Discussion

State of the States’ Budgets 2020

Sen. Phil Berger (NC)

Sen. Peter MacGregor (MI)

Sen. Karen Spilka (MA)

Sen. Bob Peterson (OH)

Sen. Stuart Adams (UT)

Sen. John Cullerton (IL)

Sen. Jack Whitver (IA)

Sen. Paul Gazelka (MN)

Sen. Drew Perkins (WY)

Sen. Cathy Giessel (AK)

Sen. Dominic Ruggiero (RI)

Sen. Hanna Gallo (RI)

Sen. John Alario (LA)

Sen. Page Cortez (LA)

Sen. Greg Treat (OK)

Sen. William Galvano (FL)

Sen. Karen Fann (AZ)

Sen. Ginny Burdick (OR)

Sen. Rodrick Bray (IN)

Sen. Mary Kay Papen (NM)

Sen. Ronald Kouchi (HI)

Sen. Tom Alexander (SC)

Sen. Scott Sales (MT)

Sen. Larry Taylor (TX)

Sen. Phil Berger (NC): When asked by Ms. Mulder if North Carolina had passed a budget, Sen. Berger replied, “It depends on what you mean by a budget.” His quip reflected the challenge faced by the State after Governor Roy Cooper’s veto of the proposed budget, based on his requirement for Medicaid expansion to be included. The House overrode this veto and the Senate could follow suit in the upcoming session. Meanwhile, statutory CRs required that certain programs continue to be funded at last year’s level and various mini-budgets were allocated to cover specific expenses such as officers’ and state employee wages.

Sen. Peter MacGregor (MI): Michigan’s Republican legislature passed a balanced, bipartisan   budget but Democratic Governor Gretchen Whitmer, who based her budget on a 45 cent gas tax earmarked for roads, vetoed 147 items and transferred allocated funds to different Departments. After intense negotiations, the Governor and legislative leaders agreed on a plan to spend more than half of the nearly $1 billion the Governor vetoed from the budget and restrict her power to move money within state departments.

Sen. Karen Spilka (MA): “Our budget is DONE,” Sen. Spilka reported with enthusiasm, indicating relief that the State’s Democratic legislature and Republican Governor had come to an agreement. It was hard to decide where to allocate the State’s $1 billion excess, given Party differences; however, ultimately Rainy Day Funds were increased in preparation for a possible recession, and $1.5 billion was allocated for educational reform. A bill to reduce the cost of prescription drugs in the Mass Health program remains in dispute with the Senate and the Governor in support, but not the House.

Sen. Bob Peterson (OH): While the legislature and Governor are all Republican, both the Governor and Speaker of the House are new, and this poses different challenges as they navigate the budget process. The bones of the budget have been agreed upon, including a cut in personal income tax and an increase in gas tax; however, these are healthy fiscal times and there are differences about how to manage our excess. We needed to take time off to reflect on the budget.

Sen. Stuart Adams (UT): The State’s income tax is increasing rapidly, but this is a less stable revenue source than a sales tax. Previously, the sales tax on food was removed in the hopes of benefitting poor people, but this strategy was not effective, instead, a higher deduction for low-income families is proposed. The sales tax on food was restored along with a 10 cent gas tax. On the other side of the equation, the income tax was lowered and the state tax on Social Security was removed. The changes represent about a $160 million tax cut; but a referendum to challenge the cuts is possible.

Sen. John Cullerton (IL): Our State is one of only 11 that have a flat income tax, and we have no tax on retirement income. With limits on revenue, meeting our huge pension costs is a major hurdle. A proposed Constitutional Amendment that would allow Illinois to impose a non-flat income tax will be on the ballot in the November 2020 general election. The amendment has Gov. Pritzker’s support but requires 60% voter approval to pass.

Sen. Jack Whitver (IA): Two years ago, a Tax Reform Bill was enacted for 4 years, and now revenues are up, giving us a $400 million excess. Iowa has the highest taxes on income, property and sales, so we have to consider what the next step should be to make Iowa competitive and bring more people to the State. Meanwhile, we have a 2.5% unemployment rate and are looking at ways to get people off welfare and into the workforce. We also are looking at ways to address the “child care cliff,” which cuts off all child care aid when income hits 145% of the poverty level. For a single parent and child, the cutoff is $23,230, or $11.17 an hour.

Sen. Paul Gazelka (MN): The State has a $1.3 billion surplus and is in good shape. There is discussion about eliminating the tax on Social Security income. However, there is disagreement about whether the excess should be held in reserve or, most likely, be invested into bridges and other infrastructure.

Sen. Drew Perkins (WY): In Wyoming, 60% of revenue comes from oil, coal, and natural gas. Coal and oil production, as well as prices for natural gas are all down; therefore, revenue is down. We are focused on economic development and tax reform; however, attracting more people while lowering taxes can create more of a burden. The good news is that we have 2 large funds (totaling $13 billion) invested in the worldwide economy and they are the largest sources of revenue for the government.

