Fiscal year 2016 budget deficit estimated at $3.7 billion
Gov. Bill Walker’s approved fiscal year 2016 state budget will require a draw of $2.7 billion from the state Constitutional Budget Reserve, a ready asset fund, according to state budget director Pat Pitney.
The draw on the CBR is lower than the actual deficit of about $3.7 billion because the Legislature opted to transfer $1 billion from the Public Education Fund, a budget reserve used to do advance-funding for school districts.
That action will have no effect on school funding, however, because the Legislature will instead appropriate education money next fiscal year as part of the regular budget rather than withdrawing it from the education fund.
The CBR balance as of July 1, the start of fiscal year 2016, was $10.1 billion, Pitney said. The draw for the fiscal year will leave the fund at $7.3 billion on July 1, 2016, the start of fiscal year 2017, she said.
The just-completed fiscal year 2015 ended with a budget deficit of $2.7 billion, which was covered with funds from the Statutory Budget Reserve that was nearly zeroed out by the draw.
At that rate of drawdown, assuming no further budget reductions, no big increase in oil prices and no new revenues, the CBR will be exhausted sometime in fiscal year 2019, which would be in calendar year 2018.
David Teal, director of the Legislative Finance Division, said his estimates of the reserve drawdown and CBR depletion is similar to that of the administration’s Office of Management and Budget, which Pitney heads.
One issue the administration is now considering, Pitney said, is whether it is prudent to allow the CBR to be completely drained, which would leave only the accumulated earnings of the Permanent Fund, which total several billion dollars, as a cash reserve for emergencies.
“We’ll be asking for advice from a lot of people on that,” Pitney said.
The governor has said that he intends to propose new revenue measures to state legislators late this year or early next year.
Meanwhile, the final figure for total state unrestricted general fund spending in fiscal year 2016 is $4.954 billion, a huge reduction from fiscal year 2015, the budget year ending June 30.
That figure includes operations spending, including state agencies, as well as the capital budget, debt service on bonds, and fund transfers. In terms of state operations, which includes agencies, the Legislature cut $343.7 million.
The capital budget for fiscal year 2016 totals $116 million in unrestricted general funds, a $489.8 million reduction compared with the previous year capital budget.