Three times a year, the Revenue Estimating Conference (REC) meets to discuss the state’s economic outlook and set their general fund revenue projections. The REC is a three-person, nonpartisan committee established to provide consensus on available revenue which serves as the foundation for the legislature’s budget process.
The REC met this week and again lowered revenue projections for Fiscal Year 2017 to reflect slower than anticipated economic growth. Low commodity prices and a sluggish agricultural sector continue to be driving factors for the low revenue figures. While another significant reduction to state revenue this late in the fiscal year is challenging, House Republicans anticipated the possibility of this outcome and plan to address it head on.
First, we are looking at ways to increase the accuracy of the REC’s revenue estimates so we have a more reliable number on which to base the budget. While we understand the difficult and complex task it is to predict revenue, we have to find ways to better anticipate trends and possible adjustments.
Another important step to manage a difficult budget situation is taking a hard look at where taxpayer money is being spent. This is something we have been doing for months, but will continue to address with even more urgency. As we build the budget for Fiscal Year 2018 and beyond, House Republicans will thoroughly review all government spending to find efficiencies and prioritize spending.
Finally, we will evaluate every tax credit to make sure taxpayers are getting the best deal possible. Next week, the House Appropriations Committee will begin work on House Study Bill (HSB) 187 to examine the true fiscal impact of state tax credits on the overall budget picture. The bill sets a limit on tax credit expenditures and once that cap is reached, additional claims would not be fulfilled. The bill also eliminates the refundability of certain tax credits that aren’t fully redeemed. With these changes, HSB 187 would help us get a better hold on our tax credit liability year over year and allow us to budget more effectively.
While economic experts work to determine the exact cause of the state’s revenue slowdown, House Republicans will stick to our common sense budget principals, work carefully to reduce the overall impact to essential programs and services, and leave this session with a balanced budget. Additionally, we will continue our work this session on policy to reduce burdens on business so employers can hire more workers, pay higher wages, and expand their positive impact on the state’s economy.