Yesterday marked the start of the 1992 fiscal year for numerous states around
nation. Many legislatures, fighting tough battles to find revenues and raise taxes in recessionary environments, missed the deadline.
NEW YORK STATE
Although a New York State budget was due on April 1, it was finally passed by the Legislature in early June. And the dust following months of budget wrangling between the governor and lawmakers has still not settled.
That may change today, however. Lawmakers and Gov. Mario Cuomo are apparantly close to an agreement that would restore between $650 million and $800 million of the $940 million in spending the governor vetoed shortly after lawmakers passed the budget.
Legislative leaders argued that Gov. Cuomo's decision to veto the spending was wron. The $51.9 billion they has passed was balanced, they claimed.
This hotly worded difference of opinion could have left the state in dire fiscal trouble or seen its bond rating lowered. Gov. Cuomo offered an olive last week to $360 million
spending, financed in part with $80 million in revenue bonds sold revenue bonds sold by the New York State Thruway Authority.
Lawmakers balked at the offer. But now, after further talks, they and the governor appear to be edging toward a final resolution to the fiscal 1992 budget. The latest plan may include: $140 mil3ion in tax and lottery revenues; $40 million in additional revenues from fees and taxes, including $5 million garnered from a tax on out-of-state natural gas; $62 million from social services; and the restoration of $38 million in spending vetoed from the 1992 budget.
The state legislature and Gov. Jim Florio reached a $14.7 billion budget compromise just minutes before the midnight deadline Sunday night, including approval of $400 million road sale to the Turnpike Authority.
Lawmakers in the state Assembly passed a budget last week that they said could avet the thousands of layoffs Gov. Florio proposed to balance his alternative spending plan. But the final package, which includes no new taxes, still includes as many as 3,000 new layoffs.
Ths state will earn $400 million from the sale of the stretch of highway to the Turnpike Authority, which is meeting today to decide whether a refunding of $2.5 billion in outstanding debt will be necessary to pay for the road.
BUDGETS NOT PASSED
Gov. Pete Wilson of California signed numerous bills on Sunday to help erase the state's $14.3 billion budget deficit, and late yesterday state leaders were trying to iron out final details for an overall budget package.
Gov. Wilson signed major tax increase bills, including one for temporary and permanment sales tax increases that will raise about $4 billion. A roughly equal split between tax increases and spending cuts is proposed to close the record budget gap.
Over the weekend, legislators also approved the governor's controversial proposal to take $1.6 billion from the California Public Employees Retirement System to help balance the budget. The money had been set aside in special accounts to help offset the effects of inflation on benefits.
But the Legislature rejected Gov. Wilson's plan to replace the retirement system's board of trustees with a panel controlled by his appointees.
The state's overall budget bill had not been signed by the governor late yesterday, but he has until Wednesday to do so, noted Cindy Katz, an assistant finance director for the state. The state's budget for fiscal 1992, which began July 1, will total $55.7 billion and include a general fund budget of $43.4 billion, Ms. Katz said.
A spokesman for the governor said yesterday that state leaders still had to decide how to eliminate about $2 billion of the budget gap. Democrats have been pushing the republican governor to agree to an income tax increase on California's wealthiest taxpayers.
Gov. Jim Edgar and the Illinois Legislature failed to come to a budget compromise before the fiscal year ended Sunday night, and the Republican governor and majority Democrats in the Legislature appeared to be far apart on a number of issues.
Primary among the differences is the status of the state's 20% income tax surcharge, which expired Sunday. A Republican-sponsored Senate plan favored by Gov. Edgar would extend the surcharge permanently, while a Democratic plan in the House would extend the surcharge for only two years.
Another hangup has arisen over how to distribute the funds. The old formula divided the money evenly between school districts and local governments. Senate Republicans favor delaying the local government portion 18 months and using the revenue to pay old state bills. Gove. Edgar has proposed halving the local government share in order to prop up the state's general funds balance. Democrats wanted to keep the distribution formula as it was, but on Sunday night proposed giving 30% of the local government share to the state.
Republican in the Senate also want legislation to limit growth in property tax collections for school districts and other governments, while House Democrats have opposed such a plan.
Disagreements over budget cuts also have hampered a compromise, said Mark Gordon, a Republican Senate staff member. The state comptroller reported general funds revenues for fiscal 1991 were $13.26 billion, $190 million less than had been anticipated in March.
Gov. Edgar previously had proposed $500 million in budget cuts for fiscal 1992, but aides said he would likely propose additional cuts to make up for projected revenue shortfalls. The governor's proposed all-funds budget is $25.6 billion.
Legislation sources were not optimistic a budget compromise would be reached in the next few days. In the last 10 years, the General Assembly has stayed in session as late as July 8 before a budget was passed.
Pennsylvania started the 1992 fiscal year yesterday without a budget, as lawmakers and Gov. Robert P. Casey continued negotiating over what is expected to be the largest tax increase in the state's history.
