Sunday, January 13, 2008

Is the budget situation a crisis or something less?

That is the question I have been trying to determine.

There are two issues, first the current Fiscal Year situation, and next years budget problem.

First, the current year. We are told that there is a $434 million shortfall for this Fiscal Year. That is broken down as follows:

$130 million less than budgeted,
$138 million in higher authorized spending
$166 million in "additional spending needs."

Now, as far as the $130 million less than budgeted, that I take at face value. However, for the entire 2 year budget, we are projected to take in $70 million more than anticipated. So for the overall budget revenue is not a problem. In fact, money remaining from the last Fiscal Year is being used to make up some of this years deficit.

My concern is with the categorization of $166 million in additional spending needs as part of a deficit. My example is, if I request $1 million dollars for something, does that push the deficit up another million? Just because something is identified as additional spending needs, doesn't make it part of a deficit. Now, the $166 million request includes $112 million for Medicaid spending and $22 million for Corrections. No one wants people to go without health care or see prisoners let out. However, requests should not just be added to a deficit automatically.

The next issue is the budget for future years. I have written about this previously, that next years projected revenue is $500 million less than this years budgeted spending. This is a problem, but can be solved in large part, if not completely, by repealing the prevailing wage law.

Monday night is the State of the Commonwealth address. I look forward to hearing the Governors plan.