The Joint House and Senate Appropriations spent this week listening to state departments going over the Governor’s Budget proposals and the cuts that are in most department budgets. Medicaid, the QBE Formula in Education and most of Higher Education were exempt. That left the 4% cuts in FY2020 and the 6% cuts in FY2021 to the rest of state government.
The tax collection Revenue Estimate for the FY2020 budget has been lowered. Spending is projected to increase in FY2021 by 3%.This is actually 2.65% State Funds and 3.66% of DOR revenue receipts depending on your figure used.
The effect is that pay raises for teachers and for state employees making less than $40,000 are being partially financed by budget cuts to services affecting a wide range of state functions.
The FY 2020 amended budget proposal
The amended budget State Funds estimate of $27.38 billion includes $255.7 million from the Revenue Shortfall Reserve for the Mid-Year Adjustment for K-12 enrollment growth. The mid-year budget recommendation from the Governor revised down tax receipt revenues from the original as passed FY2020 General Budget last session, leading to the proposed mid-year reductions.
Agency-submitted 4% reduction plans as requested in the Governor’s budget instructions issued last summer. This is in addition to $109 million in savings in low income Medicaid and $79 million in savings from favorable bond rates. One of the reasons for the called reductions is due to sluggish Personal Income Tax collections. These have been particularly weak, down -0.5% for the year on collections of $6 billion. Overall, through the first six months of the fiscal year, the collections are up 0.3% or just $32.2 million.
Governor’s mid-year cuts reverse many initiatives
Because the Governor is not able to provide recommended reductions to the Judicial Branch, his recommendation includes their agency request for additional funding. The legislature will review that in the coming weeks.
Some notable reductions include the elimination of over 1,200 vacant but budgeted positions across executive agencies including Consumer Protection workers in Agriculture, personnel in the Department of Corrections, and security and non-security positions in the Department of Juvenile Justice. Additional recommended cuts include:
➤ The 4% cuts to agencies affected total $244 million in the FY2020 Budget proposal
➤ Reductions to the public library materials grant down to $.175 per capita
➤ $318,000 in reductions to the Family Connection county allocation and the Family Connection Partnership technical assistance to counties
➤ $1.9 million in reductions to supported employment services in Department of Behavioral Health and Developmental Disabilities
➤ Reductions totaling over $2.6 million to the Agriculture Experiment Station and $3.5 million to the Cooperative Extension Service
➤ Reductions of over $1.2 million to Public Defenders including a reduction in contract rates and freezing vacant positions
➤ $500,000 reduction in the Childcare and Parent Services (CAPS) program
➤ $2.07 million reduction in the Department of Driver Services from non-implemented operations and process changes
FY 2021 general budget reduces permanent
state workforce and
funds pay raises
The General budget has a state funds estimate of $28.10 billion including $1.31 billion from Lottery Proceeds, which are transferred to fund Pre-K and HOPE Scholarship Grants. Similar to the amended budget recommendation, the Governor has recommended agencies shed over 1,200 vacant but budgeted positions across executive agencies — some in agencies with double digit personnel turnovers and hard to staff positions.
Personnel reductions in the general budget carryover into continuation, meaning that these staffing reductions are permanent. Many of these vacancies have persisted based on non-competitive market compensation and less attractive pension benefits in areas such as the Department of Agriculture’s Consumer Protection program which is proposed to lose thirteen positions for a budget savings of $776,290.