Legislative Finance Committee

Report of the Legislative Finance Committee - 2017 Post Session Review

The Legislature during the 2017 session eschewed the usual, relatively leisurely start of 60-day session for a mad dash through a solvency package to ensure FY17 ended in the black. For FY18, faced with continuing to cut, the Legislature instead settled on a state plan that left spending flat but relied on new revenue. Nevertheless, the governor's vetoes of the revenue bill and significant parts of the General Appropriation Act mean the FY18 budget is far from resolved. The governor has said she will call a special session, the state Supreme Court will hear arguments in mid-May on the Legislature's legal challenge of the governor's vetoes, and the legislative leadership has launched an effort to call itself into extraordinary session.

General Fund Revenue Tracking Report: Accruals through February 2017

State revenues are on track with the forecast for this year, with assurances from the federal government a delayed mineral leasing payment will come in before the end of the fiscal year. February revenues were up from 6 percent from the same month a year ago, but down almost 4 percent for the fiscal year to date.

LFC Memo on GRT Pyramiding

LFC analysis shows HB412 would raise about $512 million from eliminating tax expenditures and would spend between $260 million to $490 million to reduce gross receipts pyramiding, primarily in the fields of construction, IT, attorneys, accountants, and architects. This might leave little money left to reduce rates for people newly brought into the tax, including hospitals, doctors, and nonprofit organizations. An alternative would be to use all the money to reduce the rate, reducing the effect of pyramiding and reducing the impact on those losing their deductions.

2017 Legislative Session Fiscal Overview

Quick legislative action on solvency during the session will mean the state ends the current fiscal year with general fund reserves at $90 million, despite $25 million in vetoes. For FY18, which starts July 1, the Legislature approved a $6.1 billion budget package that increases spending overall by 0.3 percent, partly to accommodate executive-requested increases, and raises about $350 million, leaving reserves at $211 million. Although the executive and the Legislature both started with recommended spending levels that exceeded expected revenue, the Legislature opted to raise more money, while the executive recommended cutting employee take-home pay, eliminating an insurance fund for high-risk patients, calling on local governments to cover more of the cost of Medicaid, and cutting tax distributions to counties.

General Fund Revenue Tracking Report: Accruals through January 2017

January recurring revenues were $370.6 million, down $15.3 million, or 4 percent, from a year ago. Year-to-date recurring revenues are down $167.3 million, or 5.2 percent, from last year.