Sen. Cathy Giessel (AK): Alaska has no personal income tax and no state sales tax. Instead, Alaska relies on two main sources of revenue (oil taxes/royalties and federal funding). A third source is interest from Alaska’s constitutionally protected Permanent Fund, which was established 40 years ago. As the state’s biggest savings account with $65 billion invested, the Permanent Fund also generates more than 90% of all investment earnings and has produced $15 billion in earnings. Fund income pays for more than 50% of State appropriations, including the annual dividend that all Alaska residents receive each year. Unfortunately, in 2019, the State’s $2 billion in revenue plus $3 billion in Fund earnings was insufficient to fund the $3000 dividend allocated for every man, woman, and child in the State, despite Governor Mike Dunleavy’s commitment to deliver the dividend.

Sen. Dominic Ruggiero (RI): The State faces a $200 million deficit and is focused on reducing expenses and encouraging development of land for revenue-generating projects. A proposed toll bill for large vehicles and sports wagering could help raise revenues. Meanwhile, tax cuts over the past 3-4 years have made the State more competitive and attractive to industry. However, the State faces workforce challenges. The State’s unemployment rate has dropped from 12% to 2.9%. Currently, 2000 welders are required for General Dynamics Electric Boat, a key Rhode Island employer. Through educational reform and a partnership with them, career and technical schools now offer training to prepare students for open jobs in marine industries.

Sen. Hanna Gallo (RI): A coordinated and effective plan to develop the workforce has included implementation of a state-wide curriculum for the schools, professional development for teachers and principals, and partnership with industry for high school and college career training programs.

Sen. John Alario (LA): The State convened a Revenue Estimating Committee to take a more scientific approach to budgeting and required a unanimous vote; however, as Party politics have become more partisan, a unanimous decision can be blocked. But the Governor can submit a budget based on the economists’ recommendation. The current budget raises teachers’ salaries and allocated more funding to early childhood education.

Sen. Page Cortez (LA): I agree with Sen. Alario, who has been an inspirational leader and a role model for all of us. His tenure in the Louisiana legislature was unparalleled and we will all miss him. We will especially miss his leadership as we grapple with the challenges he outlined: Our State income tax is down and our $1 billion surplus is gone. While there is a super majority of Republicans in the House and Senate, we have to work together with our Democratic Governor to solve our problems.

Sen. Greg Treat (OK): Oil, gas, and agriculture are the mainstays of the State; but in recent years, exploration for oil and gas has been less productive, and companies have moved to other States. Income and wages for oil company employees are twice what the rest of the State’s workers earn, so losing those revenues means we have to change our model.

Sen. William Galvano (FL): The State’s economy is strong, and we currently have a surplus. Tourism is strong, and our economy is diversifying. We took $70 million in tax cuts last year and will make more cuts this year. However, on the downside, people in the panhandle are still recovering from Hurricane Michael (2018), and the State is still waiting for Federal government reimbursements from Hurricane Irma (2017). Storm damage reduced citrus production to 50% of what it was 10 years ago. Additionally, the Seminole Nation decided to stop making $350 million in payments for gaming exclusivity rights. Overall we are in good shape, but we are cautious.

Sen. Karen Fann (AZ): National political rhetoric can interfere with State decision-making, so we spent 2 months of pre-work on the budget to gain consensus ahead of time and avoid partisan posturing. Five years ago, the State had a $1 billion shortfall, now there are $1 billion in the Rainy Day Fund. Education is the legislature’s number one priority for spending, and we will restore funding to pre-2008 levels. One-time funding also has been allocated to roads, schools, and other infrastructure.

We are a strong pro-business State focused on maintaining an open market by decreasing rules, regulations, and taxes, and expanding job opportunities. Additionally, the 2018 Wayfair Decision, which allows States to collect sales tax on Internet sales, is to projected to net $57 million in 2020.

Population growth in the State has meant another Congressional seat to the State. Incomers from California represent 40% of new residents, who are fleeing high California taxes, but they still want all the services, so this is a challenge. Despite this population growth, the State still has more jobs than people to fill them.

Sen. Ginny Burdick (OR): Oregon’s economy usually outperforms the national economy, and the State has a robust Rainy Day Fund; however, this Fund may not be sufficient if there is a severe recession. Major funding in the last session was allocated for a significant educational initiative to compensate for years of underfunded education since the 1990 Measure 5 Property Tax Reform placed Constitutional limits to property taxes, and led to deep funding cuts in education and a low 74% graduation rate. With cooperation from the business community, the legislature passed a corporate gross receipts tax, which is projected to raise $2 billion per biennium for education, and is subject to continuous review.

Sen. Mary Kay Papen (NM): The State is under a Court order to address deficiencies in our educational systems and poverty supports. One response has been to appoint Elizabeth Groginsky as the first secretary of the State’s new Early Childhood Education and Care Department, which brings together services that can start with prenatal counseling, child-care assistance and prekindergarten. The new department provides services that can start with prenatal counseling, child-care assistance and prekindergarten, which are designed to keep children from falling behind in their development before even reaching elementary school, and experiencing lifelong consequences.

The State’s Land Grant Permanent Fund holds $20 million and there are many proposals to tap this Fund. However, the legislature has resisted these attempts and allocated the income into education. Additionally, there are more productive oil rigs and associated salaries are up, providing more funding for infrastructure, roads, and bridges.

