The Williams Report: November 2018, Part 2
Connecticut is currently projected to have a $2 billion deficit next budget cycle. The “volatility cap,” a spending restriction passed with bipartisan support last year, requires legislators to save a percentage of unexpected revenue coming from volatile sources. In order to circumvent the volatility cap, House leadership needs 60 percent of the legislature to agree on accessing excess volatile revenue to close the budget gap.
The Ocean State’s Revenue Estimating Conference announced Friday they expect state revenue to be $5.4 million lower during FY 2019 than they projected in May. As it stands, the governor would have to close a deficit of $158 million in the next budget proposal and it’s unclear how revised revenue figures impact budget preparations.
Created to help the incoming administration tackle budget problems, Governor-elect J.B. Pritzker announced the formation of a “budget and innovation committee” this past Thursday. Comprised of 17 members from both sides of the aisle, former state comptroller and committee Chairman Dan Hynes expects the committee to be a “collaborative and innovative process.”
A meaningful balanced budget amendment, an idea championed by Mike Pence, is now in the state constitution following overwhelming approval by Hoosier voters. The bill’s authors include Former ALEC National Chairman Sen. Jim Buck, Sen. Ed Charbonneau and former Sen. Brandt Hershman. “I think it is one of the more enduring things that we’ve done to ensure that Indiana is positioned, as a government and as an economy, to succeed for generations to come because we will ensure that we don’t fall into some of the fiscal problems that other states had,” Hershman said.
The newly-defined “National Landing” area will host half of Amazon’s highly anticipated HQ2. In order to attract the tech giant to northern Virginia, Virginia Gov. Ralph Northam’s administration promised more than $22,000 for each new job created, projected to amount to $550 million over the next 12 years. Arlington County, the locality encompassing most of HQ2, will pay Amazon $23 million over the next 15 years raised from a new “Transient Occupancy Tax” levied on hotel rooms.
Governor-Elect Tony Evers could face a difficult first year in office following a report released Friday. According to the nonpartisan Wisconsin Policy Forum, the state would need an additional $2.2 billion over two years. Wisconsin Policy Forum derived this value from growth-in-spending figures provided by government agencies and estimated costs of increased education funding promised by Evers. The report reveals the high price tag Wisconsin can expect from Governor-Elect Evers’ agenda.
Following approval of Chicago’s $10.67 billion budget for FY 2019, Mayor Rahm Emanuel looks to address Chicago’s pension funding gap of $28 billion according to city’s own – and likely optimistic – estimates. The Windy City’s large pension liabilities caused Chicago’s credit rating to drop further, leading to higher costs of borrowing in the future. Financial crises seem to be a theme in the Land of Lincoln as Illinois currently owes $388.34 billion in pension costs.
The Kentucky Retirement System (KRS) currently has only 20.9 percent of the money needed to pay expected future payments. Yet, the Kentucky Judicial Form Retirement System (KJFRS), the pension program that manages retirement for hundreds of elected state officials, is 97.8 percent funded. Contrasted with KRS, KJFRS also offers a hybrid cash-balance plan that is 98.1 percent funded. As Kentucky’s 2018 pension reform legislation is heard in front of the Kentucky Supreme Court, it is important to note that lawmakers and judges who voted and ruled against reform, take advantage of a near-perfectly funded defined-benefit plan.
New Jersey’s Economic and Fiscal Policy Workgroup recently released recommendations in its “Path to Progress” report designed to reform the woefully underfunded New Jersey retirement system. Among the recommendations were shifting the defined-benefit plan to a hybrid plan with defined-contribution elements. Without reform, New Jersey’s annual pension contribution is expected to rise to 27 percent of the state budget by 2023 according to New Jersey Treasury.
Called “double dipping,” 2,400 once-retired state workers retire to collect their pension and then return to work months later to collect a portion of their former salary as well. Gov. Paul LePage pushed for legislation to make double dipping illegal, as re-hired retirees no longer contribute to the retirement system. The Governor’s Office, Department of Administrative and Financial Services, and Maine Heritage Policy Center all agree that double dipping weakens the health of Maine’s retirement system.