Budget Crisis Is Opportunity: Bigger budget for FY’11 shows need for policy reform

by Joseph Coletti

Senior Fellow, Fiscal Studies, John Locke Foundation

July 19, 2010

Key facts:

• The final budget for fiscal year 2011 spends $20.56 billion, $153 million more than the budget for fiscal year 2010.

• General fund availability in fiscal year 2011 excluding federal funds is $17 million less than was available in fiscal year 2010.

• Federal bailout funds for the state total $1.6 billion, up from $1.4 billion in fiscal year 2010.

• Congress may not pass an extension of more than $500 million in bailout funds for the state.

• Contingency plans include breaking a 69-year tradition in the state of meeting the needed contribution to state employee pensions.

• Temporary taxes, one-time changes, and other federal funds add $1.7 billion to the hole for fiscal year 2012.

• Funding pension and retiree health benefits will add as much as $4 billion more to the pending shortfall.

• A $7 billion shortfall in a $20 billion General Fund requires fundamental reform of state government.