Virginia s Budget. Update. Michael Maul. Associate Director, Department of Planning and Budget

Transcription

1 Virginia s Budget Update Michael Maul Associate Director, Department of Planning and Budget November 13, 2009

2 Revenue Reductions: Impact on State Government Including the August reforecast, there now have been a series of revenue reductions for the biennium totaling more than $7.0 billion Date Reductions in Millions August $ February ,064.5 October ,513.7 December February August ,508.0 Total -$7,

3 Overview of the FY 2010 Budget Shortfall and Reduction Strategies Net Budget Shortfall for Biennium $ in Millions Balance in Appropriations Act (Chapter 781) $ 157 FY 2009 Revenue Shortfall (299) FY 2010 Revenue Shortfall (1,209) Net Budget Shortfall for Biennium $ (1,351) Because almost three months of fiscal year 2010 had elapsed, the Governor s proposals were intended to Manage the shortfall while minimizing impact on K-12 education, safety net services, and local governments Make agency and targeted budget reductions that could be continued through biennium and beyond The Governor s plan includes a variety of actions including: Agency and program reductions Reversion of prior year unspent general fund and nongeneral fund balances Use of alternative funding sources as a substitute for general fund spending Proposed Revenue Stabilization Fund transfer 2

4 Summary of Governor s September 2009 Proposed Budget Actions FY 2010 General Fund Revenue Shortfall (incl. transfers) $ (1,350.5) Agency-based Actions: Agency Pledged Balances 22.8 Agency GF/NGF Balances Net GF Higher Education Reductions Close Correctional Facilities 36.6 Constitutional Officers 30.4 One Day Employee Furlough 16.3 Indigent Care Funding 7.0 MH Treatment/Disability Training Centers 6.3 Economic Development/Tourism 3.1 Remaining Agency Reductions Subtotal $ Revenue Sharing Adjustments: K-12 Sales Tax 37.6 HB 599 Payments 13.7 Subtotal $ 51.3 Other Actions: Revenue Stabilization Fund Withdrawal Federal Stimulus (K12 & Higher Education) VRS Employer Retirement Rate Suspension VRS Employer Non Retirement Programs Rate Suspension 30.9 Federal Stimulus (Medicaid Match Rate) 97.0 Literary Fund 55.0 Lottery Profits (from FY2009) 9.9 Subtotal $ Total of All Actions $ 1,353.2 Amount in Excess of Shortfall $ 2.7 3

5 Higher Education Reduction Strategies Higher education reductions total $196.8 million from the general fund The net reductions to higher education institutions (using available federal stimulus funding) totals $105.2 million An additional $91.5 million in stimulus funding used in fiscal year 2010 to mitigate the impact Four year schools are reduced by 15 percent Two year colleges (VCCS and RBC) are reduced by 13 percent Institutions of higher education are given flexibility to determine how to implement the reductions (i.e., no specifically approved reduction strategies) No restrictions are placed on tuition increases With the federal stimulus, the net impact for four-year institutions now becomes 8 percent and 6.9 percent for two-year colleges (systemwide = 7.7 percent) 4

6 Looking Ahead to the Next Biennium Slower Revenue Growth Slower revenue growth in the future no quick post-recession bump FY 2006: $14,834.8 billion FY 2011: $14,618.0 billion (August 2009 General Fund Forecast) Means that: Significant budget pressures will continue in the next biennium Budget reductions against current spending levels will be needed in many areas to maintain fiscal balance 5

7 Where the Money Goes in % of state GF revenues are used for education, health and public safety programs Public Safety $3, % Other $1, % General Government $1, % Car Tax $1, % Debt Service $ % Transportation $ % Health & Human Resources $8, % Education $14, % K-12 $11, % Higher Education $3, % Other $ % *Governor Kaine s Introduced Biennial Budget 6

8 Federal Stimulus Package Allocation: $4.8 billion Big ticket items that supplanted/replaced GF appropriations: Fiscal Stimulus Funds for Education - $984 million K-12 - $435 million Higher Education - $217 million Reserved for FY $332 million Fiscal Stimulus Funds (Flexible Portion - $218.9 million) FY $109.8 million FY $109.8 million Medicaid - $1.3 billion FY $368.8 million FY $593.7 million Remainder in FY2011 (six months of FY only) Byrne Justice Assistance Grants - $23.3 million Use in FY2010 for Sheriffs 7

9 For more information on Virginia s budget, visit these websites at: or 8