FY 2012 Budget Recommendation to Account for Loss of Over $700 Million in Nonrecurring Funds

January 26th, 2011

With budget discussions for the next fiscal year well underway, there appears to be some agreement that the budget doomsday scenarios may not emerge. On January 13, the Legislative Budget Office provided an overview of the Joint Legislative Budget Recommendation for the upcoming year.

One of the issues raised included the need to develop a strategy to replace non-recurring funds from the current year. Most of the non-recurring funds used in Fiscal Year (FY) 2011 were funds made available to the state through the American Recovery and Reinvestment Act. The following table illustrates the non-recurring line items targeted:

Click to enlarge

The budget recommendation addresses the loss of the non-recurring funds through savings generated from targeted budget reductions, tapping available cash balances (such as the Working Cash-Stabilization Reserve and the Health Care Trust Funds) and anticipated revenue growth.

With a road map to address the loss of non-recurring funds established for this year, questions remain about future budgets. Will revenue growth reach the levels needed to cover future gaps? Will additional cuts be needed as reserve funds are depleted?

The looming budget questions will likely require a structural response that brings in additional revenue to provide a quality education for our children, a healthy workforce, and infrastructure for business development.

Source:

FY 2012 Legislative Budget Recommendation