August 17, 2011

State Budget Trigger Watch II

On August 16, the Department of Finance (DOF) released their estimate of July state General Fund revenues. The report confirmed the lower revenues identified by the State Controller in the prior week.  Both the State Controller and DOF identified approximately $550 million in lower than anticipated July General Fund revenues.

We are still in a ‘glass half full’ situation. That is because the July revenues reflect the economic softening that occurred March through June. It appears, through other economic indicators, that the economy is improving at a rate better than the March through June rate.  While it is still questionable whether this economic strengthening will be sufficient to make the $4 billion additional revenue goal, the DOF has stated their expectation that most of the $4 billion will occur during the second half of this fiscal year which means during the time January through June 2012.  If the DOF continues that more optimistic point of view then it is less likely there will be a significant pulling of the trigger for K-12 mid-year cuts. 

One month does not make a fiscal year revenue projection. It still is too early to project 2011-12 full year state General Fund revenues.

~Dave Walrath