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BUDGET OUTLOOK: Things Looking Better, But Do Not Get Excited Yet!

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The state’s Revenue Estimating Conference (REC) met on Friday and increased their estimates for this year (FY2018) and next year (FY2019).  Most of this increase is because of changes in federal tax laws after passage of the Trump tax cuts.   It now looks like there will be $33 million more than was estimated in December for the current fiscal year, which could mean very few (if any) mid-year cuts.  For next year, it looks like there will be an extra $207 million to spend, but legislators are cautious about this, not knowing if these increases will be repeated in future years.  On top of that, several legislators are eyeing those funds to stabilize Medicaid and pay for a part of the $1 billion in tax cuts proposed by the Governor.

Legislators do think they will have to make some cuts to the current year budget.  The House and Senate have passed different versions of the deappropriations bill (SF 2117), which propose midyear cuts of $30-50 million.

This week, we expect to see the budget discussions heating up.  There will likely be a decision made about deappropriations, budget targets will be released so the appropriations subcommittees can begin drawing up their budgets, and decisions on how all of this will fit into a tax reform package.  It's a lot to do with only a little over a month left in session, but once decisions are made, things happen very fast.