Mario Burgos

Clear thinking and straight talk from the top of a mountain.

Wednesday, February 17, 2010

Stitching a Budget Together With Disappearing Thread

They are feeling the pressure at the Roundhouse to get a budget approved before the strike of noon tomorrow.

"I'm hopeful we can come up with something (to avoid a special session)," said Senate President Pro Tem Tim Jennings, D-Roswell, who's participated in the budget talks.
        

The House approved cuts of about 1 percent for public schools and government services, while the Senate budget package calls for reducing spending levels by about 3 percent.
        

The shallower cuts in the House plan would be made possible by more than $300 million generated by tax hikes, primarily the gross receipts increase. The Senate plan relies on $180 million in new tax revenue.
        

However, Jennings said he's concerned revenue levels might end up being even lower than projected and said Richardson has criticized more tax ideas than he's offered. 
 I'd say that Senator Jennings concerns about lower revenue levels are well founded.  Consider for a moment the source of some of the revenue being expected to help plug the gap:
The Finance Committee approved the budget on Thursday and sent it to the Senate for consideration.
The committee proposed spending about $5.5 billion in the next fiscal year, which starts in July. That includes about $200 million in federal aid that's replacing state money for Medicaid, public schools and higher education.
 Of course, there's one obvious problem with this plan. It seems to fail to consider the reality of what is being said about the future of federal money coming to the states:

Payments to states and individuals will fall to $11 billion, from $14 billion, per month. Much of this spending -- such as Medicaid funding and additional unemployment benefits -- was meant to stabilize the economy during the recession.
 Yuppers, it looks like that faucet is starting to be turned in the opposite direction. So, here's my prediction. Assuming a state budget gets approved by noon tomorrow, we will most likely see a special session before the summer is over to deal with the "surprise" lower than expected revenues.

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