The state's top economists will present their unified projections for state tax revenue tomorrow. This is the number which the legislature must use to create a balanced budget that meets the requirements of our state constitution.
However, over the last two days, the House and Senate Fiscal Agencies - nonpartisan staff working for the Legislature, who comprise two of the three agencies meeting tomorrow - have each released their projections for tax revenue for the current year (ending in September) and the next fiscal year (October 2014 - September 2015).
The future is looking less rosy.
Both agencies project lower tax revenues for this year and next than had been projected at the last meeting in January. This means that all the draft budgets which have been moving through the Legislature were based on overly optimistic assumptions.
The projected shortfall is greater in the state's General Fund budget than in the School Aid Fund, but that will still affect school aid since many proposals to increase funding for schools hoped to take advantage of the significant increase in expected revenue to the General Fund. Here are the details for the School Aid Fund:
|FY 2014 (this year)||FY 2015|
|Change from previous estimate||-$121.8 mill.||-65.9 mill.||-124.4 mill.||-88.4 mill|
This is significant because the bulk of the increase in funds being used in all versions of the budget to increase per-pupil funding depend on money left unspent from this year and savings next year from having fewer students in the public schools. These projected shortfalls more than counteract those savings, meaning that available spending next year will depend on using up any accumulated balance in the School Aid Fund.
While the per-pupil increases proposed so far are still technically feasible, there will be much less room for error, especially if revenue collection continues to slow during the year. Any proposal that relied on shifting costs back to the General Fund will be much harder to sell in this environment. It's also important to remember at this point that the vaunted increases will only apply to some districts. Both versions of the budget have to include line items to make sure that every district gets at least a small increase when all is said and done, given the removal of some aid for pension payments and other categoricals that have helped some districts. The House version only guarantees a $5 increase; the Senate version aims for a $75 minimum.
The danger is that the temptation to make things look good in an election year will lead lawmakers to make promises for next year that rely on carryover balances which will be used up in the process. That would leave us with another contraction in school spending after the elections - unless our state officials finally decide to consider new and more stable funding for education.