Revenue Estimating Conference to Meet on October 7th

tax-calculatorOn October 7 the Revenue Estimating Conference (REC) will meet to revise the estimate for FY 2010 and establish the initial estimate for FY 2011.

The REC consists of Charles Krogmeier (Governor’s appointee), Holly Lyons (Legislature’s appointee) and David Underwood (private sector representative, appointed by the other two members).

The first thing that is needed is to receive the final word on FY 2009, which ended on June 30. The deficit for FY 09 is in a range from $120 million to $160 million. The Governor has said he will use the following options to eliminate the FY 2009 budget deficit:

  • $44.5 million from the ending balance (all due to stimulus funds)
  • $50 million from the Economic Emergency Fund (EEF)
  • $38 million Medicaid surplus (all due to stimulus funds)
  • $40 million shifting school infrastructure refunds into FY 2010

Once the final FY 09 numbers are known, FY 2010 can be adjusted for the FY 09 decrease as well as reduced from its current -0.7 percent estimate. Considering revenue came in at -4.1 percent through August and was -6.3 percent through last Tuesday (September 22), there is no doubt the REC will further reduce the FY 2010 at its next meeting.

It is expected that the Governor will be forced to enact an across the board cut in the FY 2010 budget after the REC meets. For FY 2010, every 1 percent equals $58 million. Therefore, should the deficit be over $200 million, the Governor would need to enact 4 percent or 5 percent across the board cut. He could ask the Legislature to backfill cuts in some areas in order to lessen the blow to certain programs or state agencies.

After the initial estimate is established for FY 2011, we will know the actual spending gap for the coming fiscal year. The initial spending gap was projected by Fiscal Services to be $930 million. With the reduced revenue estimates, that number is expected to rise to $1.1 billion to $1.3 billion.

House Republicans are committed to a line-by-line review of the budget and will continue to suggest budget savings ideas in order to balance the budget without raising taxes.