More Bad News for State Revenue

Today’s new revenue forecast from the Economic and Revenue Forecast Council widens the current state fiscal gap by $238 million.

The balance sheet included in the forecast shows the general fund deficit for the current biennium to be $430 million with a balance of $245 million in the rainy day fund. Those numbers do not include an adjustment for the most recent caseload forecast. Including the caseload forecast would increase the deficit by about $250 million.

While the sizable current deficit is a matter of concern, of greater concern are:

• The 2011-13 biennium, which could face a deficit reaching into the billions of dollars when federal recovery funds being used to support education, health care, and public safety are no longer available.
• The potential passage of I-1033, which could cost the state nearly $6 billion by 2015.

Details:

The $238 million in decreased revenue expectations breaks down as follows:

• $109.6 million is due to a weaker forecast for consumer spending.
• $46.1 million is due to a State Supreme Court case which will lower B&O collections.
• $82 million is due to lower-than expected revenue collections since the last forecast.