Sen. Ronald Kouchi (HI): Hawaii is in good shape with the highest bond rating, favorable interest rates and premiums. An increase in tourist visits and their expenditures ameliorated the 2011 deficit. And marijuana legalization in 2021 promises new revenue without raising taxes. But the State faces some challenges, such as determining the carrying capacity of each Island. How much tourism is acceptable before negative impacts on the environment threaten this resource?

Changing demographics are also changing budget priorities. Previously, education was the biggest line item in the budget with a centralized state school system. But now, spending on human social services has outpaced education spending to meet the needs of expanding aging and homeless populations in the State.

Sen. Tom Alexander (SC): The State anticipates a nearly $2 billion increase in the general fund, for the budget year that starts in July 2020. Our growing population, expanding economy, more vigorous collection of online sales taxes and underestimating other taxes this year has led to the excess. Funds will likely be allocated to increasing salaries for teachers and state workers, improving prisons and making deferred repairs on state buildings.

Sen. Scott Sales (MT): While the state's economy is doing well, Republicans are concerned about Montana's reliance on federal funding, which makes up 44 percent of the state's budget. At some point the federal government will realize it can't continue running trillion dollar deficits, and Montana could end up in deep economic trouble. Instead of relying on Federal funds, Montana should develop its natural resources in an environmentally safe way to create jobs and increase tax revenue.

Sen. Larry Taylor (TX): Dealing with the hardships of Hurricane Harvey brought us all together, and, in May 2019, we passed a bipartisan budget including an $11.6 billion landmark educational finance and property tax reform bill. The bill changes the funding structure for education while seeking to meet workforce needs and break the cycle of poverty. The bill funds teacher raises and also programs targeted to the needs of low-income people and the poor, including early childhood education and all-day pre-K.

North Carolina

FY 2020

Rev: $24.8B

Exp: $25.2B

RDF: 5.9%

Michigan

FY 2020

Rev: $10.6B

Exp: $10.7B

RDF: 12%

Massachusetts

FY 2020

Rev: $46.3B

Exp: $46.1B

RDF: 9.5%

Ohio

FY 2020

Rev: $34.2B

Exp: $34.5B

RDF: 7.7%

Utah

FY 2020

Rev: $7.9B

Exp: $7.9B

RDF: 9.9%

Illinois

FY 2020

Rev: $38.9B

Exp: $36B

RDF: 0%

Iowa

FY 2020

Rev: $7.9B

Exp: $7.7B

RDF: 10.3%

Minnesota

FY 2020

Rev: $24.3B

Exp: $24.3B

RDF: 10.4%

Wyoming

FY 2020

Rev: $1.2B

Exp: $1.5B

RDF: 109%

Alaska

FY 2020

Rev: $2.3B

Exp: $3.7B

RDF: 52.6%

Rhode Island

FY 2020

Rev: $4.2B

Exp: $4.1B

RDF: 5.2%

Rhode Island

FY 2020

Rev: $4.2B

Exp: $4.1B

RDF: 5.2%

Louisiana

FY 2020

Rev: $9.7B

Exp: $9.7B

RDF: 4.4%

Oklahoma

FY 2020

Rev: $8.0B

Exp: $7.6B

RDF: 10.6%

Florida

FY 2020

Rev: $34.3B

Exp: $34.6B

RDF: 4.6%

Arizona

FY 2020

Rev: $11.1B

Exp: $11.4B

RDF: 8.8%

Oregon

FY 2020

Rev: $10.2B

Exp: $10.9B

RDF: 13.5%

Indiana

FY 2020

Rev: $16.8B

Exp: $16.8B

RDF: 8.6%

New Mexico

FY 2020

Rev: $7.3B

Exp: $7.5B

RDF: 14.2%

Hawaii

FY 2020

Rev: $8.1B

Exp: $8.2B

RDF: 4.8%

South Carolina

FY 2020

Rev: $8.7B

Exp: $8.9B

RDF: 6.6%

Montana

FY 2020

Rev: $2.6B

Exp: $2.5B

RDF: 4.6%

Texas

FY 2020

Rev: $59.7B

Exp: $58.5B

RDF: 12.9%

CONTACT US

Senate Presidents’ Forum

579 Broadway

Hastings-on-Hudson, NY 10706

 

Tel: 914-693-1818

Copyright © 2020 Senate Presidents' Forum. All rights reserved.

Discussion

State of the States’ Budgets 2020

Sen. Phil Berger (NC)    North CarolinaFY 2020Rev: $24.8BExp: $25.2BRDF: 5.9%

When asked by Ms. Mulder if North Carolina had passed a budget, Sen. Berger replied, “It depends on what you mean by a budget.” His quip reflected the challenge faced by the State after Governor Roy Cooper’s veto of the proposed budget, based on his requirement for Medicaid expansion to be included. The House overrode this veto and the Senate could follow suit in the upcoming session. Meanwhile, statutory CRs required that certain programs continue to be funded at last year’s level and various mini-budgets were allocated to cover specific expenses such as officers’ and state employee wages.

Sen. Peter MacGregor (MI):   MichiganFY 2020Rev: $10.6BExp: $10.7BRDF: 12%

Michigan’s Republican legislature passed a balanced, bipartisan   budget but Democratic Governor Gretchen Whitmer, who based her budget on a 45 cent gas tax earmarked for roads, vetoed 147 items and transferred allocated funds to different Departments. After intense negotiations, the Governor and legislative leaders agreed on a plan to spend more than half of the nearly $1 billion the Governor vetoed from the budget and restrict her power to move money within state departments.

