/Legislators likely can avoid once feared double digit budget cuts

Legislators likely can avoid once feared double digit budget cuts

The earlier projections were more dire with double-digit reductions to state agencies. Budget experts informed lawmakers Monday that the pandemic recession has not been as severe as initially thought. Retail sales, income, and corporate taxes have not fallen as much as originally projected. Darrin Webb, State Economist, stated that “the bottom line is that the national economy appears as if it is recovering… and the state economic is also improving.” The current budget year ends in two weeks. Legislators suggested that the governor could tap into the state’s “rainy-day fund” to help cover a $47 Million shortfall in the approximately $6 billion budget. Lt. Governor. Delbert Hosemann pointed out that previous projections for the fiscal 2021 budget had called for a huge shortfall of $800 millions or more. This would have led to cuts around 12 percent. These drastic cuts could have led to the collapse of many state agencies and massive reductions in services. Instead, the fiscal deficit for 2021 is estimated at $275 million. In part, the shortfall in 2021 was reduced by lawmakers “pushing” approximately $275 million in income taxes into next year’s budget. The filing deadline was extended from July 15 to allow for more time. Philip Gunn, House Speaker, said that he was encouraged by the fact that the shortfalls seem to be lower than previously projected. He stated that lawmakers had been discussing cuts at 4.8 percent, but “we believe we can make it work with less.” The House Speaker Philip Gunn said that lawmakers are aiming to establish a budget and close this year’s legislative session next week. Monday’s meeting was a significant step in the process of determining how much money lawmakers must spend. Chris Howard, the director of the state Department of Rehabilitation Services said that any cuts would be difficult for his agency. His agency draws federal funds at a 3-1 match and uses most of its state funding for salaries and direct services to people with disabilities. Howard stated that the cuts don’t look so bad at 10-12 percent. “… For every dollar that we lose in state funding we will lose $3 in federal funding.” Howard said. Lawmakers stated that the state’s rainy-day fund was at $550 million and that the governor can use $50 million to close the $47 million budget gap for the current fiscal year. Gov. Gov. Webb advised lawmakers that, while things aren’t as bad as originally predicted, there are still many unknowns in the state economy. This includes a possible “second wave” pandemic that could force more government shutdowns.