Fiscally sound state budget is key this year
The Fiscal Year (FY) 2019 budget year could be the most eventful in decades, with major changes in federal policy looming and ballot questions that could reshape state tax policy likely to appear on the November ballot. This year's budget will be written in a climate of uncertainty, and against a backdrop of ongoing fiscal challenges. Recent tax revenue trends, however, have been positive, potentially creating an opportunity to address the state's fiscal instability.
Our FY 2019 Budget Preview examines the state's fiscal condition heading into FY 2019 and examines projected revenue growth as well as the costs of maintaining current services.
While recent revenue trends suggest the state could end FY 2018 in a strong fiscal position, when enacted the FY 2018 budget was precariously balanced. It relied significantly on temporary revenue sources, including counting on 13 months of sales tax revenue rather than 12. And it has not yet fully-funded a number of accounts that everyone agrees will need to be funded (such as for removal of snow and ice from the roads). If strong revenue growth continues this year and into next year (December revenue data show monthly tax revenue $527 million above the benchmark and year to date $728 million over benchmark) then the state could be in a position to reduce or end the practice of relying on temporary revenue and savings to balance the budget.
Producing a more fiscally sound state budget for FY 2019 could be particularly important as the threat of federal budget cuts and cost-shifting to the state looms in the months and years ahead.
Read the full preview here.
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