Another Look at the Wednesday, December 5th Forecast

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Let’s take another look at the State’s December 5th Forecast by breaking it down into two parts. Part 1 involves our current biennium, FY 2012-2013, which only has seven months remaining. Part 2 involves the upcoming biennium, FY 2014-2015. Each are separate and distinct budget periods but FY 2012-2013 significantly impacts FY 2014-2015.

FY 2012-2013

Let’s take FY 2012-2013 first. The Forecast for the remainder of FY 2012-2013 projects state general fund revenues to go up by $1.076 billion, while general fund spending is projected to go down by $262 million. This adds up to a $1.3 billion surplus. However, because, at the time of the Forecast, it cost $2.4 billion to get the K-12 Education Shift back to the 90/10 split, this extra $1.338 billion surplus is dedicated, by statute, to paying down the Shift. This eliminates the surplus for FY 2012-2013 and still leaves $1.1 billion of the Education Shift to be paid back.

FY 2014-2015 deficit is $1.095 billion

The second part of the forecast involves the upcoming biennium, FY 2014-2015. The budget outlook for this biennium has changed little since estimates given this past summer and the result is a projected deficit of $1.095 billion for next biennium.

What Happened to the K-12 Shift?

The deficit is officially $1.095 billion. Constitutionally and statutorily, this deficit has be fixed by the end of FY 2014-2015. The $1.1 billion remaining of the K-12 Education Shift is NOT considered part of the deficit. Rather, the state is required, by statute, to use any surplus identified in a future Forecast to pay back the shift to a 90/10 split. After Wednesday’s down payment, it will still cost another $1.1 billion to pay back the shift.

 

Published In: Elections & Politics Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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