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A legislative subcommittee believes the state's economy is set to rebound next year.

Members of the Joint Appropriations Committee approved a $1.14 billion FY11 state budget revenue estimate Monday. The estimate is up from $1.107 in FY10, which amounts to a 3 percent increase.

In essence, the action means lawmakers have enough confidence in the state economy for state revenue to increase by more than $33 million next year. The change is accounted for by projected increases in sales tax revenue and contributions from the state’s trust funds, which are projected to regain enough principle to contribute to the state’s general fund next year.

The estimate adopted by legislators is approximately $10 million less than the revenue estimates the governor proposed in December. Gov. Rounds’ initial budget was based on $1.150 billion in revenue, but actual collections have caused the governor to revise the estimates. 

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The House continues to stall action on school funding decisions, but will likely take action tomorrow. Lawmakers continue to hold their intentions close, so House votes tomorrow on SB 124 and SB 22 will provide the first formal direction we’ve had from the House this session. At this point in the session, the two issues on the table are per-student funding and changes to the index factor.

Per-student funding:

Both pieces of legislation the House will consider tomorrow contain a per-student funding freeze for FY11. The governor’s plan to freeze per-student funding is alive in SB 22. The bill, which originally had to due with the birth-to-three program, was changed completely by the House Appropriations Committee and approved to be a “bargaining chip” for ongoing negotiations with the Senate. Senate Bill 124 also contains a per-student funding freeze, but also includes changes to the index factor. We know there are several legislators from both parties who are committed to reinstating the 1.2 percent increase, but the idea has not caught on with the legislative leadership and has been voted down twice in the Senate.

Index factor:

Senate Bill 124 seeks to change the index factor, the law that determines annual increases in per-student funding. The measure the House will consider tomorrow was changed in the House Education committee earlier in February – in its current form, it changes the “3 percent or the CPI-W, whichever is less” language in state law to “2 percent or the CPI-W, whichever is greater.” In its Senate-approved form, it changed the index factor language to “4 percent or CPI-W, whichever is greater” with some limitations that tie per-student increases to state continuing receipts.

ASBSD will continue to advocate for the Senate-passed SB 124, which contains “4 percent or greater” language. We will also support amendments to restore the 1.2 percent for FY11.

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