From the Director - Governor Releases Proposed Budgets

On December 18, 2008 the Governor released her proposed 2009-11 budget and the 2009 supplemental budget. The state faces a projected $5.7 billion shortfall for the biennium. The Governor’s budget highlights point out that this shortfall is a little more than the state’s higher education institutions and the Department of Corrections budgets combined.

This budget gap, and the Governor’s commitment to not raising or creating new taxes, required that the Governor propose significant cuts. Nearly 60% of the budget is allocated to items the state is required to fund, such as basic education, federally mandated Medicaid, pensions and debt service. Therefore, all cuts have to be made in the remaining 40% of the budget. With the Governor’s proposed cuts, health care and human services and the natural resources’ budgets are cut more than 12% from maintenance levels. Additionally, cost-of-living adjustments and raises for teachers, state employees and health care workers are put on hold.

While there are concerns with some of the proposed budget cuts as outlined below, we are also appreciative of the funds the Governor proposed to continue to flow to local governments. These include:

• Continued Streamlined Sales Tax mitigation funds to jurisdictions that are negatively impacted by new sourcing rules;
• Continued support to local public health jurisdictions;
• Continued support for criminal justice programs; and
• Continued appropriations to the City-County Assistance Account (although the real estate excise tax which funds the account has fallen sharply).

Those budget cuts of most concern include:

• Cuts to health and human services and the associated demands placed on local governments;
• Transfers from the state and local toxics control accounts.

And then there are those cuts that help in the short-term but will cost more in the long-run, such as significant reductions in pension contribution rates (see related article in Personnel & Labor Relations section of this Bulletin).

It is expected the 2009 supplemental budget will be passed soon in order to address some of the actions the Governor took this past fall. Budget cuts made this biennium will help reduce the deficit heading into the next biennium.

During this first week of the legislative session and much of next week, the Governor’s staff and agency representatives will present details about the proposed budget as it relates to all aspects of state programs and services. As a result the mood on the "Hill" has been rather somber this week.

A detailed explanation of what was included (or not included) in the Governor’s proposed budget is on AWC’s website, www.awcnet.org.

This will obviously be a very tough budget year. We will do our best to provide you timely information on budget discussions. Please respond to our requests for feedback as soon as you can and feel free to contact Jim Justin at jimj@awcnet.org or Alicia Seegers Martinelli at aliciam@awcnet.org of the AWC staff if you have any questions.

Thank You!

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