Presenters Answer Questions Submitted by Legislators
On May 13, the House and Senate Appropriations Committees held a second joint meeting to hear responses to questions that members of both committees submitted to Dorfman and Farr based on their May 7 presentations. Below are highlights from these questions:
Q: Do you expect third and fourth quarter revenues to pick up and return to near normal?
A (Dorfman): The third quarter is likely to be a pretty bad revenue projection, probably 10 percent below original projections. The fourth quarter may see more returning to normal. As the economy reopens, we will see improvement, and I think we are near the bottom right now. It will take a while to get back to normal.
Q: Is the executive branch engaging in conversations with Congress?
A (Farr): Yes, the governor has and continues to have conversations with Congress and encourages legislators to do the same.
Q: If the state is now reopening, why is a 14 percent (budget) reduction needed when we have another month and a half to normalize?
A (Farr): The 14 percent cuts for agencies is intended to get agencies prepared for any level of cuts that may be necessary. Once (revenue) estimates are updated around June 1, then the legislature can determine the actual cut needed.
Q: What (revenue) decline can be attributed to the income tax filing deadline shift?
A (Dorfman): Our best estimate now is that $1.35 billion in tax revenue has been delayed by the deferral. We should recoup $1 to $1.5 billion of this revenue.
Q: What is the estimated impact on revenue for increasing taxes on cigarettes or other similar items?
A (Dorfman): It depends on how much the tax rate is raised on cigarettes or other items. If the legislature proposes any changes, I and the Governor’s Office of Planning and Budget stand ready to help analyze how much money could be raised.