Package."

Adding Revenue
Adding revenue to the General Fund has a couple of advantages. First, it reduces the number of spending cuts we have to make -- essentially pushing some of them off until next year, when we can spread them over 12 months. Second, it helps prop up our 6% spending limit.

The Arveschoug-Bird 6% spending limit says we can't increase spending from the General Fund by more than 6% from one year to the next. If we increase spending less than 6%, the limit ratchets down and we lose that amount of spending forever.

This year, we don't have enough revenue to spend the full 6%; adding some revenue help keep the limit up a bit.

This is the Revenue part of the chart at the top:

General Fund	2008-09 Long Bill	With Dec 2008 Revenue Forecast	With Dec 2008 Revenue Forecast & Balancing Package
GF Revenue
LCS Forecast	$8,114.30	$7,526.80	$7,526.80
Revenue Increases			$243.77
Total GF Revenue:	$8,114.30	$7,526.80	$7,770.57

You can see that we're adding $243.77 million in General Fund revenue.

This next chart shows where that money is coming from:

General Fund Revenue Enhancements (Summary)
Statutory Revenue Changes	Amount
Cash Fund Transfer Bill (SB09-208)	$226,556,443
Tobacco Bill (SB09-210)	$1,714,070
Cap Vendor Fee (SB09-212)	$12,800,000
Limited Gaming Fund Transfer (SB09-217)	$2,700,000
Total Revenue Increases:	$243,770,513

Cash Fund Transfers
The first line shows the amount we're transferring from cash funds into the general fund. Click here for a full list of transfers.

Other Revenue Enhancements
The second is money we get from the Master Settlement Agreement with tobacco companies. We're diverting a bit of it into the GF.

The third line shows money we're saving from a limit on the vendor fee. That fee is what we pay stores for collecting sales tax. Yes, we pay stores to collect to collect the sales tax you pay when you buy something. Normally they get to keep a little over 3% of all the tax they collect. We're reducing the amount a bit during the recession.

The final line shows money from the tax on casinos. It usually goes to things like promoting tourism and arts grants. We're taking about a quarter of it for the GF.

For a full list of other revenue enhancements, click here.

General Fund Cuts
On the other side of the equation, we cut spending. This is the spending part of the chart from the beginning of the article:

General Fund	2008 09 Long Bill	With Dec 2008 Revenue Forecast	With Dec 2008 Revenue Forecast and Balancing Package
GF Obligatons
GF Appropriation (original)	$7,813.50	$7,813.50	$7,813.20
GF Changes			-$90.04
Increased Medicaid Match			-$107.70
GF Reserve	$300.80	$300.80	$155.11
GF Appropriation (new)	$8,114.30	$8,114.30	$7,770.57

Here's a list of the spending cuts by department:

Department	JBC Changes to 2008-09 Approp
Agriculture	-$472,744
Corrections	-$5,780,572
Education	-$65,277,431
Governor	-$2,560,759
Health Care Policy	$41,230,154
Higher Education	-$30,000,000
Human Services	-$17,118,277
Judicial	-$1,773,055
Labor	$0
Law	-$790,000
Legislature	$0
Local Affairs	-$425,548
Military Affairs	-$168,551
Natural Resources	-$1,538,446
Personnel	-$594,261
Public Health	-$247,480
Public Safety	-$2,643,177
Regulatory Agencies	-$112,765
Revenue	-$1,428,538
State	$0
Transportation	$0
Treasury	-$265,096
Capital Construction Fund	$0
Controlled Maintenance	-$72,300
Total:	-$90,038,846

And that's the summary of how we're balancing the budget for FY 2008-09.

General Fund	2008 09 Long Bill	With Dec 2008 Revenue Forecast	With Dec 2008 Revenue Forecast and Balancing Package
GF Revenue
LCS Forecast	$8,114.30	$7,526.80	$7,526.80
Revenue Increases			$243.77
Total GF Revenue:	$8,114.30	$7,526.80	$7,770.57
GF Obligatons
GF Appropriation (original)	$7,813.50	$7,813.50	$7,813.20
GF Changes			-$90.04
Increased Medicaid Match			-$107.70
GF Reserve	$300.80	$300.80	$155.11
GF Appropriation (new)	$8,114.30	$8,114.30	$7,770.57
Budget Balance (Revenue - Spending)	$0.00	-$587.50	$0.00