The special session has ended painfully after applying a series of Band-Aids including funding fixes, "swaps," "sweeps," and agency cuts to the 2010 budget, which has been hemorrhaging rapidly during the past ten months. The shortfall is due to the perfect storm: low energy prices, and a steep decline in gross receipts and personal income taxes brought on by a nation wide recession.
Going into the session, we had a $650 million hole to fill, and on opening day there was no preliminary agreement between a legislative task force and the governor, always a dangerous sign of troubled waters ahead.
And trouble there was... as those who wanted the hole filled by substantial cuts to recurring spending in the schools, universities, and government programs like Medicaid, clashed with others who wanted to include tax increases or at least roll-backs of some of the revenue we've given away in the past six years in the budget fix.
In the end we dodged the bullet, holding off big cuts to education and Medicaid, but deferring tax increases until the January session. The final package included several measures:
- A bill to cut $206 in annual spending including a 2% cut to public schools, a 4% cut to higher education, a 7.5 % cut to state agencies reporting to the Governor, 2% to the courts, and 4.5% for the legislative branch, among others.
- A bill to "sweep" $116 million from various state accounts, including a college affordability fund into the general fund to help pay for on going government operations
- An amendment to cut about 102 "exempt" positions hired by the Governor outside the classification system.
- A bill to shift about $136 million slated for use to fund capital outlay projects around the state to severance tax bonds. This "swap" would free up money in the general fund (the state's major checking account)
- A measure to use federal stimulus funding to limit the cuts to education
- A bill to transfer $115 million from one of the state's cash reserve accounts to the general fund
- An amendment to have legislative staff identify $150 million in building projects and stalled capital outlay that could be scrapped. The post-session news is that the Governor is going to just identify and cut these himself.
Education cuts were held to even less than 2% by some artful dancing to give school districts access to some previously restricted funds to use to pay property taxes, a big expense. Medicaid, too, escaped immediate cuts, via a transfer of federal funds and those placed in reserve from the tobacco settlement.
Solvency was achieved, but everyone knows that this patchwork quilt of little Band-Aids won't last--especially as we face a potential $1 billion shortfall when the regular session convenes. I believe we need a much more comprehensive solution, but this was made difficult since both the Governor and legislative leaders would not allow us to even consider the other side of the ledger-tax increases or so called "revenue enhancements."
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