Sen. Karen Spilka (MA):   MassachusettsFY 2020Rev: $46.3BExp: $46.1BRDF: 9.5%

“Our budget is DONE,” Sen. Spilka reported with enthusiasm, indicating relief that the State’s Democratic legislature and Republican Governor had come to an agreement. It was hard to decide where to allocate the State’s $1 billion excess, given Party differences; however, ultimately Rainy Day Funds were increased in preparation for a possible recession, and $1.5 billion was allocated for educational reform. A bill to reduce the cost of prescription drugs in the Mass Health program remains in dispute with the Senate and the Governor in support, but not the House.

Sen. Bob Peterson (OH):   OhioFY 2020Rev: $34.2BExp: $34.5BRDF: 7.7%

While the legislature and Governor are all Republican, both the Governor and Speaker of the House are new, and this poses different challenges as they navigate the budget process. The bones of the budget have been agreed upon, including a cut in personal income tax and an increase in gas tax; however, these are healthy fiscal times and there are differences about how to manage our excess. We needed to take time off to reflect on the budget.

Sen. Stuart Adams (UT):   UtahFY 2020Rev: $7.9BExp: $7.9BRDF: 9.9%

The State’s income tax is increasing rapidly, but this is a less stable revenue source than a sales tax. Previously, the sales tax on food was removed in the hopes of benefitting poor people, but this strategy was not effective, instead, a higher deduction for low-income families is proposed. The sales tax on food was restored along with a 10 cent gas tax. On the other side of the equation, the income tax was lowered and the state tax on Social Security was removed. The changes represent about a $160 million tax cut; but a referendum to challenge the cuts is possible.

Sen. John Cullerton (IL):   IllinoisFY 2020Rev: $38.9BExp: $36BRDF: 0%

Our State is one of only 11 that have a flat income tax, and we have no tax on retirement income. With limits on revenue, meeting our huge pension costs is a major hurdle. A proposed Constitutional Amendment that would allow Illinois to impose a non-flat income tax will be on the ballot in the November 2020 general election. The amendment has Gov. Pritzker’s support but requires 60% voter approval to pass.

Sen. Jack Whitver (IA):    IowaFY 2020Rev: $7.9BExp: $7.7BRDF: 10.3%

Two years ago, a Tax Reform Bill was enacted for 4 years, and now revenues are up, giving us a $400 million excess. Iowa has the highest taxes on income, property and sales, so we have to consider what the next step should be to make Iowa competitive and bring more people to the State. Meanwhile, we have a 2.5% unemployment rate and are looking at ways to get people off welfare and into the workforce. We also are looking at ways to address the “child care cliff,” which cuts off all child care aid when income hits 145% of the poverty level. For a single parent and child, the cutoff is $23,230, or $11.17 an hour.

Sen. Paul Gazelka (MN):    MinnesotaFY 2020Rev: $24.3BExp: $24.3BRDF: 10.4%

The State has a $1.3 billion surplus and is in good shape. There is discussion about eliminating the tax on Social Security income. However, there is disagreement about whether the excess should be held in reserve or, most likely, be invested into bridges and other infrastructure.

Sen. Drew Perkins (WY):    WyomingFY 2020Rev: $1.2BExp: $1.5BRDF: 109%

In Wyoming, 60% of revenue comes from oil, coal, and natural gas. Coal and oil production, as well as prices for natural gas are all down; therefore, revenue is down. We are focused on economic development and tax reform; however, attracting more people while lowering taxes can create more of a burden. The good news is that we have 2 large funds (totaling $13 billion) invested in the worldwide economy and they are the largest sources of revenue for the government.

Sen. Cathy Giessel (AK):    AlaskaFY 2020Rev: $2.3BExp: $3.7BRDF: 52.6%

Alaska has no personal income tax and no state sales tax. Instead, Alaska relies on two main sources of revenue (oil taxes/royalties and federal funding). A third source is interest from Alaska’s constitutionally protected Permanent Fund, which was established 40 years ago. As the state’s biggest savings account with $65 billion invested, the Permanent Fund also generates more than 90% of all investment earnings and has produced $15 billion in earnings. Fund income pays for more than 50% of State appropriations, including the annual dividend that all Alaska residents receive each year. Unfortunately, in 2019, the State’s $2 billion in revenue plus $3 billion in Fund earnings was insufficient to fund the $3000 dividend allocated for every man, woman, and child in the State, despite Governor Mike Dunleavy’s commitment to deliver the dividend.

Sen. Dominic Ruggiero (RI):    Rhode IslandFY 2020Rev: $4.2BExp: $4.1BRDF: 5.2%

The State faces a $200 million deficit and is focused on reducing expenses and encouraging development of land for revenue-generating projects. A proposed toll bill for large vehicles and sports wagering could help raise revenues. Meanwhile, tax cuts over the past 3-4 years have made the State more competitive and attractive to industry. However, the State faces workforce challenges. The State’s unemployment rate has dropped from 12% to 2.9%. Currently, 2000 welders are required for General Dynamics Electric Boat, a key Rhode Island employer. Through educational reform and a partnership with them, career and technical schools now offer training to prepare students for open jobs in marine industries.

