The 2009 Legislative Session ends at midnight tonight, but the state’s budget for FY 2010-11 is far from resolved. The Governor and legislators are still engaged in last minute negotiations, but time is short.
First, let’s review where we stand:
- The state started the biennium with a $6.4 billion deficit projected for FY 2010-11.
- Medicaid matching funds included in the federal stimulus package reduced that deficit by about $1.8 billion, bringing the problem down to $4.6 billion.
- The legislature passed omnibus finance bills that make $1.5 billion in spending reductions ($786 million of those cuts are backfilled with federal fiscal stabilization dollars).
- The Governor signed those omnibus bills, but made several line item vetoes to cut additional general fund spending, including $381 million in health and human services, $3 million in economic development and $2.6 million in higher education.
- So, after incorporating the federal stimulus funds and the approved spending reductions, there still remains a $2.7 billion deficit for FY 2010-11.
Now, let’s look at what has been happening in the final days of session:
The Governor and legislature exchanged a few offers on Saturday and seem to agree on implementing a $1.8 billion shift in education spending. However, the House and Senate have been insisting that the shift be coupled with an increase in ongoing revenues to ensure the shift can be “bought back” in the future biennium.
If an education shift is implemented, that still leaves a $900 million deficit for FY 2010-11. Saturday, the Governor proposed closing that gap through spending cuts to the renters’ credit, health and human services, higher education, and aids to local governments. The legislative response proposed raising about $1 billion in revenue, reducing spending for aids to local governments and other budget areas, and undoing the Governor’s line item veto of General Assistance Medical Care.
There were no negotiations between the Governor and legislature on Sunday. Instead, the House attempted to override the Governor’s line item veto of General Assistance Medical Care and his veto of the tax bill that raised close to $1 billion in revenue. Both override attempts failed.
Today, legislative leadership emerged from a meeting with the Governor around 2 p.m. and said the tax and health and human services chairs will be taking a closer look at those areas of the budget to see if there are some partial solutions that can be agreed on. More discussions with the Governor are expected as the day continues.
If no deal is reached by midnight tonight, the Governor has said he will use his unallotment powers to balance the state budget.