June 24, 2009

Budget Conference Committee Update

By David Walrath

Today the State Senate failed to pass State Budget amendment legislation for an additional $11 billion in cuts from the February approved budget and the Assembly failed to pass a spending cuts and revenue increase proposal to close the budget deficit. The voting was essentially along party lines in each House. While the partisan differences are narrowing, they are not yet close enough to pass a comprehensive balanced budget.

In other news, the Department of Finance reported that May State General Fund revenues continued to be below expectations for both personal income tax and sales tax revenues. The continuing weakness of the General Fund revenue stream places greater pressure on state cash flow for paying bills.

In response to that General Fund revenue pressure and a lack of the balanced state budget for 2009-10, the Pool Money Investment Board (the entity that manages the state’s cash flow for bill paying) has announced a July 2, 2009 meeting to consider issuing Registered Warrants – the state’s IOU to employees and vendors.

School and state bondholder payments are expected to be made with the monthly state General Fund revenues, but all other state government payments could be at risk of receiving registered warrants rather than real money.