Sen. Hilliard: Updated revenue estimates reduce projected shortfall but leave FY2011 gap

Sen. Cinder Hilliard on the Senate floor distributed revised revenue-estimate sheets and told colleagues the state’s current fiscal-year target remains unchanged at $194,000,000 but warned of continuing shortfalls in the next fiscal year.

Hilliard said the General Fund had fallen by about $5 million while the Uniform School Fund rose by roughly $5 million, leaving the overall target unchanged for the fiscal year in progress. He said updated projections reduce an earlier positive consensus figure and now show an ongoing FY2011 deficit of about $37 million versus the governor’s prior estimates.

“The reason we feel more positive is that the last year…and we anticipate this year with the change in our income tax, a lot of people are being under withheld,” Hilliard said, explaining shifts in income- and sales-tax receipts. He added that earlier session decisions removed $100 million from consideration so the body had been operating on a leaner baseline.

Why it matters: Lawmakers must reconcile agency spending expectations with new revenue figures as they work to complete the budget. Hilliard told senators the updated numbers mean the governor’s plan effectively has about $50 million less available than previously assumed, creating programmatic gaps to fill.

On next steps, Hilliard recommended formation of a reserve and additional staff work to reconcile budget plans with available revenue. “I think in all likelihood, we’ll want to have some type of reserve fund,” he said, noting past transfers and shortfalls used to balance the budget in prior years.

The presentation prompted no immediate floor amendment; senators acknowledged the work ahead and moved on to the consent calendar.