Saturday, February 11, 2012

Where’s My Surplus?

Below is an excerpt from the Office of Fiscal Analysis’ Overview of Governor Malloy’s Fiscal Year 2013 budget. Spending is increased, taxes are increased, the surplus all but disappears, consolidations produce no real savings, savings decrease and there is some confusing motion in the bottom line of the budget – none of which is good. Here’s hoping the relevant legislative committees read the report.

Highlights of OFA Synopsis of FY 13 Revised Budget Appropriations

Synopsis of Governor s FY 13 Revised Budget Appropriations Committee Hearing

February 9, 2012

1:00 PM

OFFICE OF FISCAL ANALYSIS

The following is intended to provide information on the Governor’s FY 13 Revised Budget for the Appropriations Committee as background for the OPM presentation. Since the budget was released only recently, we have tried to highlight the major areas of interest rather than provide a comprehensive analysis of the budget and revenue plan. Such analysis will be undertaken by the Committee with the assistance of OFA staff in the coming weeks.

I. OVERVIEW

Original FY 13 Budget Balance - The original FY 13 budget contained a $488.5 million General Fund surplus. Assuming the use of $50.0 million in funds for GAAP reserve and a projected decrease in FY 13 revenues (based on the January 17, 2012 consensus), the current balance for FY 13 stands at $299.8 million (assuming no change in bottom-line spending). The growth rate between the original FY 12 and FY 13 budgets is 1.3% (General Fund and all funds).

Governor’s Revised FY 13 Budget Balance - The Governor’s FY 13 Revised Budget increases spending by a net $313.9 million in the General Fund ($329.0 million in all funds). It also increases revenue by a net $15.7 million. When factoring in the loss of $138.7 million in projected revenue as a result of the January 17th consensus, the revised budget achieves a balance of $51.6 million in the General Fund. Assuming the use of $50.0 million in funds for a GAAP reserve, the balance is $1.6 million. The growth rate between the original FY 12 and the revised FY 13 budget is 3.1% (3.2% for all funds).

Lapses (Bottom-Line Reductions) - The original FY 13 budget contains $1.0 billion in various lapses (in all funds). Of this amount, $901.2 million relates to the labor management savings (Revised SEBAC 2011 Agreement).

The Governor’s revised budget: (1) eliminates the $901.2 million in SEBAC lapses (reductions) from the bottom of the budget, (2) moves $647.9 million of these reductions directly into individual agency budgets (see Appendix B for agency list), and (3) increases the existing Legislative branch lapses by $2.0 million, and (4) increases the Judicial branch lapses by $4.8 million.

Agency Consolidations/Program Transfers - The revised budget consolidates 13 state agencies into six agencies (five current and one new agency). This reduces the total number of state agencies from 59 to 52 (a 11.9% reduction). There does not appear to be savings or position reductions attributable to these consolidations. Detail on these consolidations appears within the “Financial Tables” section.

In addition, the revised budget transfers various programs and functions across several state agencies. A table listing the significant transfers of programs and functions between agencies along with the funding and associated positions appears within the “Financial Tables” section.

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