Left on ice is a massive $1.7 billion note sale, which cannot take place until a final spending plan is approved. The state needs money from the notes to make payments to local school districts, which are starting to feel the pinch of missed state aid.
The planned not sale will also provide an opportunity for the rating agencies to take a fresh look at the state's credit. Standard & Poor's Corp., which rates Pennsylvania's general obligation bonds AA-minus, put the state on CreditWatch with negative implications in January, citing mounting deficit problems.
Pennsulvania has an Al from Moody's Investors Service and a AA-minus from Fitch Investors Service.
Like most of its northeast neighbors, Pennsylvania's revenue collections have slipped dramatically as a result of the national recession. According to Gov. Casey, June's take was $102 million below estimate, bringing the full year's tally to $817 million below projections.
Gov. Casey has proposed a $2.7 billion tax increase to balance the budget.
The state Legislature approved a 30-day interim budget over the weekend in order to give legislators time to reach a compromise on the few remaining issues holding up passage of Gov. George Voinovich's proposed $27 billion biennial budget that was to have been in place yesterday.
The Republican-controlled Senate and Democrat-controlled House remain split on how to deal with a $100 million revenue shortfall in the budget, as well as on levels of school funding and the governor's proposal to privatize state liquour stores.
However, the two houses reached an undiclosed compromise on tapping into the state's $300 million budget stabilization fund.
Legislative sources said the budget talks could produce a budget compromise as soon as next week.
Gov. Tommy Thompson and the state Assembly were more than $700 million apart on spending and taxes yesterday, while the state Senate was still preparing a budget proposal for a possible vote today.
Gov. Thompson proposed a $13.26 billion general funds budget for thee 1992-93 biennium that eliminated a projected $800 million shortfall by holding proposed spending growth to 4% over the course of the biennium, while revenues are expected to grow by 4.8%. The total proposed all-funds budget for the biennium is $25.7 billion.
Gov. Thompson's plan did not include any tax increases.
Meanwhile, the Assembly, which has gone along with the governor's basis budget package, wants to raise taxes about $717 million during the biennium, increasing the corporate income tax to 8.9% from 7.9% and expanding the state's 5% income tax to some currently exempt goods and services.
Connecticut's underwriting team busied itself yesterday trying to figure out what to do if an impasse over income and other taxes continues in the state's General Assembly.
Lawmakers in that body were unable to reach an agreement acceptable to Gov. Lowell P. Weicker Jr. before the beginning of the state's 1992 fiscal year yesterday.
Treasurer Francisco L. Borges has warned that a delay in the state's budget process could force Connecticut to refigure borrowing plans for the summer, costing the state roughly $5 million.
The governor vetoed a budget package that both chambers agreed to at the last moment, calling largely for a broadening of the state's existing 8% sales tax.
Gov. Weicker, who in February took the politically dangerous step of proposing that the state levy a 6% tax on wages and salaries, said he would veto any plan that did not include an income tax.
By yesterday morning, a $12.9 billion budget was on gov. William F. Weld's desk, waiting for his line-item vetoes and eventual signature into law.
Jordan St. John, a spokesman for Gov. Weld, said that the governor has ten working days to evaluate the plan. The governor may announce some vetoes and sign the package into law as early as Monday of next week.
The budget, which Mr. St. John said includes no tax increases, features a tax credit of 10%-15% for research and development.
An official at the Massachussets Water Resources Authority said the budget may also seek early repayment on a loan to the authority. The authority official said that bond or note proceeds would likely be used to repay the debt, whose present value is about $120 million.
Maine Gov. John R. McKernan Jr. shut much of his state's government yesterday, after vetoing a $3.2 billion two-year budget lawmakers passed early Monday morning.
Sources in the state legislature said the governor was holding the budget hostage to legislation relating to state workers' compensation program. The program serves as an insurance fund for on-the-job injuries.
Gov. McKernan proposed a 35% cut in business contributions to the insurance fund, while lawmakers have approved a cut of only 30%.
The governor's office was closed yesterday. A tape recording informed callers: "Due to the close-down of Maine state government, no one is available to take your call right now. Please try your call again."
Senate and House conferees in North Carolina were still haggling yesterday over the details of raising taxes, as lawmakers work to close an estimated $1.2 billion revenue gap for the fiscal 1992 budget.
At the center of both plans is an increase in the state's sales tax to 6% from 5%, raising about $450 million in annual revenues.
However, on the first day of the new fiscal year, the leadership of the two chambers remains deadlocked over increasing corporate and cigarette taxes.
State lawmakers are working against a final deadline of July 8 to solve the expenditure side of the $3.86 billion general fund budget. Gov. Buddy Roemer has proposed spending cuts of $251 million, but lawmakers continue to debate where to make those cuts.
The Legislature solved the revenue side of its 1992 budget by renewing about $300 million in expiring sales taxes in a special session held in April.