State Faces Budget Shortfall for Fiscal 2015

The Spending Affordability Committee, composed of members of the General Assembly and three public members, met on October 16 for the first of a series of meetings to assist them with setting an appropriate level of spending for fiscal 2015.  During the meeting, the Department of Legislative Services briefed the Committee on its development of a baseline budget for fiscal 2015 and examined the relationship between ongoing general fund revenues and general fund expenditures for the current and upcoming fiscal year.

The DLS briefing document indicates that the projected fund balance for fiscal 2014 has been eliminated and a shortfall now exists for fiscal 2015.  As reported by

There now appears to be a $400 million potential gap in next year’s budget, Warren Deschenaux, the chief of policy analysis, told the joint Spending Affordability Committee. A nearly $300 million surplus estimated when the fiscal 2014 budget passed in April has disappeared in the face of unplanned expenses and reduced revenues, and there may instead be an $87 million deficit. (See briefing report.)

DLS staff also provided an overview of State Aid to Local Governments.  Using the baseline budget assumptions, local aid is expected to increase by 14.2% over the level of funding received in fiscal 2010.  The county/municipal line is expected to increase by $163 million, however much of this funding has been allocated to specific jurisdictions.  Of this figure, $54 million is from video lottery terminals (gaming), $28 million is from the teacher supplemental grant to offset the teacher retirement shift for some counties, and $22 million is for the restoration of police aid.

Lastly, DLS provided an analysis of the effect of the Federal government shut down on the State.  Although DLS estimates that the State loses approximately $5 million a day in income and sales tax revenue due to a government shutdown, this loss has been mitigated by measures that have been passed by Congress to pay military personnel during the shut down and retroactively pay federal employees for the days they were furloughed.