Post on 16-Dec-2015
GOPB
2010 GENERAL SESSION BUDGET REVIEW
Phillip Jeffery, Deputy Director for the Governor’s Office of Planning & BudgetAssociation of Government AccountantsJuly 15, 2010
2010 GENERAL SESSION BUDGET OVERVIEW
o THE ENVIRONMENT: Revenue Downturn
o THE CHALLENGES: Pre-Session Budget Situation
o THE PRINCIPLES: Responsible Solutions
o THE SOLUTIONS: Cuts, One-time “Backfill”
o MOVING FORWARD: Upcoming Challenges, Available Tools
CONSENSUS REVENUE ESTIMATES
Revenue Assumptions Committee (RAC) Economists from:o Governor’s Office of Planning & Budgeto Tax Commissiono Legislatureo State Agencieso Higher Educationo Local Governmento Private Sector
Economic Outlook
November 2008
CONSENSUS REVENUE ESTIMATES (cont’d)
3.4%
0.0%
2.1%
7.1%
1.5%
1.7%
2.2%
-4.5%
1.5%
7.8%
-1.5%
1.7%
-7.9%
-6.5%
0.8%
7.3%
-4.9%
1.5%
-10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
Retail Sales
Home Prices
Average Pay
Unemployment Rate
Nonfarm Employment
Population
Change in Selected Economic Indicators: 2009, 2010f, 2011f
CONSENSUS REVENUE ESTIMATES (cont’d)
Revenue Estimates Committee
o Quarterly CONSENSUS Revenue Estimates
• Point Estimates in November & February• Range Estimates in June & September
o Committee Members Include Directors of:
• Governor’s Office of Planning & Budget• Office of the Legislative Fiscal Analyst• Tax Commission
THE ENVIRONMENT: REVENUE
FY 1
980
FY 1
981
FY 1
982
FY 1
983
FY 1
984
FY 1
985
FY 1
986
FY 1
987
FY 1
988
FY 1
989
FY 1
990
FY 1
991
FY 1
992
FY 1
993
FY 1
994
FY 1
995
FY 1
996
FY 1
997
FY 1
998
FY 1
999
FY 2
000
FY 2
001
FY 2
002
FY 2
003
FY 2
004
FY 2
005
FY 2
006
FY 2
007
FY 2
008
FY 2
009
FY 2
010f
FY 2
011f
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
General Fund/Education Fund Revenue CollectionsAnnual % Change FY 1980 – FY 2011 forecast
THE ENVIRONMENT: REVENUE
State Budgeto FY 2008
• $11.5 billion total• $5.3 billion General Revenue
o FY 2011• $11.6 billion total• $4.3 billion General Revenue
Revenue Pictureo Loss of $1.1 billion or
21% top to bottom
2009 LEGISLATIVE ACTION
Working Rainy Day Fund
o Utah funded $516 million in capital investment for FY 2009o Of this amount $346 million is from ongoing revenue sources
One-time Funding Sources Available
o $418 million Rainy Day Fundso $103 million Student Population Growth Account
Federal ARRA Package allowed us to maximize working rainy day fund and save one-time sources for future needs.
Revenues dropped $950 million from original FY 2009 projection (about 18%)
How Utah dealt with the shortfall
o Agency budget reductions $355 million• Pub. Ed. held to 6% reduction ($182 M)• Higher Ed. held to 9% reduction ($77 M)
o Capital funding reductions including buildings & roads of 28% ($134 M)
o Structural Deficit of $460 million (10%) funded mostly with ARRA
2009 LEGISLATIVE ACTION
THE CHALLENGES: PRE-2010 SESSION BUDGET SITUATION
Shortfall and One-time Funding
o Additional $177 Million Shortfall in FY 2010
• Ongoing Base Budget Reductions ≈ 18% partially backfilled with • American Recovery & Reinvestment Act and other One-Time funds
o Total One-Time Funding of $460 Million• Public Education: $293 Million• Higher Education: $66 Million• Health & Human Services: $76 Million
THE CHALLENGES: PRE-2010 SESSION BUDGET SITUATION (cont’d)
New Costs and Resources
o New Costs• Enrollment Growth • Medicaid & Human Services• Employee Health & Retirement
o One-time Funding Sources Available• $418 Million Rainy Day Funds• $103 Million Student Population Growth Account• $73 Million Additional ARRA anticipated
THE PRINCIPLES: RESPONSIBLE SOLUTIONS
Governor’s Budget Recommendation Principals
o Protect Public and Higher Education
o Avoid exacerbating the structural budget imbalance
o Retain a responsible Rainy Day Fund balance
o Balance the budget with no tax increases
THE SOLUTIONS: FY 2010
December Executive Order
o Reduced state agency and higher education budgets by $39 million
o Instituted a flexible hiring freeze
o Delayed IT purchases
o Provided other spending guidance
THE SOLUTIONS: FY 2010
FY 2010 BUDGET ACTIONS
GAP: $177 Million
Budget Cuts: $57 Million
Rainy Day Funds: $86 Million
Restricted Funds, Unallocated, etc: $14 Million
Medicaid Lawsuit Settlement: $20 Million
$177 Million
THE SOLUTIONS: FY 2011
FY 2011 BUDGET ACTIONS
GAP: $482 Million
Budget Cuts/Funding Shifts: $75 Million
Rainy Day Funds: $123 Million
Student Population Account: $103 Million
ARRA FMAP: $73 Million
Tobacco Tax: $43 Million
Restricted Funds, Unallocated, etc: $65 Million
$482 Million
THE SOLUTIONS: FUNDING FOR EDUCATION
Public Educationo Additional cut could have been as high as $400 Million, limited to
$10 Million in non-classroom cuts
o Ongoing budget cut of approximately 6%
Higher Educationo Additional cut could have been as high as $100 Million, limited to
$33 Million
o Ongoing budget cut of approximately 13%
2010 General Session PENSION REFORM
In 2008 Pension lost 30% of its value creating a $6.5 billion dollar gap
o Increased contributions $400 million per year for the next 25 years
Three Goals
o Fully Fund Pension Liabilityo Meet 100% of obligation to current and retired employeeso Remove bankruptcy risk imposed on state
2010 General Session PENSION REFORM (cont’d)
SB 43, Post-retirement Employment Amendments
SB 63, New Public Employees’ Tier II Contributory Retirement Act
o Applies to new employees after July 1, 2011o Limits State contributions to 10%o Can elect DB or DC plano Increases years of service to 35 years (25 public safety)
FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$27.1
$66.9
$146.1
$254.9
$313.4
$418.5$413.8
$209.3
MOVING FORWARD
2010 GENERAL SESSION OUTCOMESo Reductions to Public and Higher Education Minimized
o Structural Imbalance reduced from $460 Million to $320 Million
• $210 Million left in Rainy Day Funds• Revenue Enhancements like Quarterly Estimated Payments• Revenue Growth?
MOVING FORWARD, ECONOMIC DEVELOPMENT
Economic Vitality
o Utah was ranked #1 by the American Legislative Exchange Council as the state most likely to emerge first from the economic recession.
o Utah was ranked top ten states for business in 2010 by Chief Executive Magazine.
UTAH’S ECONOMIC STIMULUS PACKAGE
Home Run Program
Utah Science, Technology, and Research Initiative (USTAR)
Motion Picture Incentive
Energy Development Initiative
Transportation Infrastructure
GOPB
Phillip JefferyGovernor’s Office of Planning and BudgetUtah State Capitol350 North State StreetSalt Lake City, Utah 84114www.governor.utah.gov/gopb801-538-1027pjeffery@utah.gov
Questions