While last week’s post was a bit dour, this week’s is less so. Tuesday’s revenue forecast contained mostly good news, but not quite in the way I expected it. Because of my own confusion about how the revenue forecast(s) [note the plural] work, I underestimated the power of forecasting to turn two different forecasts into winners for everyone. The forecast for the 2017-19 budget is up by about $200 million over the previous forecast, dropping the shortfall from the last guesstimate of $1.6 billion, to $1.4 billion. At the same time, the forecast for the 2015-17 biennium ending balance is up by $400 million, which will trigger the “kicker” if the forecast turns to reality when the final budgets are closed out by late August. If the revenue drops significantly below the $400 million threshold, then the “kicker” won’t be triggered and the excess can be rolled up into the 2017-19 budget to offset the shortfall even further. In addition, corporate tax revenues for 2015-17 are up, which means the possibility that the corporate “kicker” can be rolled into K-12 budgets on top of any other revenue they might get.
All this combined reduces the pressure on the Legislature to come up with big revenue enhancements, but the Rs in the Legislature have announced that the budget is good enough for them that NO revenue enhancements are needed, since the shortfall can be covered by program cuts. For PERS members, this means more wheel-spinning. The Rs are the ones pushing for PERS reform; the Ds are pushing for revenue enhancement, particularly the corporate income tax. These two forces stand in direct opposition to one another; there is no way the Ds will agree to PERS cuts, or many other cuts, without the Rs agreeing to corporate tax reform. So, while more draconian PERS cuts *might* be off the table, PERS cuts, in general, remain so long as there is a possibility that the Rs might agree to some revenue increasing measures.
Expect this saga to drag on for awhile, and lead to, possibly, a stalemate that results in the need for a special session after the revenue situation for 2015-17 is sorted out in the latter half of August. This only pushes the problem for PERS members further into the future, staying the date of execution until later. There may be some movement before sine die in late June or early July, but I’m growing discouraged that anything will be settled by then.
I wish I could offer something more informative, but, like you, I’m still waiting in the weeds.