March 2, 2024
On Thursday morning during our Member Support call, we discussed the ‘Revenue Forecasting’ process underway between the Exec, the Assembly and the Senate. The parties were negotiating in an effort to reach consensus on how much revenue (beyond what is needed to pay for the state’s base operating budget) will be available for: 1) the remainder of the current fiscal year (ends April 1) and 2) the SFY ’25 budget (currently under negotiation).
This process is very important for several reasons including that at least some of the ‘additional’ revenue amounts agreed upon are often made available to legislative leaders (and various legislative committees) for purposes of adding money to executive budget proposals that may (in their estimation) have been underfunded or proposed for a cut by the Executive. Lawmakers seek to ‘buy back’ proposed cuts using these funds. As an example: The Governor proposed a 1.5% COLA for the Human Services Workforce and we have been pressing lawmakers to ensure that the final budget includes a 3.2% COLA. For this to happen, legislative leaders would need to put the funds allocated to them into the ‘bucket’ to pay for the full COLA. The additional revenue forecasted to be available may be the way lawmakers get there – if they feel the pressure from stakeholders. Remember: Lawmakers are inundated with requests and recommendations from stakeholders telling them how they should spend the funds made available to them, and pressuring them to prioritize this or that proposal. The process by which all parties come to an agreement on the amount of revenue available is referred to as the consensus economic and revenue forecasting process.
The economic forecasts contained in the Executive Budget and Legislative reports (attached) portray continued but slowing growth in national and State economies for 2024. All parties agree that the national economy, as measured by inflation-adjusted Gross Domestic Product, will expand at a slower pace in 2024, following growth of 2.5 percent in 2023. The consensus forecast for U.S. real GDP growth for 2024 is 2.1 percent, followed by growth of 1.8 percent for 2025.
At the end of the day the 3 revenue estimates from all parties for FY 2024 and the projections for FY 2025 exhibited significant variance, but participants reached consensus on a two-year revenue that is $1.35 billion above the Executive Budget estimates.
Again, this consensus marks the beginning of the serious negotiations on a State Budget for SFY24-25.
More to follow.