Sen. Hanna Gallo (RI):     Rhode IslandFY 2020Rev: $4.2BExp: $4.1BRDF: 5.2%

A coordinated and effective plan to develop the workforce has included implementation of a state-wide curriculum for the schools, professional development for teachers and principals, and partnership with industry for high school and college career training programs.

Sen. John Alario (LA):    LouisianaFY 2020Rev: $9.7BExp: $9.7BRDF: 4.4%

The State convened a Revenue Estimating Committee to take a more scientific approach to budgeting and required a unanimous vote; however, as Party politics have become more partisan, a unanimous decision can be blocked. But the Governor can submit a budget based on the economists’ recommendation. The current budget raises teachers’ salaries and allocated more funding to early childhood education.

Sen. Page Cortez (LA):     LouisianaFY 2020Rev: $9.7BExp: $9.7BRDF: 4.4%

I agree with Sen. Alario, who has been an inspirational leader and a role model for all of us. His tenure in the Louisiana legislature was unparalleled and we will all miss him. We will especially miss his leadership as we grapple with the challenges he outlined: Our State income tax is down and our $1 billion surplus is gone. While there is a super majority of Republicans in the House and Senate, we have to work together with our Democratic Governor to solve our problems.

Sen. Greg Treat (OK):    OklahomaFY 2020Rev: $8.0BExp: $7.6BRDF: 10.6%

Oil, gas, and agriculture are the mainstays of the State; but in recent years, exploration for oil and gas has been less productive, and companies have moved to other States. Income and wages for oil company employees are twice what the rest of the State’s workers earn, so losing those revenues means we have to change our model.

Sen. William Galvano (FL):    FloridaFY 2020Rev: $34.3BExp: $34.6BRDF: 4.6%

The State’s economy is strong, and we currently have a surplus. Tourism is strong, and our economy is diversifying. We took $70 million in tax cuts last year and will make more cuts this year. However, on the downside, people in the panhandle are still recovering from Hurricane Michael (2018), and the State is still waiting for Federal government reimbursements from Hurricane Irma (2017). Storm damage reduced citrus production to 50% of what it was 10 years ago. Additionally, the Seminole Nation decided to stop making $350 million in payments for gaming exclusivity rights. Overall we are in good shape, but we are cautious.

Sen. Karen Fann (AZ):    ArizonaFY 2020Rev: $11.1BExp: $11.4BRDF: 8.8%

National political rhetoric can interfere with State decision-making, so we spent 2 months of pre-work on the budget to gain consensus ahead of time and avoid partisan posturing. Five years ago, the State had a $1 billion shortfall, now there are $1 billion in the Rainy Day Fund. Education is the legislature’s number one priority for spending, and we will restore funding to pre-2008 levels. One-time funding also has been allocated to roads, schools, and other infrastructure.

We are a strong pro-business State focused on maintaining an open market by decreasing rules, regulations, and taxes, and expanding job opportunities. Additionally, the 2018 Wayfair Decision, which allows States to collect sales tax on Internet sales, is to projected to net $57 million in 2020.

Population growth in the State has meant another Congressional seat to the State. Incomers from California represent 40% of new residents, who are fleeing high California taxes, but they still want all the services, so this is a challenge. Despite this population growth, the State still has more jobs than people to fill them.

Sen. Ginny Burdick (OR):    OregonFY 2020Rev: $10.2BExp: $10.9BRDF: 13.5%

Oregon’s economy usually outperforms the national economy, and the State has a robust Rainy Day Fund; however, this Fund may not be sufficient if there is a severe recession. Major funding in the last session was allocated for a significant educational initiative to compensate for years of underfunded education since the 1990 Measure 5 Property Tax Reform placed Constitutional limits to property taxes, and led to deep funding cuts in education and a low 74% graduation rate. With cooperation from the business community, the legislature passed a corporate gross receipts tax, which is projected to raise $2 billion per biennium for education, and is subject to continuous review.

Sen. Rodrick Bray (IN):    IndianaFY 2020Rev: $16.8BExp: $16.8BRDF: 8.6%

Sen. Mary Kay Papen (NM):    New MexicoFY 2020Rev: $7.3BExp: $7.5BRDF: 14.2%

The State is under a Court order to address deficiencies in our educational systems and poverty supports. One response has been to appoint Elizabeth Groginsky as the first secretary of the State’s new Early Childhood Education and Care Department, which brings together services that can start with prenatal counseling, child-care assistance and prekindergarten. The new department provides services that can start with prenatal counseling, child-care assistance and prekindergarten, which are designed to keep children from falling behind in their development before even reaching elementary school, and experiencing lifelong consequences.

The State’s Land Grant Permanent Fund holds $20 million and there are many proposals to tap this Fund. However, the legislature has resisted these attempts and allocated the income into education. Additionally, there are more productive oil rigs and associated salaries are up, providing more funding for infrastructure, roads, and bridges.

