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Legislative staff presents tight state budget; Medicaid and education drive spending pressure
Summary
Legislative budget staff presented a fiscal plan showing modest revenue growth, a $23.3M recommended supplemental appropriation, rapid Medicaid growth, and pressures on transportation and school-building funds that will complicate 1994 budgeting.
Legislative budget staff (identified in floor remarks as "Leo") gave the Senate a detailed overview of the state's general fund and uniform school fund outlook, emphasizing slow revenue growth in some areas and rapid cost pressures in programs such as Medicaid and education.
Leo reported a June 30, 1992 surplus of $4,852,000 and that the office had moved $1,612,000 of reserved surplus into the 1993 budget for projects that need appropriation. He said the office's 1993 revenue estimate for the general fund is $1,932,225,000. The presenter recommended a supplemental appropriation package totaling $23,311,000 and said $5,460,000 would be carried forward into 1994.
The presentation flagged several areas of pressure. Medicaid was described as growing rapidly: 1992 Medicaid expenditures were reported to be about 29 percent higher than 1991, with an anticipated 20 percent increase over 1992. The presenter noted that Medicaid expenditures were already approaching $400 million and cautioned that if growth continues, the program could reach roughly $1 billion by 1998.
Education funding needs were also prominent: the budget recommended about $1,246,000,000 for public education (including a 3 percent weighted pupil unit increase and an enrollment growth allowance). Approximately $302,000,000 of that was presented as local property-tax contribution; the state share was presented as the remainder from the uniform school fund.
On capital and bonding, the presenter said the building board recommended substantial revenue bonding (including approximately $86.4 million tied to court-fee-funded projects) and that the statutory debt capacity could allow roughly $124 million of new bonds in 1994. Senators asked for a cost comparison between revenue bonds and general obligation financing and whether revenue bonds would count against the statutory debt limit; the presenter said revenue bonds had not been included in the debt limit when that statute was passed and that staff would check whether the governor’s recommendation included the revenue bonds.
Other priorities and set-asides noted were a 3 percent compensation reserve (roughly $55 million), a $2 million fiscal-note reserve, $11.4 million for federal mandates (about $7.5M of which applies to health and human services/Medicaid), and targeted program enhancements largely directed at public education. The presenter also recommended five additional highway troopers and five narcotics investigators for the Department of Public Safety and warned that federal highway funding had fallen markedly from roughly $222 million per year to about $120 million per year in recent years.
Senators used the session to press for clarifications on revenue sources, the mechanics of any proposed revenue bonds, and the potential effects on future appropriations. Budget subcommittees were scheduled to review details as the session's appropriations work begins.
