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Legislative Update

Report on state revenues, state agency budget requests released

by | Nov 23, 2020 | Legislative Update Blog, State Budget | 0 comments

As required by statute, the state Department of Administration (DOA) submitted its Nov. 20 summary of state agency budget requests for the 2021-23 biennium along with the state tax revenue estimates for the remainder of the 2020-21 fiscal year and the following two fiscal years (2021-22 and 2022-23).

The summary’s bottom line: Even with a healthy $1.2 billion ending balance to finish the current biennium and modest new revenue growth expected in the next biennium, the state would face a $1.2 billion deficit if every agency request were approved as submitted, something the report notes is unlikely.

The summary found the state’s ending General Fund balance at the close of the most recent 2019-20 fiscal year (on June 30, 2020), was nearly $1.172 billion, approximately $380 million higher than had been predicted when the 2019-21 state budget was enacted in July 2019.  In addition, the balance in the state’s separate Budget Stabilization Fund stands at an all-time high of $761.8 million.

Looking ahead, overall state tax revenues for the current 2020-21 fiscal year (i.e., the remainder of the current 2019-21 biennium) are forecasted to grow by $132 million above 2019-20 revenue levels.  Based on these projections, the state’s general fund balance at the end of the current biennium (on June 30, 2021) is projected to be $1.222 billion.

Looking ahead to next (i.e., 2021-23) biennium, tax revenues are projected to rise by $352.7 million (2.0 percent) in fiscal year 2021-22 and to further increase by $646 million (3.6 percent) in fiscal year 2022-23.

The document released last Friday also shows that state agency budget requests for the coming biennium exceed forecasted revenues by $1.187 billion in fiscal year 2021-22 and $1.179 billion in fiscal year 2022-23, for a total of $2.366 billion over the next biennium.  

The two biggest agency requests are the DPI’s request of an additional $1.616 billion in the next biennium and the Department of Health Services’ request for an additional $597 million for Medical Assistance and other items.

Comparing estimated future revenues against requested expenditure in the upcoming biennium results in an estimated imbalance of $1.239 billion. However, this estimate assumes that all state agency budget requests would be approved, which is highly unlikely.

A big uncertainty in terms of forecasting future revenues is the path the economic recovery will take from the economic downturn caused by the onset of the COVID-19 global pandemic earlier this year.

The report notes that “potential actions on the federal level are difficult to project and thus are not incorporated into the baseline economic forecast for current revenue projections; however, federal action or inaction in response to the pandemic will likely impact revenue estimates.”

Read the Report on State Agency Budget Requests and Revenue Estimates

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