Sen. Ronald Kouchi (HI):    HawaiiFY 2020Rev: $8.1BExp: $8.2BRDF: 4.8%

Hawaii is in good shape with the highest bond rating, favorable interest rates and premiums. An increase in tourist visits and their expenditures ameliorated the 2011 deficit. And marijuana legalization in 2021 promises new revenue without raising taxes. But the State faces some challenges, such as determining the carrying capacity of each Island. How much tourism is acceptable before negative impacts on the environment threaten this resource?

Changing demographics are also changing budget priorities. Previously, education was the biggest line item in the budget with a centralized state school system. But now, spending on human social services has outpaced education spending to meet the needs of expanding aging and homeless populations in the State.

Sen. Tom Alexander (SC):    South CarolinaFY 2020Rev: $8.7BExp: $8.9BRDF: 6.6%

The State anticipates a nearly $2 billion increase in the general fund, for the budget year that starts in July 2020. Our growing population, expanding economy, more vigorous collection of online sales taxes and underestimating other taxes this year has led to the excess. Funds will likely be allocated to increasing salaries for teachers and state workers, improving prisons and making deferred repairs on state buildings.

Sen. Scott Sales (MT):    MontanaFY 2020Rev: $2.6BExp: $2.5BRDF: 4.6%

While the state's economy is doing well, Republicans are concerned about Montana's reliance on federal funding, which makes up 44 percent of the state's budget. At some point the federal government will realize it can't continue running trillion dollar deficits, and Montana could end up in deep economic trouble. Instead of relying on Federal funds, Montana should develop its natural resources in an environmentally safe way to create jobs and increase tax revenue.

Sen. Larry Taylor (TX):    TexasFY 2020Rev: $59.7BExp: $58.5BRDF: 12.9%

Dealing with the hardships of Hurricane Harvey brought us all together, and, in May 2019, we passed a bipartisan budget including an $11.6 billion landmark educational finance and property tax reform bill. The bill changes the funding structure for education while seeking to meet workforce needs and break the cycle of poverty. The bill funds teacher raises and also programs targeted to the needs of low-income people and the poor, including early childhood education and all-day pre-K.

CONTACT US

Senate Presidents’ Forum

579 Broadway

Hastings-on-Hudson, NY 10706

 

Tel: 914-693-1818

Copyright © 2020 Senate Presidents' Forum. All rights reserved.

Discussion

State of the States’ Budgets 2020

Sen. Phil Berger (NC)    North CarolinaFY 2020Rev: $24.8BExp: $25.2BRDF: 5.9%

When asked by Ms. Mulder if North Carolina had passed a budget, Sen. Berger replied, “It depends on what you mean by a budget.” His quip reflected the challenge faced by the State after Governor Roy Cooper’s veto of the proposed budget, based on his requirement for Medicaid expansion to be included. The House overrode this veto and the Senate could follow suit in the upcoming session. Meanwhile, statutory CRs required that certain programs continue to be funded at last year’s level and various mini-budgets were allocated to cover specific expenses such as officers’ and state employee wages.

Sen. Peter MacGregor (MI):   MichiganFY 2020Rev: $10.6BExp: $10.7BRDF: 12%

Michigan’s Republican legislature passed a balanced, bipartisan   budget but Democratic Governor Gretchen Whitmer, who based her budget on a 45 cent gas tax earmarked for roads, vetoed 147 items and transferred allocated funds to different Departments. After intense negotiations, the Governor and legislative leaders agreed on a plan to spend more than half of the nearly $1 billion the Governor vetoed from the budget and restrict her power to move money within state departments.

Sen. Karen Spilka (MA):   MassachusettsFY 2020Rev: $46.3BExp: $46.1BRDF: 9.5%

“Our budget is DONE,” Sen. Spilka reported with enthusiasm, indicating relief that the State’s Democratic legislature and Republican Governor had come to an agreement. It was hard to decide where to allocate the State’s $1 billion excess, given Party differences; however, ultimately Rainy Day Funds were increased in preparation for a possible recession, and $1.5 billion was allocated for educational reform. A bill to reduce the cost of prescription drugs in the Mass Health program remains in dispute with the Senate and the Governor in support, but not the House.

Sen. Bob Peterson (OH):   OhioFY 2020Rev: $34.2BExp: $34.5BRDF: 7.7%

While the legislature and Governor are all Republican, both the Governor and Speaker of the House are new, and this poses different challenges as they navigate the budget process. The bones of the budget have been agreed upon, including a cut in personal income tax and an increase in gas tax; however, these are healthy fiscal times and there are differences about how to manage our excess. We needed to take time off to reflect on the budget.

Sen. Stuart Adams (UT):   UtahFY 2020Rev: $7.9BExp: $7.9BRDF: 9.9%

The State’s income tax is increasing rapidly, but this is a less stable revenue source than a sales tax. Previously, the sales tax on food was removed in the hopes of benefitting poor people, but this strategy was not effective, instead, a higher deduction for low-income families is proposed. The sales tax on food was restored along with a 10 cent gas tax. On the other side of the equation, the income tax was lowered and the state tax on Social Security was removed. The changes represent about a $160 million tax cut; but a referendum to challenge the cuts is possible.

