Specifically, the IFO projects deficits of $988 million in FY 2018-19; $1.865 billion in FY 2019-20; $1.774 billion in FY 2020-21; $1.784 billion in FY 2021-22; and $2.189 billion in FY 2022-23. (page 66)
The estimates take into account the revenue and borrowing package signed into law on October 30 which IFO said would generate about $2.3 billion in FY 2017-18.
The good news, the IFO said, is these deficits would have been between $800 million to $1 billion a year worse without the revenue package and certain cost containment measures taken this year.
The IFO identified these causes of the new deficits, in particular in FY 2018-19--
-- $89 million decline in revenue based on 2017 tax changes, gaming expansion, Net Operating Loss court decision;
-- $2 billion in borrowing and fund transfers are not available;
-- Dept. of Education expenditure increases by $642 million;
-- Dept. of Human Services expenditure increases by $607 million;
-- General obligation debt service increases by $168 million; and
-- All other increases $148 million.
Over the last four years of the forecast, expenditures increase at an average rate of 3.6 percent per annum and net revenues increase at an average rate of 3.2 percent. The 2017 tax and revenue legislation provides $140 million in FY 2019-20 and $72 million by FY 2022-23, and these estimates are reflected in the growth rates.
A caution the IFO included in the report is the potential impact of an economic recession during the five year period. They noted in the presentation there is a 15 percent chance of a recession in each year. If that happens, based on past impacts, income to the General Fund could be reduced by perhaps $1.7 billion per year based on past experience.
Click Here for a copy of the report. The IFO presentations will also be posted.
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