A recently released report from the state’s non-partisan Legislative Fiscal Bureau (LFB) indicates state revenues are lagging behind earlier projections, which could leave the state with a projected ending balance that is $94.3 million below earlier forecasts.
The state is now projected to end the current biennium on June 30, 2017, with a balance of $135 million in its general fund. Because state law currently requires a minimum $65 million general fund balance, if lawmakers want to pass legislation that either raises spending or cuts revenue by more than a combined total of $70 million, they would have to change that law.
The forecast of a lower ending balance comes mostly from a $158.2 million decrease in projected state tax collections. State expenditures are projected to be $87.1 million lower than earlier forecasts. When re-estimates of two other minor items (anticipated lapses to the general fund and anticipated departmental revenues) are figured in, this leaves a net reduction of $94.3 million.
According to the LFB, reduced expectations for growth in wages, salaries, interest and farm income, coupled with a weaker national economy than projected a year ago is contributing to the downward adjustment in state income and sales tax collections. In the new report, personal income is now projected to grow by 4.2 percent in 2016 and 5.2 percent in 2017, down from earlier forecasts of 5.0 percent and 5.5 percent growth, respectively.
It remains to be seen whether the new revenue projections will hasten the timeline for wrapping up the legislative session. The last floor debate days for the 2015-16 session are set for April, but Republican leaders are anxious to get their members home and on the campaign trail. They have indicated they hope to wrap up their work by early March.