Sen. John Cullerton (IL):   IllinoisFY 2020Rev: $38.9BExp: $36BRDF: 0%

Our State is one of only 11 that have a flat income tax, and we have no tax on retirement income. With limits on revenue, meeting our huge pension costs is a major hurdle. A proposed Constitutional Amendment that would allow Illinois to impose a non-flat income tax will be on the ballot in the November 2020 general election. The amendment has Gov. Pritzker’s support but requires 60% voter approval to pass.

Sen. Jack Whitver (IA):    IowaFY 2020Rev: $7.9BExp: $7.7BRDF: 10.3%

Two years ago, a Tax Reform Bill was enacted for 4 years, and now revenues are up, giving us a $400 million excess. Iowa has the highest taxes on income, property and sales, so we have to consider what the next step should be to make Iowa competitive and bring more people to the State. Meanwhile, we have a 2.5% unemployment rate and are looking at ways to get people off welfare and into the workforce. We also are looking at ways to address the “child care cliff,” which cuts off all child care aid when income hits 145% of the poverty level. For a single parent and child, the cutoff is $23,230, or $11.17 an hour.

Sen. Paul Gazelka (MN):    MinnesotaFY 2020Rev: $24.3BExp: $24.3BRDF: 10.4%

The State has a $1.3 billion surplus and is in good shape. There is discussion about eliminating the tax on Social Security income. However, there is disagreement about whether the excess should be held in reserve or, most likely, be invested into bridges and other infrastructure.

Sen. Drew Perkins (WY):    WyomingFY 2020Rev: $1.2BExp: $1.5BRDF: 109%

In Wyoming, 60% of revenue comes from oil, coal, and natural gas. Coal and oil production, as well as prices for natural gas are all down; therefore, revenue is down. We are focused on economic development and tax reform; however, attracting more people while lowering taxes can create more of a burden. The good news is that we have 2 large funds (totaling $13 billion) invested in the worldwide economy and they are the largest sources of revenue for the government.

Sen. Cathy Giessel (AK):    AlaskaFY 2020Rev: $2.3BExp: $3.7BRDF: 52.6%

Alaska has no personal income tax and no state sales tax. Instead, Alaska relies on two main sources of revenue (oil taxes/royalties and federal funding). A third source is interest from Alaska’s constitutionally protected Permanent Fund, which was established 40 years ago. As the state’s biggest savings account with $65 billion invested, the Permanent Fund also generates more than 90% of all investment earnings and has produced $15 billion in earnings. Fund income pays for more than 50% of State appropriations, including the annual dividend that all Alaska residents receive each year. Unfortunately, in 2019, the State’s $2 billion in revenue plus $3 billion in Fund earnings was insufficient to fund the $3000 dividend allocated for every man, woman, and child in the State, despite Governor Mike Dunleavy’s commitment to deliver the dividend.

Sen. Dominic Ruggiero (RI):    Rhode IslandFY 2020Rev: $4.2BExp: $4.1BRDF: 5.2%

The State faces a $200 million deficit and is focused on reducing expenses and encouraging development of land for revenue-generating projects. A proposed toll bill for large vehicles and sports wagering could help raise revenues. Meanwhile, tax cuts over the past 3-4 years have made the State more competitive and attractive to industry. However, the State faces workforce challenges. The State’s unemployment rate has dropped from 12% to 2.9%. Currently, 2000 welders are required for General Dynamics Electric Boat, a key Rhode Island employer. Through educational reform and a partnership with them, career and technical schools now offer training to prepare students for open jobs in marine industries.

Sen. Hanna Gallo (RI):     Rhode IslandFY 2020Rev: $4.2BExp: $4.1BRDF: 5.2%

A coordinated and effective plan to develop the workforce has included implementation of a state-wide curriculum for the schools, professional development for teachers and principals, and partnership with industry for high school and college career training programs.

Sen. John Alario (LA):    LouisianaFY 2020Rev: $9.7BExp: $9.7BRDF: 4.4%

The State convened a Revenue Estimating Committee to take a more scientific approach to budgeting and required a unanimous vote; however, as Party politics have become more partisan, a unanimous decision can be blocked. But the Governor can submit a budget based on the economists’ recommendation. The current budget raises teachers’ salaries and allocated more funding to early childhood education.

Sen. Page Cortez (LA):     LouisianaFY 2020Rev: $9.7BExp: $9.7BRDF: 4.4%

I agree with Sen. Alario, who has been an inspirational leader and a role model for all of us. His tenure in the Louisiana legislature was unparalleled and we will all miss him. We will especially miss his leadership as we grapple with the challenges he outlined: Our State income tax is down and our $1 billion surplus is gone. While there is a super majority of Republicans in the House and Senate, we have to work together with our Democratic Governor to solve our problems.

Sen. Greg Treat (OK):    OklahomaFY 2020Rev: $8.0BExp: $7.6BRDF: 10.6%

Oil, gas, and agriculture are the mainstays of the State; but in recent years, exploration for oil and gas has been less productive, and companies have moved to other States. Income and wages for oil company employees are twice what the rest of the State’s workers earn, so losing those revenues means we have to change our model.

