In 9 States, FY18 Arrived Without Finalized Budgets

As of 3:45 p.m. on the first day of the new fiscal year in 46 states, New Jersey, Maine and Illinois all faced at least partial government shutdowns after their legislatures failed to pass new budgets – and Washington and Alaska “managed eleventh-hour deals to avoid a similar fate,” reports NPR

According to the National Association of State Budget Officers (NASBO), the legislatures in as many as nine states had failed to finalize budgets as of July 1: Connecticut, Delaware, Illinois, Maine, Massachusetts, New Jersey, Oregon, Rhode Island, and Wisconsin. The governors of Delaware and Massachusetts signed temporary spending bills, allowing government services to continue operating.

According to the Chicago Tribune, ideological divides on economic policy, combined with revenues coming in below forecasted levels in as many as 33 states, drove many of the budget disputes.

New Jersey 

Today marked the third day of the government shutdown in New Jersey, where 35,000 workers are furloughed and non-essential government services – including the beaches – remained closed. From Bloomberg

Senate President Stephen Sweeney, a Democrat, told reporters in Trenton that he didn’t expect budget votes in either house Monday.

The impasse was linked to the refusal by Assembly Speaker Vincent Prieto, a Democrat from Secaucus, to post a bill compelling Horizon Blue Cross Blue Shield of New Jersey to give the state $300 million annually from its surplus account. Horizon, which administers the state’s Medicaid contract, has said the company’s $2.5 billion cushion is a safety net while Christie has said it’s excessive for a private not-for-profit health insurer that grew on taxpayer funding.

The governor has vowed not to sign a budget unless the Horizon bill also comes to his desk. Prieto says the bill is being rushed.

As Christie ordered special legislative sessions over the weekend, and again today, he and his family were photographed yesterday from an aircraft by the news site NJ.com as they relaxed at Island Beach State Park outside a vacation home owned by the state for the governor’s use. The photos ignited social media, with Twitter users saying it was unfair to block access to a public park while the state’s highest elected official could continue to enjoy it, particularly during the weekend lead-up to the Independence Day holiday on July 4.

Illinois
Defying Illinois Governor Bruce Rauner, the Illinois House voted by veto-proof majority on Sunday night to raise Illinois income taxes from 3.75 percent to 4.95 percent, and corporate income taxes from 5.25 percent to 7 percent – finally leading to the passage of a companion budget bill through the House. From Illinois’ News-Gazette, as of last night at 9:20 p.m.:

The Senate still must vote on the $5 billion income-tax increase, perhaps as early as today, but Democrats hold a greater majority in the Legislature’s upper chamber, and it is expected to pass with less drama than the House’s more than two hours of debate that included shouting, jeering and some tears.

One preliminary estimate said that the tax increase would cost the typical married couple with two children who have an adjusted gross income of $100,000 a year and pay $5,000 in property taxes about $1,100 more annually.

Once it is approved, the tax increase would be retroactive to July 1.

Maine

A stalemate between Republican Governor Paul LePage and Democratic lawmakers threatens passage of Main’s $7.055 billion, two-year budget, reports CNBC. From that coverage from this morning:

After House Republicans in Maine voted to reject a compromise deal on Saturday, the Bangor Daily News reported that Republican Minority Leader Ken Fredette presented a $7.1 billion plan he said could get the governor’s approval, but some Democrats noted that was costlier than the rejected compromise.

A spokeswoman for the governor could not be reached for comment on Sunday.

“The Speaker thinks it is unconscionable that Maine doesn’t have a budget, especially leading into the holiday weekend,” Mary-Erin Casale, a spokeswoman for Democratic House Speaker Sara Gideon, said Sunday morning.

If the budget committee meeting on Sunday in Augusta agrees on a deal, the measure would go to the full legislature.

LePage has insisted on a budget with deeper spending cuts than those contemplated by lawmakers and has promised to veto any spending plan that raises taxes.

The stalled budget proposal would have repealed a measure that voters approved in November to impose an additional 3 percent income tax on state residents who earn more than $200,000 a year. But it contained a 1.5 percent increase in the lodging tax, Casale said, while increasing funding for public education by $162 million.

State police, parks and all offices responsible for collecting revenue will operate during the current shutdown, the state’s first since 1991.

Wisconsin

Wisconsin’s budget has failed to pass because of disputes over transportation funding. From the Chicago Tribune:

Dwindling collections from the state’s gas tax and vehicle registration fees have left a $1 billion hole in the two-year, $76 billion spending plan Wisconsin was supposed to have in place Friday.

Republican Gov. Scott Walker wants to borrow $500 million and delay some projects to save money. Some Republicans want to borrow even more and the GOP discussed a new heavy truck fee to raise $250 million, but that appears to be dead along with any discussion of raising the gas tax with Walker considering running for a third term next year.