State’s year-end numbers reflect slower revenue growth

  • Friday, August 22, 2014

State Comptroller Richard Eckstrom announced the state’s annual results following his closing of the statewide books for the fiscal year which ended June 30. The state continues to manage the threat of economic volatility and related potential budget shortfalls by increasing the General Reserve or “Rainy Day” Fund to $293 million and the Capital Reserve Fund to $117 million ($2.3 million of which is committed to fund supplemental appropriations. In addition, the state’s final net budgetary surplus of $266 million exceeded previous official estimates by $32 million. The $32 million is being deposited into the Contingency Reserve Fund, increasing its balance to $101 million ($68.4 million of which is committed to fund supplemental appropriations.

Because the final net budgetary surplus exceeded earlier estimates, supplemental appropriations of $234 million authorized by Proviso 118.16 of the 2014-2015 Appropriations Act will be disbursed in September 2014 to specified recipients and used for purposes stated in the Proviso.

The general operating fund finished the year with revenues of $6.6 billion and expenditures of $6.3 billion. State agencies have been authorized to carry over $490 million of their unspent FY 2013-14 appropriations to spend in FY 2014-15, similar to authority they received a year earlier to carry more than $381 million of unspent FY 2012-13 appropriations to spend in the year just completed.

FY 2013-14 general fund revenues grew by $163 million over prior year’s revenues, reflecting an annual growth rate of 2.5 percent. In comparison, the annual revenue growth rate was a robust 9.1 percent for the preceding fiscal year – indicating that while the state’s economic growth has continued, the rate of growth has slowed.

In spite of experiencing revenue growth, the state faces mounting challenges in funding its retirement benefit obligations to public employees. Due to persistent underfunding of the trust funds established by the state to provide these promised benefits, its unfunded liability (or trust fund shortfall) for these obligations has steadily swelled to more than $25 billion. Increased focus and commitment will be needed to satisfy these substantial obligations, particularly in light of growing uncertainty over the federal government’s ability to continue providing financial aid to state governments at existing levels because of the growing, massive amount of the accumulated federal deficit.

The national debt, which has resulted from years of federal deficit spending, will soon exceed $18 trillion. Serving this growing debt is consuming a growing portion of the federal budget. Mounting debt service costs are producing enormous pressure on the federal budget, building expectations of reduced federal aid to states. This is significant because federal financial aid currently funds about one-third of the state’s overall annual spending.

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