The California Journal of Politics and Policy (CJPP) is an online journal of original scholarship, cutting edge research, and informed commentary regarding all aspects of national, state, and local government, electoral politics, and public policy formation and implementation. Published by the Institute of Governmental Studies at the University of California-Berkeley, the Journal provides timely insights and historical and comparative perspective on issues ranging from legislative and electoral concerns to tax and social welfare policy, the courts, campaign finance, and the changing role and character of political media.
Volume 8, Issue 1, 2016
Western States Budget Reports
Governor Jerry Brown used the relatively easy budget negotiations during this budget cycle to set himself up to run as the elder statesman seeking reelection for an unprecedented fourth term as governor. But it was not budget politics or even elections that occupied Sacramento’s attention this fiscal year, but rather a series of three separate political corruption investigations and convictions in the State Senate that tarnished the Golden State. These cases not only generated a great deal of negative media attention, but they cost the Democrats three seats, as the caucus was forced to suspend all three senators. This denied the Democrats their supermajority in the Senate, and therefore the legislature as a whole.
Wyoming’s twenty-day budget session (the Wyoming Constitution allows for twenty days, but it took only nineteen) concluded with a $3.3 billion state biennial budget that some lawmakers called “timid and fearful” while others called it “strategic”. Convened on February 10 and adjourned on March 6, lawmakers passed 132 bills, including the biennial budget where the consensus is that this year’s budget is not much different from the current budget. Indeed, the 2014 session seemed to be dominated more by non-budget items than profound budgetary matters.
In introducing his adjustment request to the biennial budget for FY 2015, Hawai‘i’s bombastic governor, Neil Abercrombie, crowed over a $1.1 billion turnaround in the state’s budgetary fortunes during his first term. However, revenue projections came in far below expectations, leading to a largely status-quo budget passed by the legislature in 2014. The lack of funding for his policy initiatives, combined with a number of missteps by the governor that angered his core constituency, caused him to lose his party’s nomination for reelection to State Senator David Ige in the 2014 Democratic primary.
The 64th Montana Legislature ended its constitutionally mandated 90 day biennium session with a nearly $11 billion, two-year, all funds budget in April 2013. Aside from constructing a balanced budget the legislature attempted to resolve a number of long standing policy issues ranging from public pensions to school funding. Newly elected Democratic Governor Steve Bullock presented his budget which called for investing in Main Street, investing more in Montana’s education system, creating health care solutions that improve access for Montanans, and bringing high paying jobs to the state. The governor’s budget included increases in spending and $110 million in tax cuts, but after a contentious legislative session many of the items on the governor’s agenda will not be implemented. The governor vetoed 71 bills, which was the second highest for any governor in Montana history.
There is not a legislative session in 2014 – the next legislature will convene in January 2015. This update contains financial, political, and policy updates that have occurred since the last legislative session.
After a bland start to the 2014 legislative session, fiscal year 2015 became interesting (and challenging) due to the defeat of an incumbent Republican governor and a rapid decline in the global price of oil. Because taxes on oil generate around 90% of Alaska’s non-transfer revenues, and oil production from Alaska’s North Slope oilfields has been in decline since the late 1980s, the state faced a significant deficit going into FY2015. The decline in revenue led the legislature to pass a significantly reduced budget for FY 2015. At the same time, Alaska’s sovereign investments have increased in size in recent years and the state’s savings and investments totaled more than $60 billion, leaving it with reasonable options for balancing its budget over the long term, but no clear strategy for the future.
Arizona’s Fiscal Year 2015 budget showed modest revenue improvements, but the Joint Legislative Budget committee’s three-year forecast continues to show an overall weak budget picture moving forward and a structural deficit, after one-time monies are removed. State mandated and politically forced spending formed the basis of growth areas related to child abuse and neglect as well as the inflation-funding formula for K-12 education. Medicaid expansion, narrowly passed in 2013, seems to have made possible the resolution of a 30-year lawsuit regarding underserving mentally ill.
