Committees & DTFs

Agenda Committee

Preliminary State Budget Outlook for 2003-05
( From Budget Information Packet handed out at the Faculty Retreat 2002)

September Revenue Forecast: $22.7 billion
2003-05 Budget: $24.7 billion
2001-03 Ending Fund Balance $ 364 million

Gap of $2 billion between the amount of revenue expected (based on September forecast) and preliminary expenditure estimates (assuming COLA Salary Increases.) There is an additional $400 million gap of revenue in the Health Services Account that needs to be addressed.

State’s revenues are declining due to:

  • Loss of 50,700 nonagricultural jobs since last year (mostly Boeing)
  • Tax reduction measures approved by legislature beginning in 1995
  • Voter approved initiatives (I-659 reduced significantly funds received from car tabs, I-728 provides earmarked funds for K-12 for class size, I-732 provides cost of living increases to K-12 teachers, I-747 limits property tax increases)

Major expenditure increases are in areas of:

  • Health care costs per person have grown 2.5 time average inflation
  • Caseload for state services have grown – taking care of elderly and disabled population, more people in prisons due to changes in sentencing policies, and increased health care services for poor.

The complete budget outlook will not be clear until:

  • The changes in Legislative make-up following elections (November)
  • The effect of ballot initiatives can be assessed (November-December).
  • The state’s revenue and caseload forecasts are updated (February-March)
  • The legislature establishes the final budget (April-June)

Last Year’s Budget Had a Similar Challenge:

Before the 2002 Supplemental Budget the gap between revenues and expenditures was $1.5 billion due to similar problems as listed above. The legislature addressed that gap by:

  • Adding new revenues $858 million (securitizing tobacco funds, spending reserve funds, transferring funds, and some new revenue). Many of these strategies relied on one-time money which will not be available during the next legislative session.
  • Making reductions to state government programs $685 million (major cuts included: human services cut by $208 million, K-12 cut by $92 million, employer pension rates reduced saving $63 million, higher education cut by $54 million, no second year cost of living raise for state employees cut $50 million)