The Revenue Estimating Conference (REC) met today to revise the Fiscal Year 2011 revenue estimates and establish the Fiscal Year 2012 estimate. By law the Legislature and Governor must use the December estimate when creating the FY 2012 budget.
Due to revenue running above estimates, the REC increased FY 2011 by $34.1 million and FY 2012 by $85.5 million. This does not include the revenue the state will see in increased tax collections due to the federal tax cuts being extended. If the tax cuts are extended, revenue will increase of roughly $150 million but that revenue cannot be used for additional spending.
The new net revenue estimate for FY 2011 is 2.8 percent, up from 2.2 percent in October. The new net revenue estimate for FY 2012 is 4.1 percent, up from 3.3 percent in October.
However, the built-in expenditures figure of $1.2 billion does not include the $103.5 million for the salary package agreed to by Governor Culver so the increase in revenue doesn’t help reduce the spending gap. The spending gap (the difference between ongoing spending and ongoing revenue) remains at approximately $750 million for FY 2012.
House Republicans will continue to review the budget line-by-line to identify savings in all areas of state government and eliminate unnecessary spending in order to align ongoing spending with ongoing revenue.