More Budget Cuts on the Table (Updated 6/15/17)

As the extended special session drags on, with no agreement on a tax bill yet, the House has made adjustments to the governor’s budget plan submitted at the beginning of the special session.

To recap, after vetoing the budget passed during the regular session, which was balanced by taking $90 million from the Rainy Day Fund and major cuts to Medicaid and higher education, the legislature went into a special session and the House, the Senate, and the governor have all been in a stand off over personal income tax cuts and sales tax increases ever since.

With no deal on revenue, the governor introduced a new budget with HB 115. HB 115 made a number of cuts compared to the governor’s original proposal, including reducing the Save our State Fund to $15 million and cutting higher education by $5.4 million. At the time, HB 115 would have required the legislature to raise about $260 million in revenue to balance the budget.

Yesterday, the House introduced a committee substitute for HB 115, with $78 million in further cuts. While the full text of the bill is still not available, a summary was posted online.

Here are the major changes in the committee substitute for HB 115 compared to the governor’s version.

• The Save Our State Fund is eliminated fully. The governor’s originally called for a $105.5 million SOS Fund, and then reduced it to $15 million at the start of the special session. The House bill eliminates it entirely.
• $28.3 million in further cuts to the Department of Education, including $8 million in program cuts and $20 million cut from canceling the teacher’s pay raise. HB 115 already included $44.7 million in savings from the unfunded liability smoothing.
• $1.7 million in further cuts to the Department of Education and the Arts, including $941,294 cut from Education Broadcasting Authority.
• $33 million cut from DHHR. According to the summary posted online, this includes $13 million cut from Medicaid.
• No further cuts to Higher Education, leaving Higher Ed at $13.8 million below FY 2017’s funding.

The Senate also introduced their plan for the budget through an amendment to SB 1013. The Senate’s bill also makes cuts to the Governor’s special session proposal, but goes much further than the House, cutting by $254 million.

Here are the major changes in the amendment to SB 1013 compared to the Governor’s introduced version of HB 115.

• The Save Our State Fund is fully eliminated, plus an additional $250,000 cut to the Division of Energy.
• The teacher pay raise is canceled, cutting $20 million from the Department of Education.
• $85,813 cut from the Education Broadcasting Authority.
• $118 million from Medicaid.
• $5.6 million cut from the Bureau of Senior Services.
• $19.3 million cut from Community and technical colleges, which would be a 30 percent reduction from FY 2017.
• $75.2 million cut from Higher Education, which would be a 22 percent reduction from FY 2017.

The figure below shows the levels on General Revenue expenditures from the various budget proposals in both the regular and special session.  The latest version from the House is $223 million below the governor’s original proposal, and is very close to the House’s proposal during the regular session. Even the governor’s special session proposal is $155 million below the original proposal. The Senate’s proposal is $409.9 million below the governor’s original proposal, and is even below the budget that was vetoed by the governor at the end of the regular session.

***UPDATE***

Last night, the Senate passed an amended version of SB 1013, with smaller cuts than the version mentioned above, due to improved revenue forecasts. The Senate budget, balanced with millions in cuts, was passed in response to the failure to come to an agreement on a tax reform package that include major cuts to the income tax. Compared to the Governor’s special session budget bill, the version passed by the Senate includes:

• Elimination of the Save our State fund.
• Canceled teacher’s pay raise.
• $85,813 cut from the Education Broadcasting Authority.
• $54.3 million cut from General Revenue funding for Medicaid. The net effect of this cut is only $34 million, as the Governor adjusted down the amount needed for Medicaid by $20 million in a letter to the legislature.
• $5.6 million cut from Senior Services
• $6.4 million cut from Community and Technical Colleges, which would be a 10% cut from 2017.
• $23.3 million cut from Higher Education, which would be a 7% cut from 2017.

The budget passed by the Senate is $124 million below the governor’s special session proposal, and $280 million below the governor’s original budget.

***UPDATE***

After the Senate passed SB 1013, the House last night amended and passed their own version of the bill. Like the Senate’s bill, the House’s version of SB 1013 totaled $4.225 billion, but makes cuts in different areas than the Senate’s version, and also relies on some reserve funds and anticipated lottery surpluses. The House’s version of SB 1013 includes:

• Elimination of the Save our State Fund.
• Canceled teacher pay raise.
• $8.3 million cut from the Department of Education.
• $1.7 million cut from the Department of Education and the Arts, including $941,294 cut from the Education Broadcasting Authority.
• $5 million cut from the Consolidated Medical Service Fund.
• $74 million cut from General Revenue funding for Medicaid. The net effect of this cut is only $25 million, after the Governor’s adjustments and the planned use of reserves and surpluses.
• $197,723 cut from Veterans’ Assistance.
• No further cuts to Higher Education, which would leave Higher Ed at $15 million below FY 2017 levels.