We started the session with what seemed to be a balanced budget for this fiscal year (FY16, ending June 30) and a grim but manageable deficit for next year (FY17). The Governor´s budget proposal was short on details and included no new revenue, with $570 million in cuts.
Come March, new budget projections came out. The FY17 deficit almost doubled to $911 million; to make things worse, FY16 was no longer balanced. Governor and legislature had to make $266 million in further cuts to FY16, on top of the ones made in last year´s special session.
Then the Appropriations and Finance Committee released their budget for FY17, and things started to get weird. The Legislature added more detail to the Governor´s plan and softened some of the service cuts, while still not raising taxes. Trouble is, their budget only covered $570 million in cuts, not the whole expected FY17 deficit. Someone needed to find more savings or revenue somewhere.
As a result, a slightly irritated Governor presented an updated budget proposal covering the whole shortfall, with yet more cuts. Legislative leaders were not really happy about this and vowed to draft, consider and pass a budget proposal on their own, without negotiating with the Governor, sending it to his desk even if he might veto the bill.
It gets worse. As both sides were talking past each other, this year´s budget got back in the red, with a $141 million deficit. Corporation taxes and fees are coming in below expected, and savings targets are not being hit. In total, the FY16 budget was more than $1 billion off-mark.
What´s next? The date everyone has in mind is tomorrow April 26, when the final budget projections for FY17 will likely come out. That day we will learn exactly how big the deficit is for next year. Best case scenario, income tax collections improve slightly, and we see a deficit below $900 million. Worst case scenario, budget hole deepens, the General Assembly sends the Governor a budget, and he vetoes it.
Suffice it to say, we don´t see best case scenarios often as of late. We might end up in a special session, past the May 4 deadline.