Sen. William Galvano (FL):    FloridaFY 2020Rev: $34.3BExp: $34.6BRDF: 4.6%

The State’s economy is strong, and we currently have a surplus. Tourism is strong, and our economy is diversifying. We took $70 million in tax cuts last year and will make more cuts this year. However, on the downside, people in the panhandle are still recovering from Hurricane Michael (2018), and the State is still waiting for Federal government reimbursements from Hurricane Irma (2017). Storm damage reduced citrus production to 50% of what it was 10 years ago. Additionally, the Seminole Nation decided to stop making $350 million in payments for gaming exclusivity rights. Overall we are in good shape, but we are cautious.

Sen. Karen Fann (AZ):    ArizonaFY 2020Rev: $11.1BExp: $11.4BRDF: 8.8%

National political rhetoric can interfere with State decision-making, so we spent 2 months of pre-work on the budget to gain consensus ahead of time and avoid partisan posturing. Five years ago, the State had a $1 billion shortfall, now there are $1 billion in the Rainy Day Fund. Education is the legislature’s number one priority for spending, and we will restore funding to pre-2008 levels. One-time funding also has been allocated to roads, schools, and other infrastructure.

We are a strong pro-business State focused on maintaining an open market by decreasing rules, regulations, and taxes, and expanding job opportunities. Additionally, the 2018 Wayfair Decision, which allows States to collect sales tax on Internet sales, is to projected to net $57 million in 2020.

Population growth in the State has meant another Congressional seat to the State. Incomers from California represent 40% of new residents, who are fleeing high California taxes, but they still want all the services, so this is a challenge. Despite this population growth, the State still has more jobs than people to fill them.

Sen. Ginny Burdick (OR):    OregonFY 2020Rev: $10.2BExp: $10.9BRDF: 13.5%

Oregon’s economy usually outperforms the national economy, and the State has a robust Rainy Day Fund; however, this Fund may not be sufficient if there is a severe recession. Major funding in the last session was allocated for a significant educational initiative to compensate for years of underfunded education since the 1990 Measure 5 Property Tax Reform placed Constitutional limits to property taxes, and led to deep funding cuts in education and a low 74% graduation rate. With cooperation from the business community, the legislature passed a corporate gross receipts tax, which is projected to raise $2 billion per biennium for education, and is subject to continuous review.

Sen. Rodrick Bray (IN):    IndianaFY 2020Rev: $16.8BExp: $16.8BRDF: 8.6%

Sen. Mary Kay Papen (NM):    New MexicoFY 2020Rev: $7.3BExp: $7.5BRDF: 14.2%

The State is under a Court order to address deficiencies in our educational systems and poverty supports. One response has been to appoint Elizabeth Groginsky as the first secretary of the State’s new Early Childhood Education and Care Department, which brings together services that can start with prenatal counseling, child-care assistance and prekindergarten. The new department provides services that can start with prenatal counseling, child-care assistance and prekindergarten, which are designed to keep children from falling behind in their development before even reaching elementary school, and experiencing lifelong consequences.

The State’s Land Grant Permanent Fund holds $20 million and there are many proposals to tap this Fund. However, the legislature has resisted these attempts and allocated the income into education. Additionally, there are more productive oil rigs and associated salaries are up, providing more funding for infrastructure, roads, and bridges.

Sen. Ronald Kouchi (HI):    HawaiiFY 2020Rev: $8.1BExp: $8.2BRDF: 4.8%

Hawaii is in good shape with the highest bond rating, favorable interest rates and premiums. An increase in tourist visits and their expenditures ameliorated the 2011 deficit. And marijuana legalization in 2021 promises new revenue without raising taxes. But the State faces some challenges, such as determining the carrying capacity of each Island. How much tourism is acceptable before negative impacts on the environment threaten this resource?

Changing demographics are also changing budget priorities. Previously, education was the biggest line item in the budget with a centralized state school system. But now, spending on human social services has outpaced education spending to meet the needs of expanding aging and homeless populations in the State.

Sen. Tom Alexander (SC):    South CarolinaFY 2020Rev: $8.7BExp: $8.9BRDF: 6.6%

The State anticipates a nearly $2 billion increase in the general fund, for the budget year that starts in July 2020. Our growing population, expanding economy, more vigorous collection of online sales taxes and underestimating other taxes this year has led to the excess. Funds will likely be allocated to increasing salaries for teachers and state workers, improving prisons and making deferred repairs on state buildings.

Sen. Scott Sales (MT):    MontanaFY 2020Rev: $2.6BExp: $2.5BRDF: 4.6%

While the state's economy is doing well, Republicans are concerned about Montana's reliance on federal funding, which makes up 44 percent of the state's budget. At some point the federal government will realize it can't continue running trillion dollar deficits, and Montana could end up in deep economic trouble. Instead of relying on Federal funds, Montana should develop its natural resources in an environmentally safe way to create jobs and increase tax revenue.

Sen. Larry Taylor (TX):    TexasFY 2020Rev: $59.7BExp: $58.5BRDF: 12.9%

Dealing with the hardships of Hurricane Harvey brought us all together, and, in May 2019, we passed a bipartisan budget including an $11.6 billion landmark educational finance and property tax reform bill. The bill changes the funding structure for education while seeking to meet workforce needs and break the cycle of poverty. The bill funds teacher raises and also programs targeted to the needs of low-income people and the poor, including early childhood education and all-day pre-K.

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