Everybody’s favorite economist, Larry DeBoer, in his news column Capital Comments, provides a nice overview of the state budget and how the projected revenue increase, $1.6 billion, might be used.
He lists the Big Four items that constitute about 80% of the budget: 1) K-12 education; 2) Higher education; 3) Medicaid; and 4) Property tax relief. K-12 wants a 4% increase, higher ed wants about a 3% increase, Medicaid is expected to rise at about 8% but the Governor thinks he can make due with 5%, and property tax relief is a work in progress but Prof. DeBoer is thinking probably $450 million. So, with the Big Four accounted for, we’re already at about $1.375 billion. If the other 20% of the budget just keeps up with inflation – about 3%, we get savings at about 10% (up from the current 9%) of the budget for the next recession, and throw in full day kindergarten, we’re looking at a need of about $2.4 billion in new money. So, from that standpoint, we’re about $800 million off.