The so-called “surplus” is actually:

  • $600 million in one-time cash reserve funds (needed to help the state cash flow)
  • $250 million in one-time ending balance from this year (FY 12)
  • $200 million in on-going revenue growth for next year (FY 13)

The state budget is really about $12 billion. $6 billion appropriated by the state and $6 billion received from the federal government.

State law requires that 10% of the budget be set aside in cash reserves and not spent on ongoing operations. This means the $600 million is off-limits for existing and new spending.

The Legislature can legally spend the $250 million in one-time ending balance money from this year. However, this is a reckless and short-sighted budgeting practice because it builds $250 million of spending the following year without one-time money to pay for the new spending.

While the Legislature can spend up to 99% of the projected revenue, it is not required to spend at that level. The economy, federal debt, and anticipated federal cuts that will impact the $6 billion in federal funds received by the state require common sense and discipline.

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