During the 2014 legislative session, Utah legislators accentuated the need for long-term thinking on the budget. The legislature required 15-year revenue trend forecasting, held the institutions first joint long-term planning conference, and spent the first week of their limited session solely on base budget review. In the end, the session saw a near-record 486 bills pass and be signed into law, the budget balanced, and a $13.5 billion budget for the 2015 fiscal year, an increase of 5% over the FY2014 budget.
The legalization of recreational marijuana and the fight over gun control grabbed the lion’s share of headlines in the state over the past year. With respect to the state budget, the tax revenue from marijuana sales should soon have significant budgetary implications. Though not as substantial, new gun control laws also have budgetary consequences since gun purchasers must now pay for the cost of background checks, where previously public funds were allocated for this purpose.
The 2014 legislative session ended rather unremarkably with a do-no-harm budget and significant political finger pointing. The majority caucus in the House and Senate held their ground throughout the session, with the usual “no new taxes” vs. “need for rethinking tax breaks and some creative thought on revenue enhancement,” with little accomplished. The legislators worked on a number of major issues, including amendments to the marijuana statute enacted in 2012, oil-transport via rail, gun control, minimum-wage, and gasoline-tax increases for enhancements to the transportation infrastructure, but by the end the only noteworthy accomplishments aside from a minimal supplemental budget was the ample placing of blame on political opponents.
The 2014 Oregon Legislative short session was a highly partisan affair where majority Democrats in the House and Senate pursued contentious issues to Republicans including marijuana legalization, gun control, the Columbia River Bridge Crossing, and the huge implementation problems of Oregon’s dysfunctional health plan exchange (“Cover Oregon”). The economic picture in the state featured a modest recovery and urban job growth providing an increase in state income taxes, while other revenue sources such as cigarette taxes, estate taxes, and Oregon Lottery revenues were less than expected. Nonetheless, the legislature managed to adjust the 2013-15 biennial budget, although two issues indicate there are deeper unresolved problems remaining: ongoing public employee dissatisfaction and the impact of general fund redistribution on specific programs.
As of spring 2014, the economic landscape in New Mexico was mixed though generally positive. State revenues were finally reaching pre-recession levels. The recession of 2008 was slow to hit New Mexico and slow to leave. Revenues declined significantly starting in February 2009 with oil dropping to $39.00 a barrel that month oil and gas income is a significant contributor to the state coffers). New Mexico was one of only six states to have fewer jobs in February 2011 than in 2010. Budget revenues declined steeply through 2008, 2009 and 2010. During the course of the recession, general fund revenues dropped 20% percent. Economic growth was not in positive territory until the spring of 2013. Since that time general fund revenues have climbed steadily. For Fiscal Year 2015, revenues are forecast at nearly $6.2 billion, a level not seen since 2008.. While economic forecasts are positive and the financial trajectory appears upward, underlying economic indicators provide a bit of uncertainly. Job growth is slow; government jobs are flat and private sector job growth is only about 1.4%. New Mexico is not projected to regain the previous peak number of payroll jobs until 2016, eight years after that level was first achieved.
The Nevada economy has been slowly improving and the Nevada budget is resting on a solid foundation in terms of satisfying revenue projections contained in the 2013-2015 biennial budget (Nevada Department of Employment, Training and Rehabilitation, 2013). Nevada successfully faced and responded to a state economic environment that has been characterized for the past few years by recession, a budget crisis and political budget fights. The budget in Nevada is currently stable and Nevada has experienced slow economic improvement during fiscal year 2013 – 2014. Nevada’s economic improvement, compared to many other areas of the United States, has been slow and it will probably take a considerable amount of time before Nevada experiences significant recovery from the recession. The Nevada Legislature meets once every two years during odd numbered years and 2014 was an off year. The off legislative year consists of monitoring economic indicators, preliminary construction of the new biennial budget and previewing the fall general election.