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What is this “Surplus Revenue Fund?”

HB 2600, sponsored by Representative Flanigan was heard in the Budget committee this week. The bill would authorize a Surplus Revenue Fund if revenues exceed House budget revenue estimates. Currently the House version of the budget uses over $120 million from the yet to be created fund. The Senate’s position concerning the fund is still unclear.

The proposal came as a result of a lack of agreement on potential state revenues for fiscal year 2017. The House is not in agreement with the 4.1% increased revenue estimate offered by the Governor. Instead Chairman Flanigan proposed a revenue increase estimate of 3.1%, or about $91 million less.

The funding will work like two buckets. The General revenue “bucket” would have to fill before money would flow into the Surplus revenue “bucket.” Only then could funds from the surplus revenue fund be used. Flanigan said that if the Governor is correct in his estimate, then all areas will be funded. However, it was pointed out that even if the Governor’s estimate is correct, funding might not be available until very late in the fiscal year. This could create a situation in which lower priority items could be funded before items such as education and health care.

This is similar to an approach used two years ago when a consensus was not reached for the revenue estimate. The revenue estimate process does not appear in statute, so there are no guidelines governing its use in the budgeting process.

The committee will likely vote the bill on next Wednesday.

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