The budget agreement - quick takes


The Governor and the Democrats in the legislature have reached a budget deal, with the expectation of voting on it today. This might be better than the alternative, (a long drawn budget fight on an election year), but gives us very little time to look at the numbers in any detail.

After going over the initial budget spreadsheets early this morning, here is our quick take. We will try to update you as we learn more.

Top line numbers

The budget deficit for FY2017 is currently projected to be around $960 million. The agreement closes it by:

  • $830 million in budget cuts (more details below)
  • $50 million in transfers from the Municipal Revenue Sharing Fund. This is the fund created last year to use sales tax revenue for property tax relief.
  • $50 million from the State Transportation Fund. This was also created last year, also setting aside sales tax revenue for transportation projects.
  • $36.2 million in "revenue enhancements."

Where are the budget cuts?

Let me start with the good news: The cuts are not as bad as we feared in several budget areas.

  • The Office of Early Childhood has a very modest budget cut, from $297 million to $294 million. Many crucial programs hosted there barely see any reductions. Even Start, a two-gen pioneer program that has given very encouraging results, is left intact.
  • The Two-Generation pilot initiative, a first step taken by the state to modernize how we deliver services to families, remains funded, with a modest cut.
  • Developmental education funding is cut, but stays in the budget. Last year, it was part of another line item - this year, it has a specific line, with funding close to $10 million.
  • Adult education, an increasingly important piece of the remedial education system, only sees a very modest cut.

Now, the bad news:

  • Medicaid sees a significant cut, again - close to $100 million. It has a huge budget ($2.45 billion) but it is yet another cut, in a program that has seen many of them.
  • The Department of Children and Families gets a $40 million cut.
  • The Department of Mental Health has a hefty $55 million cut.
  • Personnel reductions are widespread in all departments, meaning that layoffs will continue. This is especially worrisome in some direct service departments that are already understaffed.
  • Legislative commissions: The six legislative commissions are consolidated into two (Equal Opportunity, and Women and Children), and their total budgets slashed. This is a big loss - the commissions offer unique perspectives and voices to legislators and many issues. Each has been instrumental in drafting some key reforms in the past few years. This could be a tough loss.

The question mark:

  • The education equalization grants have huge cuts ($145 million), but it is too early to tell where they fall. This is the funding that goes to municipalities, in theory, distributed using the ECS formula. In practice, a few wealthy towns still get a considerable amount of money, even if they have really low local property taxes. Depending on how the cuts are assigned, this might only affect towns that can afford it, or penalize everyone across the board. We will see.

What is left out

There is no real revenue or spending reform in this budget; the long-term structural problems that have plagued the state remain.

The cuts are piece meal, without any real sense of evaluating what works and what does not. The modest attempt at property tax reform (one of the clumsiest, most inefficient taxes in the state) from last year was weakened even before it started being implemented. Tax expenditures were left untouched. This is not surprising considering the pressures of a short legislative session, but is still discouraging.

What's next?

It's a race against the clock, more or less, as the legislative session ends today at midnight. Democrats probably have the votes to get the budget through. Republicans, however, were not part of the last round of budget talks, and can slow down the legislative process to the point that the General Assembly just runs out of time to pass the budget before the deadline.

What usually happens is that the majority party works with the minority to get some of their priorities passed, be it in the budget, or in other bills that they support or sponsor.

Let me suggest S.B.400, our favorite workforce development/brownfield remediation bill, which is currently stuck in the Senate. It is Republican bill, with bipartisan support after all!

Still time to make a difference!

We are at a point where things are almost final, but not quite. There is still time to call your legislators and make a difference, especially in line items that are comparatively small.

We strongly encourage you to call your legislator regarding the legislative commissions (Aging, Women, Children, African American, Latino and Asian), as they have proved an invaluable voice for many groups that usually do not have a strong voice at the Capitol.

As usual, feel free to call or e-mail us if you have any questions.

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