Transparency Issues in the Governor’s Budget Recommendations

Elimination of the Health Care Trust Fund
The Governor is recommending elimination of the Health Care Trust Fund (HCTF) that is currently funded entirely from a General Fund standing appropriation. The HCTF has been used to fund Medicaid, hawk‐i, Mental Health growth, and other programs that have historically been funded from the General Fund. Many of the Governor’s General Fund appropriation increases are the result of appropriating General Fund dollars directly to these programs. The HCTF was created when the Legislature raised the cigarette tax by $1 per pack during the 2007 session.

Elimination of the Senior Living Trust Fund
The Governor is recommending eliminating the Senior Living Trust Fund (SLTF) after FY 2010. Under the Governor’s budget, appropriations from the SLTF are $95.0 million less than was appropriated in FY 2009. Similar to the HCTF, the SLTF has been used to fund programs historically funded from the General Fund, including Medicaid, assisted living and adult day care oversight, and the Department of Elder Affairs. Under the Governor’s budget, the Department of Elder Affairs, assisted living and adult day care oversight, and the Rent Subsidy Program would be funded entirely from the SLTF in FY 2010. The SLTF Medicaid appropriation would be reduced by $95.0 million (from $111.8 million in FY 2009 to $16.8 million in FY 2010). The Governor’s recommended General Fund appropriation is increased to make up the SLTF reduction.

Reduction of Funding for the Homestead Tax Credit
For the past several years the appropriations for the Homestead Property Tax Credit, Agricultural Land and Family Farm Tax Credit, Military Service Tax Credit, and the Elderly and Disabled Tax Credit have been capped at $159.9 million. For FY 2010, the Governor is recommending the Property Tax Credit Fund be funded by an appropriation of $106.1 million from the General Fund and a $3.8 million balance carry forward for a total of $110.0 million. The Governor’s reduction of $49.9 million is achieved by reducing the Homestead Property Tax Credit. The Department of Revenue’s projected FY 2010 demand for Homestead Property Tax Credit claims is $139.1 million. This is $89.2 million more than the recommended amount of $49.3 million.

Inequity in Reduction for Public Schools vs. Nonpublic Schools
For FY 2010, the Governor is recommending maintaining the 4.0% allowable growth rate set last session. However, his plan is to cap the standing unlimited appropriation at approximately $2.531 billion. This is done by funding regular school aid at a 2.0% allowable growth level and applying an additional reduction of $33.4 million (approximately equivalent to the FY 2009 1.5% ATB reduction). School districts will maintain the spending authority ($85.9 million).

The Governor recommends a decrease of $46,875 (6.9 percent cut) for Nonpublic Schools Textbook Services and a decrease of $550,917 (6.5 percent cut) for Nonpublic Transportation.

Source: “Summary of FY 2010 Budget and Governor’s Recommendations”, by the nonpartisan Fiscal Services Division of the Legislative Services Agency

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