New Revenue Forecast Raises Stakes in DC and Here
The state's new revenue forecast on Thursday raises the stakes for the debate over FMAP reauthorization in DC and likely ballot initiative battles this fall in our state.
A weak state economy continues to impact the state’s ability to fund essential public priorities in the next year. Based on the new forecast from the Economic and Revenue Forecast Council, a weaker-than-expected economy has reduced the state’s general fund ending balance by over $200 million, leaving a reserve of only $253 million.
The forecast for the 2011-13 biennium is increased by roughly the same $200 million, so over the coming three-year period, revenue expectations are roughly even. However, the smaller ending fund balance in the current biennium heightens concerns about FMAP extension and revenue-cutting ballot initiatives:
- Currently, the budget assumes that the federal government will extend the provision of the recovery act that helps our state and others pay for Medicaid. Congress is considering this currently. If it does not act, the state may have to make up the $480 million difference through cuts in education, health care, and other public priorities.
- There are a number of ballot initiatives that may qualify for November’s ballot that would cut state revenue significantly, also endangering our public priorities. Another initiative, I-1053, would limit the state’s ability to take a balanced approach to dealing with new deficits.
