The June 1 Monthly General Fund Revenue Memo was posted to the Internet this afternoon. Unfortunately, it’s not good news. After dropping by 15 percent in April, general fund revenue dropped 12.4 percent in May (compared to May, 2008). This means, barring a big turnaround in June, revenue will not meet the -2.6 percent REC estimate for FY 2009.
The Democrats left themselves with a $94.6 million cushion ($44.6 million ending balance plus the $50 million the Governor can transfer from the Economic Emergency Fund). If revenue comes in below -4.9 percent, the $94.6 million will not be enough to cover the shortfall.
If this happens, the Governor would probably have no choice but to call a special session to put the FY 09 budget back into balance. Since all of the money has been spent, the only choice the Governor has is to ask the Legislature to transfer more money from the cash reserves or use the remaining federal stimulus money. Either of these two options will solve the FY 09 budget but make things even worse in FY 2010 and FY 2011.
The bottom line, again is that the Democrats spent too much, cut too little and once again are likely to be left with two budgets that are out of balance (FY 09 and FY 10) and a third (FY 11) that has a $1 billion spending gap. The Democrats simply cannot be trusted to manage the state’s finances in a fiscally responsible manner.