The latest monthly budget release (PDF) from Treasurer Scott Meacham provided some good news and some bad news. The bad news is that October revenues fell well short of projections, as they have in each month of the current fiscal year. General Revenue (GR) for October was 18.2 percent below the official estimate and 23.7 percent below below last year’s collections. The good news is that the shortfalls are slightly less than in previous months. Over the first three months of FY ’10, General Revenue collections averaged 26.0 percent below the estimate and 29.5 percent below prior year collections. October’s slightly improved performance led the Treasurer to declare:
I am cautiously optimistic that October collections could show our economy has finally bottomed and we may start seeing some recovery in actual revenue collections.
Yet, the forecasts produced by OK Policy in our newly-released issue brief suggest that even if a recovery is now beginning, we are looking at a deep and extended budget crisis. We generated multiple revenue estimates using a variety of forecasting techniques; our middle scenario is that General Revenue (GR) is likely to come in at about $4.4 billion in FY ’10. This would create a shortfall of just over $700 million compared to what was appropriated from current year GR in this year’s budget. This amount exceeds the total that can be generated from full-year 5 percent across-the-board cuts ($257 million) plus tapping the full amount available from the Rainy Day Fund for the current year ($373 million). This suggests that deeper cuts than the 5 percent monthly cuts already being implemented and/or new revenues in addition to the amounts available from the Rainy Day Fund may well be needed to balance this year’s budget.
This situation presents a real quandry for our elected leaders. As Treasurer Meacham stated over the weekend:
My concern is that there are agencies that don’t appear to be able to take more than a 5 percent cut without it affecting their core services.